untitled

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Student Debt is a Civil Rights Issue:

The Case for Debt Relief and

Higher Education Reform

Dali´e Jim´enez* & Jonathan D. Glater †

For an ever-growing number of students aspiring to higher education, bor-

rowing is essential. Yet the burdens of indebtedness disproportionally harm

Black and Latinx students. Debt also undermines the meaning and effect of

higher education access, enabling many who borrow to reach the middle class

but still limiting possibilities relative to students who do not need to borrow or

who borrow less

—

students who are more likely to enjoy relative privilege. This

Article identifies ways in which student indebtedness works systematically to

disadvantage those students who belong to groups historically subordinated on

the basis of race, and thus provides more concrete historical and empirical

grounding for reforms that would improve accessibility of higher education. The

Article develops proposals for reform, including debt forgiveness and elimina-

tion of public institution tuition, to promote greater equity in access.

ABLE OF

ONTENTS

NTRODUCTION

.................................................. 132

I. E

DUCATION

CCESS AND

ACIAL

USTICE

................. 140

A. Higher Education Policy Choices Have Put Students of

Color Further Behind ................................ 141

1. Wealth and the “Choice” to Borrow .............. 142

2. Predatory Schools and the “Choice” of Post-

Secondary Institution ............................ 145

3. Wealth, Racism, and the “Choice” to Repay ....... 149

B. How We Got Here and Why We Need to Get Out ...... 155

1. Student Debt Crisis as a Case of Policy Drift ...... 156

2. Student Debt: A Threat to Democracy ............. 159

II. P

ATHS

ORWARD

........................................ 161

A. Hobbled Civil Rights Paradigm ....................... 162

* Professor of Law, University of California, Irvine.

†Professor of Law, University of California, Irvine. The authors are grateful for comments,

suggestions, and criticism of early versions of this Article from Sameer Ashar, Asli

U. Bˆali,

Swethaa Ballakrishnen, Susan Block-Liebb, Devon Carbado, LaToya Baldwin Clark, Beth

Colgan, Prentiss Cox, Sharon Dolovich, Blake Emerson, Stephen Gardbaum, Laura Gomez,

Mark Greenberg, Kaaryn Gustafson, Jasleen Kohli, Stephen Lee, Lynn LoPucki, Rachel Mo-

ran, Alexandra Natapoff, Frances Olsen, Jason Oh, Ted Parson, Keramet Reiter, Angela Riley,

Kate Elengold Sablosky, Joanna Schwartz, Seana Shiffrin, Alan White, and participants at the

Law & Society Household Finance CRN panel in Washington, DC and a UCLA faculty work-

shop. We are indebted to Sejal Singh, Lindsay Funk, and Jules Welsh for their excellent edito-

rial assistance.

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132 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

B. Bold

—

and Essential

—

Solutions ...................... 165

1. Debt Forgiveness ................................ 166

2. Revitalizing the Government’s Role in Higher

Education ....................................... 172

C. Helpful but Insufficient Fixes: A Consumer Protection

Paradigm ........................................... 178

1. Bankruptcy Reform .............................. 179

2. Other Reforms .................................. 187

ONCLUSION

.................................................... 197

NTRODUCTION

Student debt

plays an increasingly significant role in perpetuating the

subordination of Black and Latinx people in the United States.

For students

of color, who are disproportionately likely to lack financial resources, the

burden of debt undermines opportunity, deters some from pursuing higher

education entirely, and punishes those who pursue it. Black students are dis-

proportionately likely to borrow,

to borrow larger amounts,

to take out stu-

dent loans to attend for-profit schools

with worse career outcomes,

and to

Today, nearly 45 million Americans owe more than $1.6 trillion in student loan debt. See

Michael Stratford, Warren Promises To Cancel Student Debt Using Executive Powers, P

OLIT-

ICO

(Jan. 14, 2020), https://www.politico.com/news/2020/01/14/elizabeth-warren-cancel-stu-

dent-debt-executive-powers-098623. It is a growing crisis; the effects, discussed infra, include

delaying buying a home, getting married, or having children.

