Elizabeth Warren, the senior U.S. senator from Massachusetts, spoke with David B. Wilkins, faculty director of the Center on the Legal Profession, about the burdens of student debt and the need to build a more accessible, inclusive, and just educational system.
David B. Wilkins: Senator Warren, thank you for taking the time to talk about this critical issue of student debt. This week turns out to be a particularly consequential day for thinking about debt. Tomorrow, on September 1, 2023, interest resumes accruing on student loan debt, and on October 1, millions of people will be obligated to begin making payments. While this issue of The Practice is focused on law school debt, I really want to speak to you about the broader issue because no one has thought more thoughtfully or trenchantly about the effects of debt on our society. And as millions of students are now really thinking about paying their student debt, I wonder if you could reflect on what this will mean for our economy and our society and for the things that we hold deeply and care about.
Senator Elizabeth Warren: Let me start with a story. In second grade, Mrs. Lee let me run the Yellowbird Reading Group. I used to sit with kids who were struggling with their reading and give them extra practice. One day Mrs. Lee scooped me up and whispered in my ear, “Ms. Betsy, someday, you could be a teacher.” And that was it. I was a goner. I have wanted to teach since second grade. Now, my daddy ended up being a janitor, my mama worked a minimum-wage job at Sears, and there was no money to send me off to college. I ended up at a commuter college that cost $50 a semester. Then, for a price I could pay for on a part-time waitressing job, I was able to complete a four-year degree and become a special education teacher.
Do we want to be that America, where the daughter of a janitor gets that chance and we get one more special ed teacher? Or do we want to be the America we have become?
First of all, there’s no $50-a-semester opportunity for kids like I had. Second, what we’ve substituted is a system where, if you are not lucky enough to be born into a family that can write a check for a post–high school education for you, you have to borrow the money. Today that debt load is $1.7 trillion. That’s just stunning.
Think about what that means for our nation. Think about what it means to say to any second grader, “Well, maybe go to college or maybe not. But I want you to understand if you do go to college and something goes wrong and you don’t finish that degree, that debt stays with you.” You get sick. Your mom gets sick. You get pregnant. Your family has to move. Your dad loses his job. That debt is going to stay on you, and it’s going to compound. And the federal government is going to be the most aggressive debt collector out there. They will pursue you forever, including attaching it to your Social Security check when you’re 65 years old and still haven’t paid off your student loan yet.”
For a price I could pay for on a part-time waitressing job, I was able to complete a four-year degree and become a special education teacher.
Senator Elizabeth Warren
This is what I think of right off the top: What is our most precious resource? It’s our people. And what’s one of the best ways to invest in our people? Invest in their education. Pretty much everybody in America believes you need to get some post–high school technical degree if you even want a ticket to see if you can make it into America’s middle class — two-year degree, four-year degree, graduate school, law school.
But right now, instead of that opportunity being one where we say, “Come on down. You get the education, and the rest of America will back you up.” We have become a country that says, “If you’re born into a rich family, it will be smooth sailing for you. And if you’re not, then good luck to you.” For me, that’s the very first part of this and the part that colors every other part of what we should be thinking about with student loan debt.
Wilkins: It’s so powerful. And for some groups the research shows it’s even harder. The lead article to this issue is by a wonderful postdoctoral fellow of ours, Meghan Dawe, who’s been looking at the data from After the JD study. And it shows that for Black Americans particularly, this problem is compounded. And that oftentimes they are ending up as much in debt after 10 or 20 years as they were when they started out.
Senator Warren: When you start to disaggregate the data, the story is even more wrenching.
Student loan debt is about opportunity, but it’s a huge racial justice issue.
Senator Warren
Take a look at Black borrowers and White borrowers 20 years out from college. After 20 years, the median White borrower still owes money—they owe about 6 percent of what they originally borrowed. They still owe money, but the end is in sight.
In 20 years, the median Black borrower owes 95 percent of what she borrowed 20 years ago. She’s going to be paying on that debt until she dies. And it’s because every factor comes together. African Americans borrow more money to go to school, borrow more money while they’re in school, and then have a harder time paying it off when they get out of school. You start out with more debt and then you encounter the implications of job and salary discrimination and that just compounds the effect of that debt. Miss a payment, spend a longer period unemployed, and you go into default, and default rates carry interest, and the whole thing balloons.
