Will Brehm  0:19
Elizabeth Tandy Shermer, welcome to FreshEd.

Elizabeth Tandy Shermer  1:14
Thank you for so much for having me here. I’m really excited to be talking to you Will.

Will Brehm  1:17
So, can you tell me how the US government -the federal government, in particular- first got involved in financially supporting higher education?

Elizabeth Tandy Shermer  1:26
It’s funny because we have this sort of mythological idea about what we call the Morrill Land Grant Act, where it’s that we get these endowments for these state universities, I would argue for which the United States is actually the most famous for. Actually, you know, the 19th century, the selling of this land, and it’s really extraordinary. But what people don’t realize that was actually just the endowment. It doesn’t guarantee that the individual states that had these land grant universities would actually continue to fund them. And I want to say here that actually, there’s extraordinary work actually coming from a scholar at the University Cambridge history department: they now call them “land grab universities”, where these lands were violently seized. Little of it was paid for. And it’s an extraordinary digital project where you can actually now map and see how that land was taken. And also just how, there’s a lot less money than we thought was earned from it to set up the endowment for that. But that’s really all that you have with the exception of some research stations. It’s very poor support until you actually get to the Great Depression, and you have colleges and universities across the country on the precipice of bankruptcy. And the most important thing was the Roosevelt Administration, known as the New Dealers, the New Deal had no interest in bailing them out. And what they did instead was offer this very complicated tuition assistance program called work-study. And it seems very obvious, is that you will work so that you could study but the federal government paid students for work that they mostly did on campus that the campuses assigned to them. And it’s just this incredible, convoluted way. Again, my joke about the United States is you have to understand that if we’re going to do something, we’re going to do it as complicated as possible. As complicated as possible to deal with the nightmare that is American federalism. That balance of powers.

Will Brehm  3:24
Why is it complicated in your mind?

Elizabeth Tandy Shermer  3:27
For me, the question is: so, the reason it pays students to work so that they could study is that they could therefore pay tuition. And then also they would have the living expenses, they should also be able to pay their books. However, as the program actually worked in practice, most students actually didn’t earn enough from their work-study jobs in order to actually pay for all of that. Very few actually did, it still was an incredible lifeline and students really [seized it and it’s actually extraordinary what they did. But it would have been much more direct to just fund the colleges and universities so that they would not have to rely on tuition. And therefore, it would just had made things a lot less complicated, right? And actually, what people eventually recognized was that expanding higher education was actually good for the country and for a many different ways. And so again, what if we just fund this important institution. What we’re now recognizing as basic infrastructure so that Americans don’t have to pay out of pocket. Because when you make things so complicated, Americans spend a lot of time paying out of pocket for basic needs like healthcare.

Will Brehm  4:33
Back when FDR and his team of New Dealers were designing this program, why didn’t they just try and fund universities directly? Like why come up with this complex system?

Elizabeth Tandy Shermer  4:45
There’s a couple of reasons for that. One is I think a lot of surprising for people is that most academics didn’t want it flat out. They were afraid of federal control. And this also goes back to, the tradition had been in the United States that higher education -education in general- would be left to local governments, state governments and then of course, private organizations, including religious organizations. So, this was seen at a moment in time when there is actually a dramatic expansion of federal power, this was terrifying to some. And if you think about academics, I mean, if you have philosophers, if you have political scientists, these are men because it is mostly men at the time, who are deeply concerned about tradition, and all of this other kind of stuff. And that’s what was really terrifying to them. And also, I have to be honest, they were some of the Roosevelt administration’s sharpest, most outspoken critics. So, why would you directly fund your sharpest, most outspoken critics. And it takes a while. I need to admit that for the New Dealers to recognize the many uses of the university -and that’s actually an allusion to the very famous academic Clark Kerr who transformed the entire University of California system. That they had many profound uses. And there is a broad shift over time in the Roosevelt administration to recognize that importance. But they’re still hemmed to, how can we figure out a way to do this that is within this American tradition of federalism. It’s really more of a rebalancing of it. And also, there’s a very profound sense that relief should come in the form of wages for work done. That you can’t have this handout. And that’s something that’s so fundamental to it. It’s why so much of our basic rights in the United States are tied to -it really does go back to this New Deal era- tied to your place in the formal economy. You don’t get social security, you’re not contributing to it unless you’re in the formal economy. And it’s a really dramatic issue.