We focus our argument on Black and Latinx students because that is where the most

comprehensive, empirical evidence is available. There is every reason to think that American

Indian, Alaska Native, and some Asian American communities also suffer from the phenom-

ena we identify. One study that examined Asian communities in Los Angeles found that the

median net worth of people of Korean descent was less than 4% of that of people of Japanese

descent, for example. See Charmaine Runes, What’s Behind the Wealth Gap in Asian American

and Pacific Islander Communities?, U

. I

NST

.: U

. W

IRE

(May 10, 2018), https://www.ur-

ban.org/urban-wire/whats-behind-wealth-gap-asian-american-and-pacific-islander-communi-

ties, archived at https://perma.cc/NA59-Y6HU; see also Faircloth et al., Use of Large-Scale

Data Sets to Study Educational Pathways of American Indian and Alaska Native Students, in

CHOLARSHIP IN

RITICAL

UANTITATIVE

ESEARCH

, P

. 2 (Ryan S. Wells & Frances K.

Stage eds., 2015) (identifying and analyzing issues in using datasets to study educational out-

comes for Native peoples).

See Brandon A. Jackson & John R. Reynolds, The Price of Opportunity: Race, Student

Loan Debt, and College Achievement, 83 S

. I

NQUIRY

335, 345, 351 (2013). A recent analy-

sis found that Black students are more likely to borrow federal loans relative to White students

and that the odds of borrowing have increased over time. See Monica Chan et al., Indebted

Over Time: Racial Differences in Student Borrowing, 20 E

DUC

. R

ESEARCHER

558, 559 (2019)

(finding that Black students were 1.3 times more likely to borrow than White students in 2000

but that the odds had increased to 1.59 times higher by 2016). Latinx students show the oppo-

site trend. See id. (“[I]n 2000, Hispanic students had .83 odds of borrowing compared to

White students (1.2 times less likely). By 2016, this difference had grown to .67, with Hispanic

students 1.49 less likely than White students to borrow.”)

See Jackson & Reynolds, supra note 3, at 351.

These students disproportionately attend for-profit providers of postsecondary education.

See Sandra Staklis et al., Students Attending For-Profit Postsecondary Institutions:

Demographics, Enrollment Characteristics, and Six-Year Outcomes 6 tbl.1 (2011), https://

nces.ed.gov/pubs2012/2012173.pdf, archived at https://perma.cc/Y3KP-54RB. For-profit insti-

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2020] Student Debt is a Civil Rights Issue 133

default on their loans relative to their White peers.

Latinx students are less

likely to borrow than White students

but when they do, they borrow nearly

as much,

and like Black students are more likely to attend a for-profit insti-

tution

and more likely to default than White students.

Both Black and

Latinx students are less likely to complete a course of study than are White

students,

which significantly impacts their ability to repay loans. Unscru-

pulous for-profit institutions disproportionately target these communities of

color

—

historically excluded from higher education opportunities

—

and

scoop up an outsized share of federal student aid dollars.

The combination

tutions have worse outcomes. See, e.g., David J. Deming et al., The For-Profit Postsecondary

School Sector: Nimble Critters or Agile Predators?, 26 J. Econ. Persp. 139, 152–60 (2012)

(analyzing higher student loan default rates at for-profit institutions, the lower likelihood of

achieving a bachelor’s degree at such schools, and the heavier debt burdens borne by students

who attend them).

See Stephanie Riegg Cellini & Latika Chaudhary, The Labor Market Returns to a For-

Profit College Education 4–5 (Nat’l Bureau of Econ. Research, Working Paper No. 18343,

2012), www.nber.org/papers/w18343.pdf, archived at https://perma.cc/H7MK-C4RB (finding

that earnings for students of for-profit postsecondary colleges lag behind those estimated for

students of public community colleges and traditional four-year colleges).

See J. Fredericks Volkwein et al., Factors Associated with Student Loan Default Among

Different Racial and Ethnic Groups, 69 J. H

IGHER

DUC

. 206, 215 (1998).

