Bernie needs to address the student loan problem

Sen. Bernie SandersBernie SandersSanders supporters up in arms over Puerto Rico polling locations Latinos key in Democratic battle for California delegates Clinton's ace in the hole: Obama MORE (I-Vt.) proved in Iowa that his campaign is for real.  But on the student loan issue, his agenda comes nowhere even close to his rhetoric.  Bernie is MIA, to this point, when it comes to the 44 million middle and lower-income citizens who are shouldering student loan debt on a scale the likes of which our nation has never before seen.

Sanders is pledging to make public college tuition-free for future college students.  This sounds great, and may even work for those who have yet to attend college, and don't vote.  However,  he is proposing almost nothing that would significantly affect those who have already been through school, have the debt to show for it, and do vote.  What he is proposing for these people is an extremely underwhelming refinancing plan (like Hillary Clinton's) that would lower interest rates slightly for existing borrowers.  Whatever nominal savings might be realized under these plans at today's low interest rates will be reduced further still- perhaps to nothing- by the time such plans were implemented.

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But let's be clear: it isn't the interest rates that people are worried about, It is the sticker price, and the fact that student loans have been stripped of nearly every standard consumer protection there is.  This has enabled a monstrous lending system with powers that would make a mobster envious to arise- one that is being run by both private banks and the federal government!  This is the problem, and this is what the presidential candidates must address if are to be taken seriously on this issue.

Sanders knows full well that the unique and unprecedented removal of standard consumer protections like bankruptcy rights, statutes of limitations, Fair Debt Collection Practice laws, and others have enabled a structurally predatory, and hyper-inflationary lending system to arise.  When he first came to Congress in 1990, the nation owed something like $50 billion in student loan debt. Sanders was there, in the House, when the 1998 amendments to the Higher Education Act, which made bankruptcy on federal student loans essentially impossible, were passed.

He was also there in 2005, when Sallie Mae, the Consumer Banker's Association, and others successfully convinced the Republicans in Congress to remove bankruptcy protections from private student loans- a move that the democrats vowed would be quickly reversed when they re-took the Hill. When he joined the Senate in 2007 (with the nation's student loan indebtedness now grown to $400 billion), Sanders had a front row seat as the Blue Dog Democrats turned their backs on the citizens and sided with the banks in killing legislation that would have done just that.

Today, nearly a decade later,  Sanders is now comfortably in his second term as senator, and the nation has added an astonishing $1 trillion dollars to its student loan balance since he was sworn in. Sallie Mae and other private student loan players are pinching themselves that they have been able to keep bankruptcy off the table for private loans for so long, and also continue to make obscene profits from defaulted federal loans. The Department of Education, which booked $50 billion in profit on the lending system in 2011 and also profits on defaulted student loans, fights bitterly behind the scenes, alongside the banks, and other lending interests,  to keep bankruptcy gone from student loans.

Of the 44 million borrowers now shouldering this massive debt, my best estimation is that something like 27 million are currently unable to make payments (they are in default, hardship forbearance, deferment, or otherwise delinquent). While very few of these voters would ultimately file for bankruptcy if it were returned, all of them feel the oppressive, predatory weight of the debt in the absence of this protection (which exists for every other type of loan). They are over a barrel, and to date, nothing that Hillary ClintonHillary Rodham ClintonSuperdelegate sees sexism in criticism of Clinton GOP senator: Did Clinton email setup play a role in Russian invasions? Latinos key in Democratic battle for California delegates MORE or any of the other candidates have proposed will help sufficiently to compel their support.

This issue screams out for Bernie, but to date he has remained ominously silent. To be blunt:  he has done some pretty snaky deals for the lending companies in his home state over the years, but to think that he would not seize upon the bankruptcy issue and fight for the citizens due to past, local ties to the industry is beyond the pale. That he would callously disregard these young people- and his stated principles of leveling the playing field, standing up to the banks, and so forth is simply not reconcilable.

Sanders is going to have a mighty struggle in the primaries going forward if Iowa is any indicator.  He will be fighting for every vote. He cannot afford to join Clinton in throwing these citizens under the “liberal limousine” as she appears prepared to do. 27 million voters is enough to turn a loss into a landslide, and vice-versa.

Sanders could easily vow to fight for the repeal of 11 USC 523(a)(8), the tiny piece of federal code that has caused this problem.  Tomorrow, he could sponsor a Senate companion bill for any one of 3 good bills currently in the house that would do just that.  But he had better be quick about it if he is serious about fighting for the citizens -- and winning the nomination.

Collinge is founder of StudentLoanJustice.Org and author of The Student Loan Scam (Beacon Press).

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