[crowd cheering]
[narrator] At college graduation ceremonies,
students are often told that the wait is finally over…
You are moments away from graduating,
moments away from beginning your journey through life.
[narrator] …that they're now set up for success, ready for anything.
You are capable of greatness in your profession.
You will be ready for work, no matter what that work may be.
You are prepared to play… the game of life.
-The game of life. -The game of life.
[narrator] In the actual Game of Life, a classic board game,
the very first decision players make is whether or not to go to college.
To pay for it, you have to take out a loan, but that's fine.
Your degree gets you a higher-paying job,
you pay off your debts, no problem,
and you buy a house, get married, and fill your minivan with kids.
That's how it works in the game,
and for some people in the real world, too.
But for others, it doesn't go so smoothly or so quickly.
Student loans can set you up on a path of disappointment and dead ends.
It's supposed to be a good decision.
They think they're signing up for opportunity,
but in many ways they're signing up for debt.
One day, I logged in to check my student loan balance.
I clicked record and kind of captured the reaction I had.
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?
There's now more than $1.7 trillion of student loan debt,
with nearly 45 million Americans getting a student loan bill each month.
[narrator] Total student debt has tripled in less than 15 years.
Americans now owe more in student loans
than in auto loans or in credit card debt.
It's a crisis that we have to address.
[narrator] Why are so many people drowning in student loan debt
for years after they graduate?
And what can we do about it?
[narrator 2] Good education is good business.
We cannot meet the complexities of modern life
with outmoded school systems.
Do you think China's cutting back on education right now?
[man] People paying the price are young Americans,
some straddling thousands of dollars in student loans
they borrowed for a degree that doesn't lead to a job.
If you don't go to college, you might as well get a face tattoo.
I might be late to the game learning about this.
Student loans are really messed up.
[narrator] It all started back in 1957, when Earth got an extra moon.
That's what headlines called it,
though its Russian name was Sputnik.
It was about the size of a beach ball,
and it was hurled into space by a Soviet rocket.
[Soviet nationalist music plays]
Anyone with a halfway decent radio could listen to its faint bleating
as it raced around the globe.
[beeping]
The space race had begun.
Two months later, the US tried to launch their own satellite…
…with less success.
The Soviets were not above trolling their rival superpower.
They jokingly asked if the US was interested in receiving aid
earmarked for backward nations.
President Dwight Eisenhower addressed his nervous constituents.
My fellow citizens,
my subject tonight is science and national security.
One of our glaring deficiencies is the failure of this country
to give high priority to scientific education
and to the place of science in our national life.
[narrator] At the time,
less than eight percent of Americans had a bachelor's degree,
and most of those graduates were white and male.
Some went to expensive private schools.
Others attended public universities, where state funding kept tuition low.
But some people still couldn't afford it.
Student loans weren't really an option, because banks weren't interested
in handing out thousands of dollars to teenagers.
And so, in the fall of 1958,
Eisenhower signed the National Defense Education Act.
It created the first federal loan program
for students who were good at science, math, or engineering,
and who promised not to try and violently overthrow the government.
Everyone hoped that these students would one day help the US beat the Soviets
in their scientific Cold War.
A few years later,
President Lyndon Johnson expanded the program
by signing the Higher Education Act.
The act created a low-interest loan program for everyone,
not just science nerds,
and it provided grants that didn't need to be paid back for low-income students.
[Lyndon B. Johnson] This nation can never make
a wiser or a more profitable investment anywhere.
[crowd cheering]
[upbeat music playing]
[narrator] And that investment paid off.
[Ashley Harrington] This idea of America as the superpower that it is…
[Neil Armstrong] It's one small step for man…
[Ashley] …all of that begins with a workforce
and a society that's highly educated.
The federal investment in higher education
has opened more doors to more people of color,
to low-income people, to marginalized people.
A highly-educated population absolutely benefits everyone.
[narrator] When more people go to college,
there's less crime, less illness, and less dependence on welfare,
the kinds of things that cost the government money.
More Americans are choosing the college path.
A growing share of those students are relying on loans,
and the loans themselves are getting bigger and bigger.
The result? A country with an enormous pile of student debt.
It's easy to lay the blame on the cost of college.
It's true that sticker prices have been going up,
but most students pay much less.
Thanks to financial aid, the real cost of private school
has actually stayed flat for the past 20 years.
But the yearly cost of public schools,
where around three quarters of bachelor's degrees are earned, has doubled.
A lot of this is the result of the last recession.
[droning]
[news anchor] States continue to cut funds for higher education.
So as the budgets for states get tighter and tighter,
education is one of the first things to go away.
And so when that happened,
all of those costs were also shifted onto families.
[narrator] The federal government's investment in higher education
also hasn't kept pace with need.
Federal Pell Grants for low-income students
used to cover 79% of tuition, room and board,
but now they cover just 29%.
More and more people also are going to graduate school,
which federal grants don't cover.
And so how do you make that up?
A trillion dollars of student loan debt.
[narrator] The government used to give out roughly equal amounts of grants and loans,
but not anymore.
The federal government nationalized the student loans,
flooded the market with them,
encouraged young people to take them on.