Chan et al., supra note 3, at 559. One reason for the lower rate of borrowing among

Latinx students may be that students who would need to borrow are deterred by the prospect of

taking on debt from pursuing higher education; a separate study of aversion to borrowing

found evidence that Latinx students and their families are more averse to borrowing than are,

for example, White or Black students, based on borrowing rates among students who had at

least $2,000 in outstanding need. See A

LISA

F. C

UNNINGHAM

& D

EBORAH

A. S

ANTIAGO

, I

NSTI-

TUTE FOR

IGHER

DUCATION

OLICY AND

Excelencia in Education, Student Aversion to Bor-

rowing: Who Borrows and Who Doesn’t 23 fig.5 (2008), http://www.ihep.org/sites/default/

files/uploads/docs/pubs/studentaversiontoborrowing.pdf, archived at https://perma.cc/9LJH-

L84Y. Professor Kate Elengold Sablosky recently launched a project exploring “the relation-

ship between debt, achievement and equity in higher education” among Latinx students. See

UNC School of Law Receives $374,000 Grant from Lumina Foundation to Study Higher Edu-

cation Equity, UNC S

. L., (Oct. 3, 2019), https://law.unc.edu/news/2019/10/unc-school-of-

law-receives-374000-grant-from-lumina-foundation-to-study-higher-education-equity/,

archived at https://perma.cc/2ZZS-ECV7.

See Chan et al., supra note 3, at 560 tbl.1.

See U.S. Dep’t of Educ., Table 306.40, N

’

. E

. S

TAT

., (June 2018), https://

nces.ed.gov/programs/digest/d17/tables/dt17_306.40.asp?current=yes, archived at https://per

ma.cc/KR9S-232D.

See Judith Scott-Clayton, The Looming Student Loan Default Crisis is Worse than We

Thought, E

VIDENCE

PEAKS

., Jan. 10, 2018, at 7 fig.3, https://www.brookings.edu/wp-

content/uploads/2018/01/scott-clayton-report.pdf, archived at https://perma.cc/35LF-GCUK.

See U.S. Dep’t of Educ., Table 326.10, N

’

. E

. S

TAT

., (June 2018), https://

nces.ed.gov/programs/digest/d18/tables/dt18_326.10.asp?current=yes, archived at https://per

ma.cc/V6YM-DEPA.

See, e.g., U.S. Gov’t Accountability Off., GAO-11-4, For-Profit Schools: Large Schools

and Schools that Specialize in Healthcare Are More Likely to Rely Heavily on Federal Student

Aid 7, 16 (2010); Anna S. Chung, Choice of For-Profit College, 31 Econ. Educ. Rev. 1084,

1096 (2012) (finding that even when geographical location is held fixed, the for-profit student

population has a higher concentration of Black students); Deming, supra note 5, at 148 (“The

Title IV

—

eligible, for-profit sector receives the majority of its revenues from federal financial

aid programs in the form of loans and grants to their students.”); Gregory Gilpin & Christiana

Stoddard, Does Regulating For-Profit Colleges Improve Educational Outcomes? What We

Know, What We Don’t Know, and What We Need to Find Out, 36 J. Pol’y Analysis & Mgmt.

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134 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

of congressional action and inaction

that permitted student loans to become

the dominant federal intervention in higher education finance has proven an

ill-advised choice and one that has had a disparate, negative impact on stu-

dents who belong to racial and ethnic groups that have historically suffered

racial oppression.

On the other hand, in deciding to heavily subsidize

higher education through the tax code, Congress chose to disproportionally

benefit already advantaged groups.

Student lending is now the centerpiece of higher education financing

—

but that was not the intention expressed by the lawmakers who wrote the

Higher Education Act of 1965 (the “HEA”), which established today’s stu-

dent aid regime.

When lawmakers drafted the HEA and increased availabil-

ity of federal student loans, they spoke providing students with the

opportunity to pursue higher education,

to achieve their full potential re-

gardless of poverty, and to contribute to the wider national community.

942, 943 (2017) (reporting that, inter alia, “62 percent of for-profit two-year students had

federal loans, compared to only 17 percent of public community college students”); Stephanie

Riegg Cellini & Rajeev Darolia, The For-Profit Student Debt Dilemma, Brookings (June 23,

2016), https://www.brookings.edu/blog/brown-center-chalkboard/2016/06/23/the-for-profit-

student-debt-dilemma, archived at https://perma.cc/5P3F-CTVU.

The legislative history of the Higher Education Act of 1965 does not suggest that

lawmakers intended this result. See infra B. How We Got Here and Why We Need to Get Out

I.B. However, decades of failure to increase the purchasing power of federal grants to needy

students all but ensured that they would have to borrow to keep up with rising tuition. See id.

