Student Loans: Last Week Tonight with John Oliver (HBO)

our main story tonight concerns student

loans the biggest thing you leave

college with besides a diploma and a

drinking problem student debt is such a

massive issue in this country that a few

years ago Burger King had a program

dubbed Whopper loans where lucky people

could get up to $500 of their loans

repaid which they promoted with video of

their mascot incinerating loans with a

flamethrower and just the year before

KFC did this if you name your baby

Harland you could win $11,000 in college

tuition all part of a contest by KFC to

honor its founder Colonel Harland

Sanders the chain will give the prize to

the first baby born on September 9th

named Harland September 9th was the

Colonel's birthday in the $1,000 is a

nod to his chickens 11 herbs and

spices okay first that laugh is

delightful but also someone actually did

that they named their baby Harland for

$11,000 in college tuition money which

is dark but to be fair harland's not the

worst baby name the worst name would be

Derek think about it you saw a baby with

cheeks like clouds and an innocence

unparalleled and you thought that's

Derek that's my little second string

lacrosse player I can't wait to hold

that junior sales associate in my arms

but as wild as those offers are you can

see the appeal currently over 43 million

Americans have student loans that's

about 133% of the US population for a

total outstand standing debt of $1.7

trillion that's higher than the GDP of

Australia one of the countries you

know sometimes to illustrate a point I

have to use a country like Estonia and

you have to infer from my tone whether

that means a number is big or not but

now because I've successfully

traumatized you over the years you're

probably wondering is that really

Estonian I don't know you tell me maybe

you should have paid more attention to

that school that you paid so much

money

for and for many struggling to pay their

student loans the debt can feel

overwhelming I started with 80,000 I

have been paying for 10 years the grand

total is I have paid

$120,000 and I still owe

$76 how the is this possible that

is the appropriate response no one

should be working for 10 years only to

end up worse off than when they started

I mean physically worse sure that's a

given it's completely understandable but

not financially now you might remember

Joe Biden campaigned on tackling student

debt but his most ambitious plan to wipe

out over $400 billion of it was struck

down by the Supreme Court last summer

another Banger decision from the gavl

gang who are really playing the hits

these days honestly you guys should

probably take this show on the road and

if you do I've actually got the perfect

Tor buus for another 48 Hours it can be

yours well one of yours if the rest of

you get invited in is kind of up to him

and for many on the right the Court's

decision was a good thing because all

along the very idea of student loans

getting forgiven had made them Furious

he may pull the trigger tomorrow on even

more student loan forgiveness for

pointless useless baloney liberal arts

degrees like the cultural significance

of soap operas why stop it student loans

why not pay off people's car loans their

home loans their loans to get a tattoo

why should I have to pay for my

neighbors's dumb daughter who went to I

don't know grad school for anthropology

who just backed her car into my car and

didn't leave a note uh-uh I'm not paying

for that wow what a bunch of weird

madeup followed by one thing

that definitely did happen I'll be

honest I've never considered how that

cufflink of a man has neighbors he lives

in a community among people have to see

him on the street and at the store and

yet he thinks someone hit his car by

mistake and there's only one suspect

that's absurd the whole town probably

takes turns driving into his car also

for the record Jesse wter went to a

private liberal arts college in

Connecticut which really shouldn't be

surprising that is the most Connecticut

face I've ever seen season five

Rory Gilmore would have wrecked her

whole life for him but for all the scorn

heaped on people who took on student

debt it's worth noted that this number

only got so big because of a lot of

shortsighted policy choices over the

years in fact one of of the original

architects of the Federal Loan program

back in the 60s was asked a few years

ago how she thought her proposal turned

out and she said quote we unleashed a

monster so given that tonight let's look

at that monster how it got so big and

what we can do about it and let's start

with how we got here because there's two

key issues that got us into this mess

the first is the Loan program itself

Federal money for higher education

really started with the introduction of

the GI Bill for years after it lawmakers

argued unsuccessfully for more Federal

funding for education then Sputnik

happened and suddenly everyone from

Eisenhower on down decided that

scientific education was key to keeping

up with Russia Eisenhower signed the

National Defense Education Act which

created the first Loan program for

students who wanted to study math

science and engineering and over the

years one president after another

expanded the program LBJ opened up

lending to more people regardless of

their area of study Nixon launched P

grants and created Sally May and Clinton

started the process of Shifting away

from Banks issuing student loans to

having them come directly from the

government all while pushing repayment

ideas like this the Democrats ought to

be for a program that gives every

American person the chance go to college

and help for everybody who needs it and

they should pay the money back in one of

two ways either is a small percentage of

their income over a long period of time

or by giving three or four years of

their lives back to their country

through National Services teachers our

policemen our family service workers

sounds pretty good you in exchange for

an education graduates could give back