Will Brehm  6:42
It sort of takes this position of morality, right? It’s moral to be working. And if you’re not working, it’s immoral.

Elizabeth Tandy Shermer  6:48
Absolutely. But there is something very profound about that Protestant work ethic that, you know, is usually so connected in the United States. You do see these examples from it. Absolutely. Absolutely.

Will Brehm  7:00
The other surprising thing about thinking of work-study being proposed under FDR and some of the tensions that you discuss in your book quite in-depth, the political tension as they emerge. I had work study in 2000s when I went to university. And it’s like, oh my gosh, that system never went away!

Elizabeth Tandy Shermer  7:19
So, it is killed. It is dramatically killed in one of these political fights that I think one of the big things that I want people to take away from my book that is: political fights in Washington, and political paralysis in Washington are not new. Period, full stop. The parties have transformed. So, it is now more and more a divide within parties. But if any of your listeners have been watching what’s going on right now, the Democratic Party right now is a great example of actually the party’s being divided against themselves. But work study would then be revived right in the 1960s and that would be the program that you were in as well. And it does fundamentally sort of harken back to this idea that there should be no such thing as a free ride. And they do have this sense that this is an American way of doing things. That you work your way. And they’re contrasting themselves to Europe. All the time, all the time. That’s where you get handouts. Here in America, we work for our basic rights and privileges. And that’s something I think about all the time.

Will Brehm  8:13
FDR also had this program -I don’t think it lasted that long- called the National Youth Administration. How did that administration, or that program, envision supporting higher education? And was it different from the work study program?

Elizabeth Tandy Shermer  8:28
the National Youth Administration, the NYA, so work-study is actually initially a tiny little experiment. And the thing that I always tell everyone is that they have to remember that the New Deal was not one thing. It’s a lot of experimenting. Just try stuff. Just try, see what’s going to happen. And so work-study gets folded in pretty quickly once they create the National Youth Administration. But one of the things that I think is really powerful and profound about NYA is that it actually envisioned that youth would need support from 16 to 25, beyond actually education. And I put that out because here in the States right now, the idea is the pathway out of poverty is to education. And we had Michelle Obama during her husband’s term actually going around, saying all you need to do is fill out the FAFSA -and the FAFSA, listeners, is this insanely complicated financial aid form. It is over 100 questions. People who are lawyers and accountants have a hard time filling this thing out. But this is the idea. And it’s really a tragedy in my mind that in these moments in the 1930s and 1960s, when we had a broader sense of like, what it would take to have security and that a college degree could be one aspect. One aspect of broad support just keeps getting narrow and narrow. And then you just get to just having to borrow for college in the hopes of being able to compete for an increasingly elusive American dream. Which is why I called the book Indentured Students.

Will Brehm  9:53
During FDR’s administration and the New Deal, and some of the legacies that emerge out of the New Deal, did this financial aid that was directed towards students? Did it ever cover the costs of a university?

Elizabeth Tandy Shermer  10:07
No. And the thing about it is -that is actually one of the great tragedies. I’m glad you asked that- is a lot of times this tuition assistance, which is encouraging more people to enroll, it actually doesn’t necessarily cover the cost of it. So, actually what you see is tuition rates continually going up. And this is another thing that kind of drives me crazy is, Americans have this assumption that tuition has just recently exponentially increased. Actually, just because I can’t remember off the top of my head what it is in the 30s. But between 1950 and 1960, college tuition rates go up 90%. But it’s a much smaller rate. But I think that’s because, and it’s hard for people to understand is that it’s also at a moment when Americans aren’t quite paying as much out of pocket for basic needs like health care. We don’t actually have health care in this country for everyone. We have health insurance, which is not the same thing. There’s a way that one of the things that is interesting is that the federal government doesn’t actually break out the difference between household debt and nonprofit debt. So, they’re putting nonprofit organizations with household debt. And it is just dramatically increasing over the course of the 20th century. They don’t break that difference out until just before the turn of the millennium. And then they don’t start breaking out household debts between things like student debt until 2003. And then it gets even worse that they don’t actually bother to collect any real data on the student loan programs -the first one has started in 1958- until 2008. So, they had 50 years of not actually tracking in a real substantive way. So, it’s one of the challenges for me when I talked to social scientists who want data and I was like, but it doesn’t exist in the same way in the past. I know you want it to but it doesn’t, It’s really hard. And so the challenge is that you do actually see an increase in tuition in the 1930s. And it is linked that some students are having this tuition assistance. But it also is a reflection of like it costs money to expand. And American colleges and universities have a tradition of not charging what we call the full cost of instruction. And so, there’s a way that this federal support really focused on tuition assistance, doesn’t actually cover the need to expand the universities and colleges.