See M

ARK

UELSMAN

, D

EMOS

, T

EBT

IVIDE

: T

ACIAL AND

LASS

IAS

E-

HIND THE

“N

ORMAL

”

TUDENT

ORROWING

24–25 (2015), https://www.demos.org/

sites/default/files/publications/Mark-Debt%20divide%20Final%20(SF).pdf, archived at https:/

/perma.cc/NFL8-6REX (“[I]t seems clear from the data that the burden of paying off student

debt is taking away a sizeable portion of the ability to accumulate meaningful assets as work-

ers enter their prime earning years.”)

See Gabriel R. Serna, Reassessing the Role of Federal Aid Policy in Financing 21st

Century Higher Education for Underserved Groups: Recent Trends, Contemporary Problems,

and New Proposals, 48 J. S

TUDENT

. A

1, 5 (2019) (finding that “tax expenditures (val-

ued as tax offsets that presumably cost the government money) have risen tremendously and

‘remain an important mechanism for providing aid to higher income families’”). “In 2009, the

generosity of and eligibility for the [higher education] tax credits expanded enormously so

that their 2011 cost was $25 billion.” George B. Bulman & Caroline M. Hoxby, The Returns

to the Federal Tax Credits for Higher Education, 29 T

’

& E

CON

. 13, 13 (2015); see

also M

ARGOT

L. C

RANDALL

-H

OLLICK

, C

ONG

. R

ESEARCH

ERV

., T

MERICAN

PPORTUNITY

REDIT

: O

VERVIEW

, A

NALYSIS

AND

OLICY

PTIONS

. 11 tbl. 2 (2018) (finding that

slightly more than half of the tax credits used in 2015 went to families with income between

$50,00 to $200,000 while families making under $50,000 captured 49.2% of the credits).

Pub. L. 89-329, 79 Stat. 1219 (1965).

See, e.g., 147 C

ONG

. R

. 21933 (1965) (statement of Rep. Brademas) (“[The Act’s]

purpose is precisely what its name implies: a grant to provide an opportunity for an education

to those students who without such assistance would not be able to go on to college. . . . The

results of the Project Talent survey show that 130,000 low income young people in the United

States were not able to get admission to a college or university because they lacked the money

to do so. It seems to me this Nation cannot afford the loss of any talent represented by the

failure of otherwise qualified young people to obtain a college education.”)

See, e.g., 111 C

ONG

. R

. 27607 (1965) (statement of Sen. Morse) (“It is a most signifi-

cant forward step in opening the door to talent of young people whose economic circumstances

are such that without this aid they might never be able to attain their full potential of service to

our society.”)

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2020] Student Debt is a Civil Rights Issue 135

we take the drafters of the HEA at their word, they did not intend to perpetu-

ate racial and socioeconomic inequality through imposition of injurious debt.

But student loans are merely an inadequate attempt to promote access

to higher education, made late in a history of outright exclusion.

From the

perspective of indebted students of color, it matters little that the federal

student loan regime was not motivated by discriminatory animus.

The obli-

gation to repay student loans exacerbates racial inequality.

The data paints a stark picture of the student loans crisis. Twelve years

after enrolling, the typical Black student borrower owes more on their fed-

eral student loans than they initially borrowed, whether or not they gradu-

ated.

And not just a little more: the typical Black borrower owes 13% more

than what they borrowed more than a decade earlier; the typical Latinx

borrower owes 83% of what they initially borrowed.

In contrast, the typical

White student owes just 60% of their initial loan.

Some students simply

cannot repay their education loans: studies have consistently found that stu-

dents of color default at higher rates than White students and Black under-

graduates who borrow default most often.

Default can be financially

When lawmakers designed federal student aid programs, they did not emphasize the

goal of achieving racial equity. The focus was on putting higher education within reach of

poorer students. See, e.g., 1965 C

ONG

. R

. 21,880 (1965) (statement of Rep. Powell) (sup-

porting the Higher Education Act as a means to address “the most acute problem we currently

face . . . [which is] devising a way for the financially weak to hurdle the fiscal barriers to

obtaining a degree”).

Regardless of motive, all persons should have equal access to higher education. In the

Civil Rights Act of 1964, lawmakers mandated that “no person . . . shall, on the ground of

race, color, or national origin, be excluded from participation in, be denied the benefits of, or

be subjected to discrimination under any program or activity receiving Federal financial assis-

tance. 42 U.S.C. §2000d (2018).