by doing two of the hardest jobs I can

imagine and one that's mostly staring at

your phone in the New York

subway under Clinton and later Bush we

actually passed versions of that

proposal pegging student loan repayment

to income or national service and some

of these tweaks genuinely had the goal

of making access to education easier but

the only thing they definitely made

easier was ensuring that anyone going to

college could now access an absolutely

massive line of credit and theoretically

that would have been manageable so long

as the price of college didn't get out

of hand but that brings us to this

second issue because up until the

pandemic which brought tuition freees

the price of an education crept up

steadily over the years it's now at the

point where the average net cost of

attendance for instate students of

public schools that is after subtracting

financial aid and grants and in cost for

things like housing food and books is

around

$20,000 per year and while a lot of

factors contributed to that rise one key

one was a dynamic that accelerated after

the 2008 financial crisis when states

began slashing funding for public

colleges and universities where the vast

majority of us students go now

understandably those declines in funding

were followed by large increases

intuition and fees to cover the Gap here

was the former head of LSU in 2016

explaining how in just a few short years

the ratio of what the government pays to

what students pay had shifted there I'd

say in 08 we were 7030 70% State 30%

student we're 8020 right now 80% student

20% State we're quietly privatizing

public higher education throughout the

country the children in elementary

school are not going to have a public

affordable option by the time they get

out of high school it's true and you can

frankly add that to the list of things

that elementary school children aren't

going to have by the time they're 18 the

list is now affordable public College

Summers below 100 degrees and their

grandparents probably sorry kids olds

die and when that reporter asked the

then governor of Louisiana to justify

those cuts his response was less than

inspiring I have a constitutional

obligation to deliver a balanced budget

and the cuts have to come from somewhere

so the cuts are coming at the expense of

higher education and also at the expense

of students in order to keep those

universities a float students have

access to money so do lawmakers think

well we won't put money toward this cuz

we know that students can take out debt

and pay for their education that way

well obviously uh that is happening to

some degree not just in Louisiana but

around the country and I find it very

troubling yeah we're robbing our

children to pay for our budget on one

hand I guess he's being honest there but

that is still one of the worst things

I've ever seen come out of Louisiana

with the best of course being M Jac the

statue of a frog in a top hat from the

city of rain now does it look like the

placard in front of him is blocking his

enormous frog dick yes yes it does is

there a photo where it doesn't look like

that no my friends there is not so

public universities were struggling for

funding and many responded by ramping up

spending which might seem

counterintuitive Until you realize that

you can charge tuition almost three

times higher to out of state or

International students than instate one

so colleges now compete to lure those

students in with expensive amenities

from state-of-the-art student centers to

rock climbing walls in fact one of the

most potent symbols of those spending

Wars is actually at LSU itself wow there

it is lifeguards and everything students

at Louisiana State University can now

enjoy a 500t lazy river that spells out

LSU hey

lifeguard are you a student here too yes

sir so you're paying for this you're

paying for the Lazy River yes I pay for

this into my okay first stop yelling at

that student through a fence he's busy

at work being paid to watch the river he

paradoxically funds second not a river

shame but that has too many curves the

whole point of a lazy river is to get

day drunk on daddies pass out to an MGMT

album and Vibe you can't do that if

every 5 Seconds you have to navigate the

twists and turns of the letter

s but whether out of necessity or greed

universities basically started turning

their campuses into resorts to justify

taking more money from students and the

thing is even as tuition clined students

didn't stop applying they just kept

borrowing as much as they could so the

mere existence of the student loan

industry has ended up contributing to a

vicious cycle of rising tuition and

higher debt loads all of which has made

it very easy to wind up taking on

debilitating amounts of debt often at an

age where you barely understand

understand what you're getting into it

was just explained to us as everybody

has student loans and this is just

something you do to get ahead in life to

have a drink of alcohol you have to be

21 to take out $100,000 worth of debt

you can be 18 you can do that and I

definitely did not understand what I was

signing up for right that's a huge

burden to take on at 18 and that's

already a difficult age you can't

legally drink you can't stop fighting

with your mom who's being a total

and Leonardo DiCaprio keeps skullking

around your school why add the biggest

financial decision of your life to that

list one borrower said she barely

recognized her own childlike handwriting

on the forms that committed her to

Decades of debt and yet for many taking

it on can seem like the only rational

choice because so many careers are off

limits to anyone who hasn't been to

college even though 2third of

administrative assistants don't have

bachelor's degrees 3/4 of the new job

postings for administrative assistance

say you have to have a bachelor's degree

to be considered for that job so two3 of

the people who currently do that job

can't apply for 3/4 of the new jobs in

the field exactly a lack of a college

