Dark Brandon's BFD

The $10,000 loan forgiveness is nice. The 10-year cap is revolutionary.

I’ll admit it. On the same day that Uncle Joey B announced his plan to write off $10,000 college debt, I wrote my last tuition check for my oldest son. From a young age, I had impressed upon my two sons the need to graduate without debt and steered them away from the private or out-of-state public colleges their parents had attended and toward the best in-state options. Saving for their educations was hard and often involved cash management tactics akin to Indiana Jones grabbing his bullwhip before the door closed. I struggled some of those years, but it was important. And now it felt a little unfair.

This is the proximate political problem of Biden’s executive order: On one side, you have the people who paid their loans, the families who saved and invested to pay for their children to get educated. To them, this feels unfair. On the other side, you have people carrying much more than $10,000 in college debt. If you’re carrying six figures in college debt from a graduate degree so you can work as a public servant, this executive order didn’t seem to change your life. To them, people like me complaining about the unfairness of it all seem like giant douchebags.

To sum it up, both sides are all up in their logically sourced emotions and expressing them through the poisonous prisms of resentment and selfishness. Everybody’s* right, and everybody’s acting wrong. Welcome to America, 2022.

If you focus on the fight over Mah Baby Bunny Fee Fees, though, you’re missing the forest for the fee fees. Forget Uncle Joey B smarting off about corporate welfare and White House Twitter clapping back on members of congress who had their PPP loans forgiven. Pay no attention to the man behind the curtain, because that man is Dark Brandon, and he’s just done his own BFD.

OK, let me catch you up on a couple things. First, Dark Brandon. We all know the deal with the coded meme of “Let’s Go Brandon,” and if you don’t, read this. Long story short, it’s the Schrödinger's Douchebag way of saying “F*ck Joe Biden.” (As the assistant principal of my high school said when someone burped loudly in a school assembly, “Congratulations, I hear Harvard is looking for people like you.”) Just like American revolutionaries co-opted the mocking “Yankee Doodle” as a rebellious identifier, online Democratic partisans have imagined an electric-eyed Dark Brandon to celebrate his policy wins which are starting to pile up.

And this was before Biden wiped out all college debt for 15 million Americans.

Now, to college debt, for which we have Ronald Reagan to blame. Reagan hated the protestors at University of California colleges, which were free in the ‘60s. An advisor of his warned that free college put them “in danger of producing an educated proletariat,” so when Reagan got elected governor in 1970, he cut state funding to colleges. He said it was to cut budgets, but he really wanted to renegotiate the social contract. (Stop electing failed Republican entertainers as president, people.) State colleges started charging tuition; loans soon followed.

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Why has tuition been skyrocketing? Not to pay teachers.

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Since 1980, the cost of a college education as tripled. Incomes have not. In fact, college costs have increased eight times more than wages have, but you need a college education — the credential, rather, not the education per se — to enjoy the same middle class life that grandpa enjoyed with only a high school diploma. In effect, you don’t really have a choice about borrowing money to go to college. You have to do it to ensure your economic viability. The imperative to get the degree rose as the return dropped, forcing students without generous grandparents (thanks, ma!) to borrow more and more. By 2020, 55% of bachelor’s degree recipients graduated with an average of $28,400. Americans now owe more in student debt than they did on auto loans.

And why has tuition been skyrocketing? Not to pay teachers more but to fuel what journalist Daniel Luzer correctly and early identified as “the prestige racket.” Colleges meant to offer children of the working class a route into the middle class began competing on amenities, which is how Louisiana State University, the safety school for generations of underachieving Southerners, ends up with a lazy river. (In Baton Rouge, they just call it a river.) So completely did LSU embrace its market advantage as a sun-soaked party school that students can now drunkenly float in a closed circuit of decadence, spelling out the letters L, S, and U. If nothing else, it’s literally an intellectual pursuit.

And so the business of higher education became not primarily to educate people or to increase the body of knowledge but to increase revenue to build luxurious student unions, upgrade dorm rooms, and install lazy rivers, all paid for by federally backed student loans. The colleges had no risk — the banks were happy to loan the money as long as the federal government could pick up where the borrower — you and me — fell off, as many did. The only one bearing any risk was the schmuck — it’s you and me again, sorry — who had to borrow ungodly sums to buy a ticket in the declining future in the American Dream.

But you knew that, didn’t you? Because you’re over here on the borrower’s side of the equation. Let’s go to the lender’s side, because that’s where Dark Brandon is popping bubbles and making stacks disappear.

Let’s pretend you want to be a human rights worker to help refugees. As you can imagine, there’s not a lot of money in helping migrants fleeing civil war. No one ever weighs a choice between human rights worker and investment banker, but you need an advanced degree for both, so while to the banker repaying student loans becomes a rounding error, paying 15% of the discretionary income for a human rights worker over 25 years (which was the cap) means that the principal on that six-figure college loan is never paid down.