See L

AURA

ULLIVAN ET AL

., S

TALLING

REAMS

: H

TUDENT

EBT

ISRUPTING

IFE

HANCES AND

IDENING THE

ACIAL

EALTH

4 (Sept. 2019), https://heller.brandeis

.edu/iasp/pdfs/stallingdreams-how-student-debt-is-disrupting-lifechances.pdf, archived at

https://perma.cc/6JJE-8U9X (noting that twenty years after beginning their degrees, “the me-

dian Black student borrower has $18,500 in loans remaining, while the median White borrower

holds just $1,000 in loans”); L

AURA

ULLIVAN ET AL

., D

EMOS

& IASP, L

ESS

EBT

, M

ORE

QUITY

: L

OWERING

TUDENT

EBT

HILE

LOSING THE

LACK

-W

HITE

EALTH

(2015), https://www.demos.org/sites/default/files/publications/Less%20Debt_More%20Equity

.pdf, archived at https://perma.cc/3U63-TPGD (finding that “[e]liminating student debt

among those making $50,000 or below reduces the Black-White wealth disparity by nearly 37

percent among low-wealth households, and a policy that eliminates debt among those making

$25,000 or less reduces the Black-White wealth gap by over 50 percent.”)

See Ben Miller, New Federal Data Show a Student Loan Crisis for African American

Borrowers, C

FOR

. P

ROGRESS

(Oct. 16, 2017), https://www.americanprogress.org/is-

sues/education-postsecondary/news/2017/10/16/440711/new-federal-data-showstudent-loan-

crisis-african-american-borrowers, archived at https://perma.cc/V3RG-VYPT.

See id. (emphasis added).

These numbers have worsened for all racial groups. Twelve years later, Black students

who entered college in the 1995–96 school year owed 101% of what they borrowed. See id.

Latinx and White borrowers owed 72% and 60%, respectively. See id.

Thirty-two percent of Black borrowers who entered college in the 2011–12 academic

year and had entered repayment in 2017 defaulted on at least one federal student loan; the

default rates for Latinx and White students were 20% and 13% respectively. See Ben Miller,

The Continued Student Loan Crisis for Black Borrowers, C

FOR

. P

ROGRESS

(Dec. 2,

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136 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

devastating and the effects linger, leading to the imposition of sizable collec-

tion fees,

wage garnishment,

interception of tax refunds, and getting in

the way of future efforts to use credit to advance in life.

In an economic

downturn the most heavily indebted students will suffer more

—

and they are

disproportionately Black and Latinx. Thus, while loans help many students

overcome financial barriers to access higher education, they are also mill-

stones around the necks of others, especially people of color.

Student debt contributes to racial subordination more subtly than out-

right exclusion. Sociologists Louise Seamster and Rapha¨el Charron-Ch´enier

coined the term “predatory inclusion” to describe this kind of “process

whereby members of a marginalized group are provided with access to a

good, service, or opportunity from which they have historically been ex-

cluded but under conditions that jeopardize the benefits of access.”

Their

article presents student debt as a paradigmatic example of predatory inclu-

sion.

Federal student loans dangle the opportunity of access to higher edu-

cation, but the ensuing debt undermines the benefits such education is

supposed to provide.

The size of the racial wealth

and wage

gaps in the

United States means that more Black students and families must borrow, and

2019), https://www.americanprogress.org/issues/education-postsecondary/reports/2019/12/02/

477929/continued-student-loan-crisis-black-borrowers/, archived at https://perma.cc/Z2M4-

N8QX; see also Jacob P. K. Gross et al., What Matters in Student Loan Default: A Review of

the Research Literature, 39 J. S

TUDENT

. A

19, 21-22 (2009); Jackson & Reynolds, supra

note 3, at 351 (analyzing data from the Education Department’s Beginning Postsecondary Stu-

dent survey and finding that “[n]ot only do black students face a much higher joint risk of

defaulting with no degree, they also encumber higher debt in every category”).

See infra note 116 and accompanying text.

This method of collection is authorized by statute. See 20 U.S.C. §1095a(a) (2009).

U.S. D

EPT

DUC

., What Are the Consequences of Default, J. F

. S

TUDENT

https://studentaid.ed.gov/sa/repay-loans/default#consequences, archived at https://perma.cc/

6A3D-FUSE (last visited Oct. 26, 2019) (describing consequences including reporting of de-

fault to credit bureaus and loss of future eligibility for federal student aid to pursue or continue

education).