I had managed to get through
all my undergraduate without student loans,
and then took out about 80,000 for law school.
[narrator] If she had a typical 10-year loan agreement,
she'd have to pay all that back, plus 31,000 in interest,
and her monthly payments would be over $900.
After I graduated, I was not making enough money to pay back my loans.
So I put my loans in deferment.
[narrator] That means she paused her payments,
but the interest kept adding up,
and in many loan agreements,
unpaid interest is added to the total amount owed.
So now Holly has to pay even more interest
because she's paying interest on her unpaid interest.
That extra 31,000 can easily balloon to more than the original loan.
So the plan was,
I'll get out and make a lot of money. Lawyers make a lot of money, right?
[narrator] College graduates can expect to make 76K a year,
but that's an average over their whole careers.
It takes 14 years to get there, and at first, they make much less.
Especially if they graduated in the wake of a recession.
There are a lot of people who have found themselves in an economy
where their education isn't really paying off.
The stress and the pressure of having all of that
has kept me from making plans for the future.
I honestly thought I was, kind of, getting ahead of the game a little bit,
and come to find out, I'm actually behind everybody now.
You look at this debt and go, "Well,
I don't know if I can have a family."
It has always felt oppressive.
I even, sometimes, didn't have quite enough to eat.
It certainly is a crisis in the individual lives of millions of people
whose prospects have been blighted by the debt they can't get away from.
It is the reason why so many 20-year-olds are living with their parents.
It is the reason I never became a homeowner.
It's the reason why so many young people are deciding not to start a family.
[narrator] Fifty years ago, if you graduated college,
you could probably afford to buy a house and raise a couple kids.
And while the wages of college grads have gone up since then,
housing and childcare costs have risen faster.
Add on student loan payments, and this life could slip out of reach.
People who don't go to college might avoid debt,
but they can end up in worse shape.
Fifty years ago, they could also afford a house and a couple kids.
But today, that's much harder.
Their wages are actually lower now.
The bottom has fallen out on non-college educated workers.
So you have to go to college in this economy.
But the only way you can pay for it is loans.
Is that a choice?
No, it's not a real choice.
It's-- It's a false choice.
[narrator] Colleges are in a pretty sweet position.
They have this essential product, and they can set whatever price they want,
knowing that people can take out loans to pay it.
Plus, they don't face many consequences if their graduates don't do well.
If you were trying to design a system to cost too much,
it would look pretty much like
the higher ed environment that we've operated on.
[narrator] And one particular type of school
has definitely taken advantage of this environment:
for-profit colleges.
I went to one of them right out of high school.
[narrator] These types of schools
need to make money to please their shareholders,
and so they tend to spend less on instruction
and more on advertising and recruitment.
There was a commercial… It's probably still on.
It was like, "One day, one night,
Saturday's all right."
♪ Online's just fine Nighttime, any time ♪
As a mother of two young children who's working two or three jobs,
the thing that I was interested in was, obviously, getting an education,
but trying to figure out how to manage it all.
[narrator] And for-profit colleges target exactly that kind of person.
[ad narrator] What if you could earn your bachelor's or master's degree
from a leading accredited university, while you're at home?
It worked around my schedule. Financial process was easy.
They'll work with you after work, or you can go before work. It's easy.
[Shaun] The recruiter, he just ran me down, like,
"Hey, what are you looking to do?"
"If I got my way, I want to do video game design."
He was like, "That's perfect. We have video game…"
No matter what I said, everything I said was "perfect."
So I was like, "They seem to really want me to be here,"
and I wanted to go somewhere where people wanted me to be.
These are institutions that target really vulnerable populations.
People who feel like they've been left out of traditional higher ed.
-They target low-income people. -I was a cashier.
[man] I was doing construction.
Working parents…
-A single mom. -A single father.
-…veterans… -[man 2] I did three tours in Iraq.
And they present this package of a great job or a great future.
They helped us get this great job.
He kind of went all into detail about
how they will help me get a job within the video game industry,
that they have a 100% job placement rate.
But come to find out, um, that wasn't it at all.
[chuckling] I didn't learn video games at all.
Less than eight percent of borrowers will go to a for-profit school,
but they represent nearly 30% of all student loan defaults.
[narrator] Defaulting is when you miss multiple loan payments.
The default rate is actually the lowest for people who owe the most.
They tend to have graduate degrees and higher incomes.
And its highest for the people who owe the least.
Many of them started a program,
often at a for-profit,
but weren't able to finish.
Altogether in 2019,
about one in 10 borrowers was in default.
That's millions of people.
And that number is expected to grow.
It has long-lasting and drastic implications for your life.
[narrator] Your credit score tanks,
and your entire balance comes due immediately.
The federal government has incredible collection powers.
They can garnish your wages, they can garnish your tax returns.
They will garnish your Social Security,
and since that, in a few years, is going to be my only income,
I can't afford to have that happen.
The federal government can literally collect on your student loans
all the way till you're in the grave.
[narrator] Default rates are also higher for people of color.
Almost a third of Black Americans who went to college a decade ago
have since gone into default.
Many of them come from families
where there hasn't been savings for college, like I did,
and many of them are having to work to support themselves and their family.