Say that person makes $50,000 a year. If half is considered discretionary, over 25 years that person pays $93,750 without ever paying down the debt. Sure, the federal government pays the rest, but default is not the only risk to the borrower. In service of making regular payments, that worker doesn’t invest, doesn’t buy a home, and probably — because this person is no dummy and now knows the cost of things — thinks twice about ever having a family. I mean, with college costing what it does, who can afford to have kids?

Under the new rules, that same person borrows the same amount of money, but pays back a third of it and in only a decade. At an age where they are young enough to start a new life and smart enough to know what to do with it, their college debt is wiped clean. For about $30,000 over a decade, a smart person can afford to go into public service, teaching, or any number of lower-paid, mission-driven jobs with now a much smaller financial risk.

The federal government is still making good on the unpaid part of the loan, but now there is political risk. Do we really want to be paying banks $100,000 or so for each public servant? At some point, the federal government is going to realize it is holding a helluva lot of bargaining power, at which risk points its bony finger at banks, which are about to find that they’ve pushed things about as far as they can go.

At this point, banks are synonymous with Wall Street. As a friend noted this week, “Jimmy Stewart’s Building and Loan Bank doesn’t exist anymore. It’s now owned and run by Goldman Sachs.” The interest on your home improvement loan is funding risky Wall Street investments to boost the real bottom line.

Sorry, risky Wall Street investments you say? You didn’t think banks were content to simply collect interest on the $1.73 trillion in outstanding student debt, did you? Remember what they did with all those home loans before the Great Recession? Yep, meet SLABs, or student loan asset-backed securities. They pay out like ordinary bonds but are just a bunch of student loans packaged together, which is where things cross over from risky into straight up evil:

The main purpose behind SLABS is to diversify the risk for lenders across many investors. By pooling and then packaging the loans into securities and selling them to investors, agencies can spread around the default risk, which allows them to give out more loans and larger loans. This way, more students have access to loans, investors have a diversifying investment instrument, and lenders can generate consistent cash flow from their securitization and debt collection services.

But now the default risk has been concentrated largely with a politically sensitive federal government that has shown that its sympathies do not lie with the banks. So the risk is diversified until the federal government of the largest economy in the world comes wanting to renegotiate $1.73 trillion in debt, and I’m sure the same financial instrument that nearly brought down the world’s economy in 2008 won’t leave us vulnerable to popping the student debt bubble.

I mean, the only thing that could really bring the whole operation down is if people started figuring it out that college, while important, isn’t worth what they’re charging for it — which is happening, both in attitudes and attendance.

Enrollment for both undergraduate and graduate students at U.S. colleges and universities decreased by 4.1 percent—or about 685,000 students—in spring 2022 compared to spring 2021. The number is compounded even further when you go back to 2020. The overall two-year decline is 7.4 percent, meaning that nearly 1.3 million fewer students are pursuing postsecondary education today compared to just two years ago.

Wall Street needs people to take out loans to prop up SLABS and deliver higher and higher returns. Funny thing, people who don’t go to college don’t take out college loans. I am not arguing that popping the college debt bubble and causing a recession is a good thing. Every time an investment banker gets the sniffles, a renter gets the flu.

I am arguing that any industry that depends on putting all the risk on the customer who is forced into unsustainable financial commitments is a lousy way run a railroad. I’m no expert, but hear me out: What if colleges and universities didn’t keep raising tuition and fees far higher than inflation? What if state governments funded state colleges and universities instead of passing that burden onto young people when they are at their most vulnerable to taking on long-term debt? If an associates degree is necessary for jobs we used to call blue collar, why don’t we make community college free? And what if the federal government policed Wall Street so they didn’t create investment vehicles willy nilly that left individual investors, pension funds, and damned ignorant morons like myself vulnerable to the lack of foresight which seems to be Wall Street’s one renewable resource?

And what if Dark Brandon has now exerted pressure towards each of those ends?

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It is in the future, and not on Twitter or Sunday morning news chat shows, where Dark Brandon will have his victories. My oldest son met me in Houston and brought up Biden’s executive order. This is a kid who called Kamala Harris a cop and has never really seemed comfortable with establishment Democratic politics. I expected your usual carping about how he could have done more even though he’s been able to get through college with no debt thanks to his own work ethic (Thanks, Whataburger!), help from family (again, ma, can’t thank you enough!) and his parents, who love him entirely too much.

“Remember that girl I used to date?” he asked happily. Apparently she was attending college on the GI Bill, which only affords enough credits for one kid. “Now her two brothers can go to college, too! And two of my classmates can now afford to go to grad school!”

In the arguments about fairness and examinations of risk, it’s easy to lose sight of the good that was done. Kids are going to get to enjoy better lives with more opportunity now. Good heavens, we might even be in danger of producing an educated proletariat. Heaven forfend.

* There are people who are not right, and they do not matter. We’re having a grownup discussion over here.

Jason Stanford is the co-author of NYT-best selling Forget the Alamo: The Rise and Fall of an American Myth. His bylines have appeared in the Washington Post, Time, and Texas Monthly, among others. He works at the Austin Independent School District as Chief of Communications and Community Engagement, though he would want to point out that these are his personal opinions and his alone, but you already knew that. Follow him on Twitter @JasStanford.

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