Will Brehm  12:23
So, how did the universities get the money they needed then to expand and to pay all their costs?

Elizabeth Tandy Shermer  12:29
The way that I think about is: it is a constant scramble for revenue. You just have to get your revenue. And the thing that is very challenging for even Americans to understand -the stark divides that we want to make between a public and a private university, or a nonprofit and a profit university, that’s actually a kind of an early 20th century, maybe late 19th century construction. And it doesn’t actually reflect the fact that colleges and universities have been scrambling to find revenue from the same mix of sources: students, state and local governments, and potentially federal, private business donations, private donations, student revenue. It’s all the same kind of mix. And people don’t recognize that. And so, it’s why it’s hard to make the distinction that people would want to make, particularly in the New Deal. The New Deal era really sort of hammers that division home even though it’s doing it at a time when even state schools need donations.

Will Brehm  13:23
What’s interesting is that in your book, you sort of show how, in a sense, crazy this public-private system of student aid is. And it was very clear to some people at the time that it was also crazy, right? And I’m thinking of George Zook, who had this Zook Commission and you’ve returned to this quite a few times in the book. How did he and this Commission sort of envision funding higher education in America?

Elizabeth Tandy Shermer  13:47
Thank you for asking about that. It’s something I hadn’t mentioned to you before we started the interview is actually, I cut a lot about this amazing Commission, this Zook Commission out of the book, because unfortunately, it had amazing ideas that didn’t go anywhere. It’s the 75th anniversary. And so, I’m actually a part of a special edition to tell the story of that in more detail. But what is interesting about it is, the idea was federally, robustly-funded public colleges and universities. Putting that money into colleges and universities, and actually seeing that this has to be done because of systemic racial, gender and class inequality. Period, full stop. He’s like, if you want democracy in this country, then you have to actually fund higher education and you have to have real equal access to it not just the opportunity but access. And one of the most profound things that they were talking about was making the first two years of college free and especially investing in what in the states we call community colleges. And the thing that’s interesting for me right now is we are debating. So, we’re talking in October of 2020. In this amazing infrastructure bill, like who knows what’s going to be in it that they’re talking about right now, is actually doing that. Is actually making community colleges across the country tuition free. It’s still not expanding the many number of it, but actually just reaching people at the community level for that first two years, which would in the states half the cost of instruction. But they also, with the Zook Commission, they also wanted to do scholarships as well. Not loans. Not loans. Because let’s think about it. A student loan is the worst financial product ever. I’m going to give you a loan for something that I can’t repossess. And if I could repossess it, I actually can’t sell it to someone else. And if I take it away from you, you’ll never be able to compete for the kind of job to pay me back. And your entire sort of worthiness of this loan for me to make this loan is contingent on an institution that is dependent on your tuition dollars. What a bad idea. And the New Dealers recognized that.

Will Brehm  15:46
But yet they still and we, America ,still embraced the idea of loans? Like how did that end up happening?

Elizabeth Tandy Shermer  15:53
There’s a joke in the US listeners about how the United States with its federal system, the states are 50 laboratories of democracy. And I was like, are you sure it’s not 50 laboratories of autocracy, because there’s just a lot of bad ideas out there. The states start experimenting with it. The northeast is really where it starts but it spreads into the Midwest. And its state governments that do not want to invest in higher education with a lot of private colleges and universities who also don’t want a public competitor. You know, if you have free -cos this is the thing, private universities and colleges are terrified of the Zook Report with the idea of free, low-cost quality education, because -it is a public competitor. That’s fundamentally what it was. And the states, US listeners, that’s what Obamacare, the so-called public option, that’s what it was supposed to be. It was supposed to be a low-cost competitor. And that’s actually how the New Dealers made it possible. They had low-cost utility competitor that brought rates down for electricity across the country because of the competition. And that was the idea. But so, you have states experimenting with it. And then it is just at the last minute, and it’s so heartbreaking. That’s what they change the undergraduate scholarship program to in the National Defense Student Education Act, and they change it from a grant program for undergraduates to a loan program on the idea that they have to work for this. And it just it does just open this Pandora’s box at the same time that states are experimenting with. And it’s wildly successful, because it is finally an option, a nationwide option, as opposed to seeing what colleges and universities might offer you.