Student loan debt is about opportunity, but it’s a huge racial justice issue. When President Biden decided that he would cancel up to $20,000 of student loan debt for people who earned less than $125,000, he really wanted to concentrate help. I should say, this was not exactly the plan I wanted, but I really want to give credit for how he tried to design this plan. More than 90 percent of the help was going to go to people who make less than $75,000 a year. The consequence of his proposal would’ve been to wipe out all of the student loan debt for half of all Hispanic borrowers and for a quarter of all Black borrowers. Just wipe it out.
Why is that? Partly because they’re paying over such a long period of time. Partly because it picks up people who tried a year of college. That’s not a huge amount of money, but if you didn’t translate it into a diploma, you end up earning what a high school grad earns, but trying to manage higher education loan debt on top of that. And that’s where people just get chewed up by defaults and interest rate increases that just kill them.
One other thing about the data I want to mention: Women carry more debt than men, and again, have a harder time paying it off. The cohort that struggles the most with student loan debt is Black women. This is about opportunity across the board, but student loan debt is particularly about crushing opportunity for those who are working the hardest to try to build some security in lives that don’t automatically come with a wealthy mama and papa to back it up.
Wilkins: One more compounding factor is that more and more opportunities are being reserved for those with not just undergraduate educations but with graduate school educations. Both you and I have spent much of our lives teaching at a law school and telling our students more lawyers are needed for almost everything in society, and yet the cost of legal education has just skyrocketed. And I wonder how you view that factor, particularly for lawyers, and what does it mean for our profession?
We try to teach our students that law is an opportunity to create a more just world and to level the playing field.
Senator Warren
Senator Warren: The legal profession is at its best when it’s accessible for people from all walks of life who’ve had firsthand experience with pressing social justice issues that our law works to address. Burdening students with debt means that many of those who have the most to contribute in public interest law, for example, feel cut off. They simply can’t take on the lower salaries or the higher risk of doing anything other than working for the law firm that will pay them the biggest salary. And that’s a cost born by all of us.
When we teach about justice in law school, we talk a lot about starting position—the Rawlsian veil of ignorance: What rules would you make up if you didn’t know where you were going to be when it comes time for the decision? We try to teach our students that law is an opportunity to create a more just world and to level the playing field. We don’t live in an America anymore where the king or the squire can pound his scepter on the ground and the peasants’ lives are totally at his whim.
We built a country that at least held up as the ideal “equal justice under law.” And we often talk about “equal justice under law” in terms of what it means in the criminal justice system. But student loan debt also hooks into this in an insidious way. It prevents good young lawyers who have so much to offer from taking on public service jobs that they came to law school in order to study for and train for. The irony at the heart of this is almost too much to bear. The people who most want to be in public service are often the people who can least afford it. And that is a cost that is subtle but pervasive through the legal system.
Wilkins: A lot of attention has been focused on what the government can do. But there’s also been a focus on what private institutions can do. You know that in our law school there’s a loan forgiveness program, and there are similar programs in other schools. There are also efforts to have people who make high incomes effectively subsidize students who come out and take lower-income jobs. What should be the relationship between these private solutions—either nonprofits or businesses or at law schools—and more structural public solutions?
Senator Warren: I believe in both. A private institution, like the one where you and I have taught, has a responsibility to say to all of its students: “Part of getting your education here is giving back to the legal system and helping create more justice in that system. If you can’t do that work yourself, then help support those who can.” I think that’s a perfectly reasonable thing for any institution to insist on.
But it is not nearly enough. This is not simply a problem of a handful of elite institutions. It’s not simply a problem of the legal profession. It’s a problem for America. If our lawyers are all drawn from those who can afford to write a big check to go off to law school, and who have enough family resources to cushion any bumps along the way during their years in their professional lives, then we’ll be a poorer nation and a less just legal system.
Across the spectrum, making the investment in education so that young people can get two years of college or four years of college, so they can go to law school or med school or vet school, is an investment in our best resource to build our nation going forward.
Senator Warren
We have to make the investments in making education open and available to all of our kids. I’m so glad you’re focused on law school as well as undergraduate education. And I would go do this interview now with somebody over at the med school or at the veterinary school—and certainly somebody at the school of social work. The whole point is that this is an investment for our nation and we should do this in just plain old hard dollars and cents. Investing in the education of young people is the best money we spend.