When you get into employment,
we know that Black people are paid less than their white counterparts
for the same job.
One of the most startling statistics I've heard
is that Black graduates are actually
more likely to default than white dropouts.
The student debt crisis is a civil rights crisis.
We see now how student debt drives income inequality,
drives racial inequality.
The very folks that this system was intended to help
are actually getting the worst outcomes.
[light applause]
[narrator] We've tried to fix this problem for generations now.
New rounds of policymakers come in and tweak the system in different ways.
For example, the US now offers income-based repayment plans
where you just pay a percentage of what you earn each month.
[Mitch Daniels] If life doesn't work out, the student doesn't get a job,
or the job doesn't pay much, you pay much less.
[narrator] But there are several versions of this program now, which is confusing,
with different rules, complicated paperwork,
and sometimes, loan servicers fail to tell borrowers that they even exist.
They would tell you if you knew to ask about it,
but they never offered that information.
And that caused me for years to go without income-based repayment
because I just didn't know it was available.
[narrator] So call your loan servicer and ask.
If it was easier for everyone to use these programs,
that would go a long way towards solving this crisis.
It works for some other countries, like Australia.
At Purdue University in Indiana, where Mitch Daniels is president,
they're trying out a kind of privatized version of income-based repayment called…
Income Share Agreements.
We think of it as earning your way through college after college.
[narrator] Purdue University and other investors,
including wealthy alumni and a hedge fund,
make a bet on students,
paying their tuition bills now in exchange for a share of their income later.
It shifts all the risk from the student to the investor,
and I think that schools of all kinds ought to be at risk somehow
if the degrees they're conferring
don't enable their graduates to do well in the world.
[narrator] But critics argue that these programs
are just a new, unregulated way for students to go into debt.
Moving to another loan product,
especially right now, when we're already in the midst of a student debt crisis,
really makes no sense.
[narrator] The government has tried to regulate colleges,
especially for-profit colleges, in other ways.
They sent undercover agents to investigate their recruiters,
sued a bunch of them for predatory lending,
and created a new rule.
[Ashley] The Gainful Employment rule simply said,
you shouldn't be charging more
than the graduate can expect to be able to repay back.
That simple.
[narrator] Eight hundred vocational programs failed to meet the standard,
and 98% of them were at for-profits.
Enrollment at for-profit schools, which had surged in the 2000s,
started to suffer from all the bad publicity.
And then…
The previous administration weaponized the regulation against schools
it simply didn't like.
This administration is committed to pulling back
the previous administration's overreach.
[narrator] With Secretary Betsy DeVos at the helm,
Trump's Department of Education scrapped Obama-era regulations.
In recent years, we've seen these common-sense rules being rolled back.
[narrator] And then the pandemic triggered a new recession…
[droning]
…which meant new problems for students and colleges.
But not all colleges.
We are seeing across-the-board losses in higher education enrollment,
but you know the sector that's growing?
The for-profit sector.
[overlapping dialogue]
[narrator] Political leaders have been arguing about
the state of higher education for decades,
and many of them went to college in the 1960s
and graduated without any debt.
But more and more people in the halls of power
do have personal experience with student loans.
As I am paying my student debt off,
you know, I'm going to be sending my daughter,
in less than a year, to college.
When I got in the Senate, I still had student loans.
There were months my loan payments were higher than our mortgage.
I literally made a student loan payment
while I was sitting here at this chair.
[narrator] Today, about one in six American voters have student debt,
and they're waiting to see what the people they elected will do.
The families I've talked to, the individual borrowers
are sitting around watching people point fingers at each other,
and they just really want help.
You want to really supercharge the economy?
Give-- Give me the shot that you give GM
and the airline industries and the one percent,
and all the tax breaks that Amazon and all these other companies get.
Give that to the students,
and let's see what happens.
[narrator] Joe Biden is now in the White House.
Does anybody think that 12 years of education is enough
in the 21st century to be in the middle class?
We should be thinking about getting a college education
in the same way that we think about
getting a K-through-12 education.
That's why I support debt-free and tuition-free college.
[narrator] That idea has become increasingly mainstream.
There are too many politicians today who support
the truly insidious notion of government gift-giving.
Make no mistake,
it is a socialist takeover of higher education.
Any time a politician uses the word "free,"
taxpayers should, uh, immediately button their… back left pocket.
[narrator] But one analysis found that while making public universities free
for lower-income students would cost tens of billions of dollars,
it would actually break even within a decade,
thanks to the boost in tax dollars from new graduates.
And for people who are already in debt,
Biden says he wants to wipe out at least some of it.
Studies have shown if you cancel student debt,
you can put $80 to $100 billion back into the economy every year.
You will watch the GDP rise.
Education is for the common good.
It is necessary in order for us not just to compete here, but to compete globally.
Any country that out-educates us is going to out-compete us.
[narrator] The Soviet Union may be gone,
but there are new space races,
and new frontiers of technology and innovation.
[Lyndon B. Johnson] It is the obligation of your nation
to provide every child born in these borders
all the education that they can take,
if we are to maintain our freedom in a highly competitive world.
[theme music plays]