Will Brehm  17:40
Because previously, colleges and universities would give out loans to some students?

Elizabeth Tandy Shermer  17:45
Yes, exactly. Some loans, some scholarships, all this other kind of stuff. So, there was a tradition in the United States of tuition assistance being some kind of strange mix. You might work on campus, you might have a little loan, you might have a scholarship. Very few colleges and universities had the money to give out loans. And it should make sense when I just explained how crazy the idea of a student loan is. Banks don’t really get into this. I mean, it’s the epitome of risky speculation. Some do. Tends to be a lot of philanthropies that do. But all of a sudden, you have this eagerness and this demand. It’s celebrated. And the thing is, it’s only supposed to be temporary. That’s a temporary piece of legislation. It’s a very famous piece of legislation that shows up in textbooks, but no one bothers to mention, in these US history textbooks, it was just supposed to be temporary,

Will Brehm  18:34
which legislation is this? Is it the National Education Defense…

Elizabeth Tandy Shermer  18:37
National Defense Education Act. Just supposed to be temporary. Just a temporary thing. People might note -so the graduate students do get a grant, if they’re studying something considered important for national defense. So, you actually then again, start like zeroing in on how some courses of study are more worthy than others. And that’s a whole different Pandora’s box. But then also, it’s only targeted support for certain departments in the university, and you have to compete for it. But the problem is that if you have a great Physics Department, that doesn’t help you build dorms for more students. That’s going to have to come through either donors, maybe you hope your state lawmakers are going to start investing in higher education, but it’s probably going to be fee increases.

Will Brehm  19:18
In the American psyche, in a way, the GI Bill is mythologized as being you know, this really high watermark when it comes to getting students into university at a reasonable cost. You sort of upend some of that mythology in a sense. I mean, so what’s the connection with the GI Bill to some of this longer history of why today, so many students are in your words indentured.

Elizabeth Tandy Shermer  19:42
Let me tell you the mythology first. The mythology first is: our greatest generation came home and they had the opportunity to go to college and they were amazing, and they overwhelmed it, and everyone realized that we had to invest in colleges and universities. that we needed this. Okay. Here’s what actually happened. Many people in Congress did not want to give the GIs education guarantees. Period full stop. They’re like, they don’t deserve it. They’re not going to be interested in it. This is not a good idea. They wouldn’t care. It gets worse, is academics were like, we don’t want them. And the famous one being University of Chicago’s Robert Hutchins, a man usually revered as one of the country’s great postwar liberals said that their giving GIs education benefits would turn colleges and universities into hobo jungles. That’s what he thought of who would later be considered an American lore of the greatest generation. That’s what he thought. And so, it’s a lot of political fighting and scrambling. And the terrifying thing is, is that it’s true. It’s amazing. 2.2 million GIs actually got their college degrees. But that’s out of 11 million. And the way that the program was constructed was that it didn’t actually -colleges and universities would get paid directly from the federal government for tuition. And soldiers got subsistence checks. The subsistence checks were intentionally kept less than really to make it possible for a person to live off of. And the idea was like, we don’t want them living high on the hog. These are people who’ve been through war. And so, a lot of the times, if soldiers could get in, because they completely overwhelmed colleges and universities. There’s not enough space. And particularly for soldiers of color, particularly for women. And there’s just not that if they get in, the main reason that GIs would drop out was because their subsistence checks didn’t arrive on time. Colleges and universities got paid on time, soldiers did not. And they could not afford to stay in school. And it really is this sort of heartbreaking story. And also, that despite the mythology of it, and the celebration of it, that is true. You still couldn’t get any of that Zook Commission’s amazing arguments for making the first two years free, for dramatically expanding the number of community colleges to make it more accessible, he still couldn’t get that through Congress.