degree is a significant barrier to entry

for a lot of jobs and barriers to entry

make sense for some things like

practicing medicine or Guerilla

enclosures but requiring a degree for a

job that can be done without one makes

no sense at all and once you've taken

these loans on even those who can afford

the minimum payment can end up Treading

Water four years here's that woman you

just saw breaking down where her monthly

payments actually go so my total due for

this month

$77 74 what will be applied to the

principal

$645 so the principal is the total

amount of loan like actual money that I

actually took out what will be going to

the interest 600

4320 so my principal isn't going down my

debt isn't going down I'm literally just

paying the interest that is ridiculous

that $650 could clearly be much better

spent on the principal on her loan or

even to buy two cameos from Rudy

Giuliani every month and I I would prove

that to you by buying one but I do not

want to give that man any money so we

got one from Snookie instead who charges

around the same amount

hey Britney what's up mama it's your

girl Snookie and I cannot believe this

video cost half as much as your student

loan interest that's

up yeah it is thank you snooky thank you

very much and as those debts pile up it

is no wonder that for many with student

loans it can feel almost impossible to

plan for a future one of the things that

scares me is becoming a parent I just

got married last year

and my wife is on me like hey you know

I'm ready are you ready and so you know

one I would love to be a parent but then

I look at the the cost of uh child care

and I look at my student loan balance

and it's like then I'm still going to be

balancing do I make my student loan

payment or do I pay child care you know

and I don't want to default on my

student loans but at the same time if

I'm going to become a parent I want to

make sure that my child has the best

life possible and I just don't see how

that's possible with having a student

loan dead hanging over my head yeah

student loans shouldn't determine

whether you have kids it' be crazy if

something the government did influence

your decision to have a child or not

right right that would be crazy right it

would be absolutely crazy and let's

address who gets hit hardest here

because when many imagine the typical

borrower they are picturing the

caricature painted on Fox news or in ads

like this one attacking Biden's debt

relief plan want to be a struggle artist

college is on me my kids don't need

fancy things like school supplies or new

shoes I work for you theater major this

shift is for you business major go buy

yourself that new car enjoy your Free

Ride college is on me tell Congress stop

Biden's bailout for rich kids they're so

right stop paying for rich kids to study

theater what are they going to do with

that degree anyway star in a hack

political ad making fun of anyone who

studies theater go get a real job where

you touch a

wrench but about that bailout for Rich

Kids idea it gets tossed around a lot

when it comes to debt forgiveness which

is a little weird because Rich Kids tend

not to have student debt because their

parents tend to pay for their college

just like they tend to pay for lawyers

to make that thing with the car and the

cyclist go away and and people with the

highest loan balances are often current

on their payments because they may have

gotten Advanced degrees that allowed

them to earn more con verely those most

burdened by debt often have relatively

small amounts of loans that guy was

talking about putting off having kids

he's not in debt because he studied

theater he owes $30,000 from going to a

State University to study accounting he

took the exact path people like this guy

love to cream their chinos over and it

still him over in fact as of 2022

most student loan borrowers with

outstanding debt owed less than

$25,000 and having a smaller debt

doesn't necessarily mean it's easier to

pay off in fact borrowers with the least

debt often had slightly more difficulty

with repayment and that can be for

multiple reasons including that they may

have had to leave school before

finishing meaning they have all the debt

but no degree to show for it and it gets

even worse because increasingly it's not

just young people taking on student

loans that is thanks to yet another

Federal program called Parent PLUS which

allows parents to take out a student

loan on their child's behalf but these

loans are even riskier they have

effectively no income requirements and

no limit on borrowing and that means

there are increasing numbers of retirees

saddled with student debt on behalf of

their kids like this 80-year-old man

this is my son he graduated in 2008 from

Bridgewater College with a degree in

biology I didn't want him to be stuck

with having the debt that a lot of kids

have when they get out of college so I

assumed that loan the parent plus loan

that I took out was through the

Department of Education I think I

started in

2004 I'm still paying it and um

according to naviant I'll be done in

2040 you know what I kind of like about

that the slight laugh in his voice at

the end there that is the chuckle of a

man who knows he'll be dead long before

that loan gets paid back that is a man

laughing in the face of God and

government and death might actually be

the only option to get out from under

these loans because as we've discussed

before on this show student loans are

extremely difficult to discharge through

bankruptcy they're actually something of

an outlier in that regard as this

professor explains if I were to go uh

and lose all my money uh at the gambling

casino I can declare bankruptcy if I

were to you know be a criminal and do

some horrible thing I can declare

bankruptcy students are not allowed to

declare bankruptcy that is true and

while I appreciate the hypothetical

there it is a little hard to imagine

this guy blowing his life savings at a

craps table I'm just saying the very

fact that he called it a gambling casino

