Years after Toni Potter’s husband passed away from pancreatic cancer, debt collectors in her state of Washington were still relentlessly hounding her about his hospital bills.
Andrea Anderson, a young student in Oregon, has been saddled with $150,000 in college loans as she pursues her dream of becoming a social worker. She knows she’ll be paying the loans back for decades, threatening her other dreams of buying a home or starting a family.
Linda Mock of Idaho was trapped by a payday loan that quickly grew from the original $300 to more than $900 in interest alone. Trying to break free of the debt, she took out a title loan on her car and ended up losing her only transportation.
Family debt is no personal failing — it’s a national crisis. Even as unemployment declines, the debt crisis is holding back a full economic recovery and pushing more people into poverty.
That’s why President Barack Obama announced recently that he’s instructed the Department of Education and other federal agencies to do more to help borrowers afford their monthly loan payments.
It’s a step in the right direction.
But I’d urge him to go further and rein in the lenders, banks, and collection agencies that are profiting from Americans’ debt. It’s time to stop blaming borrowers and instead hold the financial interests that created the crisis accountable.
When hospitals give big price breaks to insurance companies but refuse to work with a widow struggling to make ends meet, something’s not right.
When a federal student loan provider charges young students nearly twice the interest it charges homeowners, something’s not right.
When payday lenders can get away with charging 300 percent interest on a short-term loan to a poor family just trying to fix their car so they can get to work, something’s not right.
The explosion of predatory lenders hurts families and siphons money out of local economies. There are more than two payday-lending storefronts for every Starbucks coffee shop in the United States.
Meanwhile, more than 70 percent of students who graduate with a bachelor’s degree leave school deep in debt. The average student loan debt totals almost $30,000 today, up from $19,000 a decade ago.
For many Americans, there’s no way out.
Student loans can’t be discharged in bankruptcy. Some states will take your driver’s licenses and professional certifications if you fall behind in your student loan repayment.
And if you can’t afford your legal fees, you could go to jail — just for being poor.
It’s time to break the shame around debt and start putting the responsibility for solutions where it belongs: on those profiting off struggling families.
That means placing fair caps on interest rates, ending predatory practices that push people further into debt, and creating a path out of debt for people who are struggling.
Recently, folks from different communities across the country came together for a national online conference, “Up from Debt,” hosted by my organization, the Alliance for a Just Society. People from Seattle to New York shared powerful and moving stories — not to gain sympathy, but to erase the stigma that further burdens families trapped in debt.
The Obama administration should investigate all forms of predatory lending, including student loans, payday loans, medical loans, mortgages, and credit cards. On the White House website, you can sign a petition asking the president to create a pathway out of debt so families can reclaim their futures.
Our children, our neighbors, our parents, the sick, and the struggling aren’t cash cows for bankers and lenders to milk. It’s time to demand solutions that help families move up from debt.