Will Brehm  22:06
I mean, what’s interesting is a lot of these sorts of policies that get adopted either short term or long term in America, they are intended, at least rhetorically, to create equality or be open for so many different groups of people who might have been historically marginalized in America to gain access. But then yet, as these policies unfold, they sort of reproduce that same inequality that they were intended to try and reform.

Elizabeth Tandy Shermer  22:34
Absolutely. And it’s the difference between the idea of doing equal opportunities as opposed to actual equity. And I think that that just is a fundamental question. And I think one of the things that’s interesting to me now is -so, the GI Bill, there’s nothing in the GI Bill that says that an African American soldier can’t use it. Far from it, and not at all. And actually, one of the reasons for the Zook Commission to make such an emphasis on democracy in higher education and segregation, was because the incredible reporting of the African American GIs challenging. The Jewish GIs challenging the so-called quota system that really was keeping Catholics and Jews out of the Ivy League. African Americans also being kept out. But of course, the segregated colleges and universities in the South by law and those by practice elsewhere in the country as well. And so, there’s reporting on this. That this is an affront, right? People calling that this segregation in colleges is the principles of Hitler’s racist state. But what would it actually have taken to do that was a fundamental investment in the number of historically black colleges and universities, the schools willing to do it. And they’re not willing to do it. And what’s interesting now is we do actually have investment. There is actually investment, direct money targeted to what we now call MSIs (minority serving institutions) -sometimes there’s different names for them- and recognition that if you want to actually do this, you have to actually invest in these institutions. And it’s a long time coming. It took more than 50 years.

Will Brehm  24:06
It’s quite amazing. I mean, just to see how long some of these legacies can last with policies that, you said earlier, are supposed to be temporary but then sort of “roll the iron dice” so to speak.

Elizabeth Tandy Shermer  24:17
I also think about it too, is that like, you know, there’s this mythology about the GI Bill. So, right now, Michigan Governor and Michigan has been slammed by COVID. She said that she was going to do a GI bill for essential workers. So, Americans love this is. And we also love the New Deal. We’re gonna have a green New Deal. And it’s like, you guys should take a look at what the actual first New Deal did. Because it was actually built on excluding people from it. And the same with the GI Bill. And so, she wants to do a GI Bill for essential workers, which I think is great. But if it’s another GI Bill that shoves it through tuition assistance, what will that actually do for those who are essential?

Will Brehm  24:51
The essential workers that can’t afford food.

Elizabeth Tandy Shermer  24:53
Right, exactly.

Will Brehm  24:54
So, another name that sticks out when we think of the history of student aid in America, in higher education, is Sallie Mae. Can you tell us a little bit about what Sallie Mae is and how it came about, particularly the history of it?

Elizabeth Tandy Shermer  25:08
So, Sallie Mae is not actually a person, listeners. You might be confused. And she’s not Southern. Though you could definitely think of it by it. So, what happens with Sallie Mae is one of the key things that I want people to understand from this book is usually Americans are like, it’s so terrible about this student loan crisis. You know, it was a thing started with the best of intentions. Like no! Actually, it was the worst of intentions. They, instead of in the mid 60s, with this higher education, actually putting the money into directly investing into college universities, which are what the first three titles are for, what they did instead was put their political muscle and the money behind creating tuition assistance options, most importantly, being the loan program. They did it on purpose because what they wanted to do was use another financial product. And they modeled it off of how Americans revived their housing industry. In the 1930s, they came up with a mortgage program, which is where you can pay off after 30 years for a low interest locked in loan. And they’re like, we will just do that for student loans. That’s what we’ll do. It sounds like a great idea. Buying a house and paying for a college degree, those are two very different things. I can repossess a house, right. So, that was their idea. I know what we’ll do. We will intentionally create a student loan industry that will generate the tuition revenue, to fund higher education for its expansion. That’s their big plan. And you know who hated it? Bankers. Which I always think is really fun. Everyone wanted a book about big bad bankers. It’s like they certainly get bad but initially, they fought this. And then the thing is that bankers are not liking it. They were making money out of the state programs. There were some strange experiments that was going on actually in the nonprofit sector, they were going on. And then it’s kind of laggard, the student loan industry. Also, it’s hard to run. If you think about just the basic ways that a person applies for college, the financial aid officer says they’ll get a loan, but then you have to hope that a banker will issue a loan. So, it’s a messy, messy system. The only guarantee is the banker will be paid. So, there’s guaranteed student loan industry, the banker gets the guarantee. Just like the federal mortgage industry, the bank gets guaranteed that they’ll be repaid for the mortgage -not that you’re going to get a house. You know what works so well with the federal mortgage program? We created this secondary market for mortgages that Americans called Fannie Mae, where you can buy and sell housing debt. So, I know we’ll create Sallie Mae: student loan for Sally. And some of the coverage at the time is that -and it’s strange to me why they kept saying son of Fannie Mae goes to college. It’s like, Sally’s a girl’s name you guys. But that’s okay. So, it’s the 70s, you would expect. So, that’s what they did. They created Sallie Mae and basically Sallie Mae made buying and selling student debt and profiting off it a lot easier. And the key thing about this is that if you’re banker and you have in your portfolio, a bunch of government guaranteed student loans, that if that student cannot pay them off, and bankruptcy has been a problem since the beginning, you have a government guarantee. And so, you might start experimenting, as financial rules are being loosened throughout the 70s. You might start experimenting with private student loans because you can offset this very risky financial product by all these guaranteed student loans that you’re going to get repaid on. And then more importantly, because there was never the investment in college and universities at the high watermark that people thought but it kept steadily decreasing, the cost of education goes up so more and more people need private loans because there’s a cap on how much you can borrow through the federal government program. So, it just greases… As a quote I have in the book is one saying, “What was supposed to be a salamander soon turned into a revenue eating dragon”. And I call it the many-headed hydra. It’s really what it became.