proves he has never been inside one so

this entire system seems practically set

up to drown people in debt but there is

one more player that we should mention

here and that is student loan services

you might know them by names like these

and if you know who these companies are

you probably hate them services

like these manage loans on the

government's behalf and in theory

they're supposed to help you navigate

the system but in practice they often

manage to make things much worse a

report found some companies have builded

people for the wrong amount given them

bad information and subjected them to

incredibly long hold times on the phone

with one borrower waiting

565 minutes to speak to a representative

and that incompetence is a real problem

because the government does have

programs to ease the burden of student

debt remember the ones that you saw Bill

Clinton described earlier where your

debt can be reduced based on income or

public service those actually do exist

but unfortunately the government

designed them in a very complicated way

and their implementation is in the hands

of these companies take this woman she

was enrolled in a program where after a

decade of Public Service her loans would

be forgiven she spent her decade serving

in the military and nine years in having

autoaid on time every month she assumed

she was nearly done but when she called

her servicer fed loan they told her that

she'd only been credited with one year

of payments so still had nine left and

when she asked why their response was

maddening the woman looked through my

account she say you may have an issue

that we know is an issue where the auto

deit takes the payment but one penny

short of what is actually due so it

doesn't count I submitted my case for

review and it sat in review for 3 years

and in the interim I was paying because

you're like okay well they're reviewing

it they're doing something but it the

review never 3 years later it was still

under review hold on we may have

undercharged you by one penny so the

payment doesn't count in no other

transaction would that be acceptable if

you buy a shirt that's $9.99 and the

store only charges you $9.98 the cashier

can either let it go or say you actually

still owe us one penny but at no point

would they be allowed to say sorry your

payment doesn't account give us $10

again and she's not alone a goo report

found that that loan forgiveness program

had a denial rate of

99% a similar thing happened with income

driven repayment plans which provided

that if your income was below a certain

level and you made 20 to 25 years worth

of payments your loan would eventually

be forgiven which sounds good but again

the program's mechanics were very

complicated and services things

up government reviews found that some

steered borrowers into something called

forbearance instead which basically hits

paws on your loan but allows interest to

keep accumulating that is exactly what

this woman says happened to her for

months now Julie Alysia has been

desperately trying to take control of

her mounting student loan debt it's now

in the tens of thousands and it's crazy

cuz I'm trying to pay but she says her

loan serer naviant is not helping she's

been trying to apply for an income-based

payment plan but instead the company

steers her towards a costly forbearance

and won't send the paperwork she needs I

requested income repayment program

assistance and I'm still waiting since

like early summer last year that is

absurd she's actively trying to make

this situation better and they're not

helping she's taking it so seriously

she's wearing a headset on the

news which I presume it's cuz she's

having to be on hold with navian every

waking moment of her life but

even if you manag to get enrolled in a

program progam and jump through all the

Hoops for two decades your servicer

still might screw it up an investigation

a few years ago found some Services

weren't clearly tracking borrowers

payments toward the program and had no

idea when borrowers qualified for

forgiveness which may help explain why

as of 2021 despite the fact that 2

million borrowers have been enrolled in

income based repayment plans for over 20

years only 32 had successfully canceled

their loans not 32% 32 people this

program has only worked for a single

season of Bachelor contestants and

honestly chocking it up to companies in

competence might be too generous here a

whistleblower who worked in customer

service at naviant has said that one

major metric employees were grant were

graded on wasn't how helpful they could

be to customers but how fast they could

get them off the phone part of our

training was keeping your calls to 7

minutes if I don't keep my call to 7

minutes I have a lower status at the end

of the day I'm considered not having

performed as well a few of my co-workers

said that there was just no way to

answer all of those questions in a way

that was satisfactory and maintain the

numbers that we were maintaining and so

they would be on their call and then

they would just press a button and go

oops wow oops that is not good and I

should say naviant denies putting time

limits on calls and also denies steering

customers into forbearance in fact they

have a whole statement here that

apparently I have to read you except

oops oh I dropped it it turns out you're

right navian it's so easy to

do now the good news is navian contract

with the government has since expired

unfortunately many of many of their

accounts were transferred to moila which

doesn't seem to be much better it was

recently found to have failed to send

billing statements on time to 2 and a

half million borrowers and over 800,000

were delinquent on their loans as a

result and when you take everything

you've seen tonight together it is

really hard to feel like this system

isn't rigged we've been you know told

workingclass people that as long as you

get an education then you will have job

prospects you'll be able to take care of

your family you'll be able to have a