Following World War II, when America said to returning GIs, “We’re going to give you an opportunity to get a whole lot more education,” we learned something. Now, there was a lot of racial bias built into how they executed on that program. But even in the limited way that program was put into place, it created wealth not just for the people who went to school under the bill but for everyone. The average recipient of help from the federal government ended up paying that back in higher taxes, because they earned more—more than sixfold over the help they received initially. And it spurred the biggest economic boom in this nation—a boom that lifted the boats of people who went to school and the boats of people who didn’t go to school.
Across the spectrum, making the investment in education so that young people can get two years of college or four years of college, so they can go to law school or med school or vet school, is an investment in our best resource to build our nation going forward.
Wilkins: That’s so powerful, and yet we’re doing just the opposite. The investment in public education across the board is being slashed, and at some level now it’s being put back on the individuals to make very hard choices about whether they go to school. In fact, you’ve got people like Peter Theil giving fellowships to people who choose not to go to school.
Senator Warren, what is your advice to this new generation? You were a product of the last generational transformational shift, and now you’re in a position to be able to shape the world coming forward. What do you say to individuals and to society?
Senator Warren: Have hope and invest in yourself.
I believe there are two ways that we can attack this problem. The smaller bite-size part and then the big part. Let’s do the smaller bite-size part first.
I want to give real credit to the Biden administration. There’s been a change made just this month on income-determined repayment plans. This means that people who have amassed student loan debt and get out of school—if they sign up for this program—will pay back not according to how big their balance is and how much money they borrowed, but according to how big their income is. And they will pay a smaller fraction than in the past. If their income is below a certain level, they pay nothing at all. After they’ve done that for 20 years—which is a long time—whatever balances left on their debt are forgiven. And by the way, interest does not accrue in the meantime, so the balance isn’t growing during that 20 years. There’s a path out of this.
For students who are interested in public service, it means if your income is more modest, then you don’t have to pay at the same level as someone who’s off working at one of the big blue chip firms and making a whole lot more money. That’s a way to make sure that some of the risk is taken out of the system. I really want to applaud the Biden administration on how they put this together in a much better way.
It’s time for young people to seize power in this country. It’s time for elected officials to be forced to pay attention, not just to people who vote based on what’s happening to Social Security.
Senator Warren
The second thing I want to mention about that is public service loan forgiveness. Again, you pay a percentage of your income, but you stop at 10 years. For example, you’ve been paying 5 percent of your income as you go along—you’ve been a public defender, for example, or another qualifying public service job—and [after] 10 years, that’s it. The balance of the debt is gone. I think that’s exactly the right thing to do.
So there really is hope here. You don’t have to cover up your head and say, “All is miserable and we’re never going to be able to make it better.” Those are bite-size pieces.
The big question is how do we want to think about this as a nation? How do we want to think about this intergenerationally? My generation has stolen the future of young people today—destroyed the planet, loaded them up with debt, made it almost impossible to buy a home, and threatened the very existence of our democracy. It’s time for young people to seize power in this country. It’s time for elected officials to be forced to pay attention, not just to people who vote based on what’s happening to Social Security. Pay attention to people who vote based on what’s happening with housing, transit, climate, health care, and education.
No one gives up power readily. It must be taken. Young people are entitled to demand more of our nation. They are entitled to demand more of our elected officials. They are entitled to demand more of how we build a system that works not just for people who’ve already made it but for the people who are starting to build their lives.
I believe this intergenerational push pull is at the heart of this moment in American history. If we get this wrong, all the pieces start to break apart. But we have a chance—a good chance—to get it right if young Americans demand that we do so.
Wilkins: Frederick Douglass once famously said, “Power concedes nothing without a demand.” But in order to make demands that are likely to stick, young people have to have the wisdom and the inspiration of people who have come before, and who have made their own demands and changes in the world. And nobody has done that more effectively than you. And the fact that I have hope, it’s because your voice is still strong and clear on the things that matter the most. Thank you for sharing this with our readers.
Elizabeth Warren is the senior U.S. senator from Massachusetts, serving since 2013. She is a member of the Senate committees on Banking, Housing, and Urban Affairs; Finance; and Armed Services; and the Special Committee on Aging.
David B. Wilkins is the faculty director of the Center on the Legal Profession, the Lester Kissel Professor of Law, and vice dean for global initiatives on the Legal Profession at Harvard Law School.