Will Brehm  28:49
And now there’s something like $1.7 trillion of student debt.

Elizabeth Tandy Shermer  28:53
Yes. Yes. And I am one of the 45 million still paying this off. Absolutely.

Will Brehm  28:58
So, another thing that jumps out at me in your -you have such a detailed history of the politics across time. And you know, it’s almost like how something could have happened, but then this one little tweak of history, and then it sort of set us down this other track. And one of the points that you bring out was the death of Ted Kennedy, and how in 2010 we were almost at this moment of having this big reform of how we aid universities or the student loan industry in particular. And then Scott Brown gets elected and the Democrats lose their 60th vote in the Senate. Can you tell that story and what happened?

Elizabeth Tandy Shermer  29:38
Sure, and especially since like, I think the thing that people miss is the focus on the early years of the Obama administration was on Obamacare and health insurance. And I like to emphasize people, meds and eds are so deeply intertwined. And in this case of the United States, the two things the New Dealers were unable to do, was unable to include in their public-private financially-bragged Social Security net, health care and education. It is no wonder that those are the two things that Americans pay the most out of pocket for. Period, full stop. And they’re both, in the United States, deeply dependent on two financial products: student loans and health insurance. And health insurance is just a financial product, right. And so, all of a sudden, you have these two things, and also so much the medical research, so much of where Americans go for their health care, are university hospitals. They’re just so deeply intertwined. And so actually a big thing that Obama was pushing for in 2008 and on the campaign trail was not just Obamacare, it was not just the Iraq and Afghanistan wars, but student loans. And he and his wife are talking about how they had just paid off their student loans just a couple of years before they’re actually running. And the hope was to get the two things done before our midterm elections. And listeners, if you don’t know American politics, you basically have 18 months when you’re first elected president to try and do anything. That was the hope. And then it was a crushing blow for both Obamacare as well as the student loan reform because it is a war on Capitol Hill on both. Crushing blow when Ted Kennedy passed away. And then you have to go through basically, honestly, listeners, the only way that anything gets passed in the United States right now is through budget reconciliation. And we just have been limping from budget reconciliation to budget reconciliation because the federal system, the power of the Senate, the gerrymandering in the house, it’s just a nightmare. Everything hinges on getting the votes done. And it just becomes a way, through budget reconciliation, to kill the original guaranteed student loan program so the federal loans can now just directly from the federal government. And he did it. And Obama celebrates, it’s really very moving, killing two birds with one stone in one week. And everyone forgets that when he signed the law that actually enacted Obamacare, he did it at a community college. It’s actually where First Lady Dr. Jill Biden, that’s where she actually teaches. She’s there. He goes there and he signs the two of them into law and celebrates the two as deeply intertwined. But the hope was that it could have been so much more. And especially one of the great tragedies is that it didn’t wipe out any of the debt incurred from those guaranteed student loans. And then the banks that had grown huge and massive and fat, on the guaranteed student loans, they now service those loans for the federal government –

Will Brehm  32:30
-making a fee.

Elizabeth Tandy Shermer  32:31
Oh, yeah, everyone’s always making a fee. They’re always making a fee. And that’s exactly what’s kept them going. And I will say one of the things that we’re watching right now is a lot of these loan servicers -there’s more than eight of them- they’re now saying they’re not going to do it anymore. And it’s this incredible moment where we’re watching what are the possibilities? What does this mean? Especially as the Biden Administration -we were floored- did a dramatic shift in, you can get some of your loans forgiven for working in the public sector for 10 years. It was an incredibly convoluted program, which basically helped no one the way that it was written, the way it was enforced. And now all of a sudden, we might have our debt erased. And it is startling to see it happening.

Will Brehm  33:12
Do you think America would ever embrace direct funding to universities rather than going through this convoluted route of student aid?

Elizabeth Tandy Shermer  33:20
That’s a great question. And the issue that I think is really interesting about it is like the big thing, the tagline right now is cancel student debt. That is what the pressure is on the Biden Administration. Not just from progressive Democrats. Less talked about is what’s called the College for All Act, which would basically create these public competitors. But I think what’s interesting in terms of your question, it’s a great question, is there is something there because most Americans don’t know how stuff is paid for. I’m just putting that out there. It’s just a statement of fact. And as opposed to -I was very lucky, I used to live in the UK. I lived there for two years- that the British had a way of talking about they understood that their taxes went to something, that Americans don’t. But there’s some recognition now that with this community college paying for that, that this federal support for the community colleges could mean something. So, it might happen. I’m not sure. And it is a gradual shift in people not being able to shoulder the debt and being more outspoken about it. So, we shall see, in terms of recognizing what is worth the government’s investment.

Will Brehm  34:24
Elizabeth Tandy Shermer, thank you so much for joining FreshEd. It really was a pleasure to talk today.

Elizabeth Tandy Shermer  34:28
Yes, thank you for inviting me. I’m really excited to have this chance to talk about so many important issues.

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Related Guest Project/Publications

Indentured students: How government-guaranteed loans left generations drawing in college debt
Why massive forgiveness won’t solve the student-debt crisis
Financing security and opportunity: The new deal and origins of the Millenial student debt crisis

Indentured studenthood: The Higher Education Act and the burden of student debt

Mentioned
Morrill Act of 1862
Land Grab universities
The Great Depression
New Deal – Roosevelt administration
Work-Study Program
New Deal Programs
National Defense Education Act 1958
Federal Student Aid
Tuition costs of colleges and universities
Private versus private student loans
The President’s Commision on Higher Education – George Zook
Undergraduate Scholarship Program for Individuals from Disadvantaged Backgrounds
GI Bill
Critique of GI Bill
Robert Hutchins
Minority Serving Institutions (MSI) Program
Student Loan Marketing Association – Sallie Mae
Sallie Mae student loans: The heart of the crisis
Student loan debt crisis
Fannie Mae
Ted Kennedy’s College Cost Reduction Act of 2007
Obama’s Health Care and Education Reconciliation Act
Department of Education Direct Subsidized and Unsubsidized Loans
Federal student loan servicers
College for All Act
Higher Education Emergency Relief Fund (HEERF)
The protestant work ethic
How student debt worsens racial inequality

Related Resources
A true new deal for higher education

A history of income-contingent student loans in the US

Student Loan Debt Relief Act (2019)

Federal student loan servicing and the looming Federal student loan crisis 

Federal student loan servicing accountability and incentives in contracts
Alternative objectives of national student loans schemes
Credit supply and the rise in college tuition: Evidence from expansion in Federal Student Aid programs

Our Greedy Colleges (The Bennett Hypothesis)
The Bennett Hypothesis turns 30
Accounting for the rise in college tuition
Increasing servicer performance, transparency, and accountability before loan payments restart

Addressing the $1.5 trillion in Federal student loan debt
Racial capitalism and the Black student loan debt crisis

Advocacy Organizations
Student Debt Crisis Center
Debt Collective
Rolling Jubilee Fund
$50k and Beyond
Black Student Debt

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