Not least because repayment is often more difficult for students of color, who typically

earn less than White students. Eileen Patten, Racial, Gender Wage Gaps Persist in U.S. De-

spite Some Progress, P

. C

ENTER

(July 1, 2016), https://www.pewresearch.org/fact-tank/

2016/07/01/racial-gender-wage-gaps-persist-in-u-s-despite-some-progress, archived at https://

perma.cc/N7P6-SLJ3.

Louise Seamster & Rapha¨el Charron-Ch´enier, Predatory Inclusion and Education

Debt: Rethinking the Racial Wealth Gap, 4 S

. C

URRENTS

199, 199–200 (2017) (emphasis

added).

Id.

Jonathan D. Glater, Student Debt and Higher Education Risk, 103 C

. L. R

. 1561,

1588 n.126 (2015). And as Professor Abbye Atkinson has noted, debt can “becom[e] a means

of reverse interpersonal redistribution in which wealth is funneled out of already vulnerable

economic spaces and into the coffers of lenders, their investors, and the various other third

parties in the secondary debt market whose fortunes rest on the misfortune of these borrow-

ers.” Abbye Atkinson, Rethinking Credit as Social Provision, 71 S

TAN

. L. R

. 1093, 1104

(2019).

See Courtney E. Martin, Closing the Racial Wealth Gap, N.Y. T

IMES

(Apr. 23, 2019),

https://www.nytimes.com/2019/04/23/opinion/closing-the-racial-wealth-gap.html, archived at

https://perma.cc/X6U5-W8A6.

See Patten, supra note 30.

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2020] Student Debt is a Civil Rights Issue 137

borrow more, to pay for higher education.

This problem has worsened in

the last few decades, as tuition and fees have increased,

but neither grant

aid

nor family incomes

have kept pace. To ignore these differences in

socioeconomic circumstances is to do exactly what Lyndon Johnson warned

would be an inadequate measure to address inequity: to “take a person who,

for years, has been hobbled by chains, bring him up to the starting line of a

race and then say, ‘you are free to compete with all the others,’ and still

justly believe that you have been completely fair.”

In fact, the failure to

account for economic inequality along lines of race has meant that those

once hobbled by chains are in fact a long way behind the starting line when

the race begins.

The phenomenon of racial oppression by debt is not new.

In the

United States, debt has been used to oppress Black people in particular

throughout the nation’s history.

The fight against debt and economic ine-

See Chan et al., supra note 3 at 560, tbl.1.

See C

OLL

. B

., T

RENDS IN

OLLEGE

RICING

2018 12 (2018), https://research.college

board.org/pdf/trends-college-pricing-2018-full-report.pdf, archived at https://perma.cc/T234-

MZKV.

UZANNE

ETTLER

EGREES OF

NEQUALITY

: H

OW THE

OLITICS OF

IGHER

DUCA-

TION

ABOTAGED THE

MERICAN

REAM

52 (2014) (“In the 1970s, soon after Pell grants were

established as part of the [Higher Education Act of 1965], the value of the average grant

actually surpassed that of tuition at a four-year public university, providing enough to assist

with room and board”).

OLL

. B

, supra note 37; see also Atkinson, supra note 33, at 1100.

President Lyndon B. Johnson, Commencement Address at Howard University (June 4,

1965) (transcript available in the Lyndon B. Johnson Presidential Library), http://lbjlibrary.net/

collections/selected-speeches/1965/06-04-1965.html, archived at https://perma.cc/6WAV-

L8C3. President Johnson’s full quote is as follows:

You do not wipe away the scars of centuries by saying: Now you are free to go

where you want, and do as you desire, and choose the leaders you please. You do not

take a person who, for years, has been hobbled by chains and liberate him, bring him

up to the starting line of a race and then say, “you are free to compete with all the

others,” and still justly believe that you have been completely fair. Thus it is not

enough just to open the gates of opportunity. All our citizens must have the ability to

walk through those gates.

See D

AVID

RAEBER

, D

EBT

: T

IRST

5,000 Y

EARS

351–52 (2011) (describing the

relationship between wage labor, slavery, and sovereign debt).

Lenders have historically refused to extend credit to Black people. See Charles Nier,

The Shadow of Credit: The Historical Origins of Facial Predatory Lending and Its Impact

Upon African American Wealth Accumulation, 11 U

NIV

. P

ENN

. J.

L. & S

. C

HANGE

131

(2007). This practice, known as “redlining,” has its origins in New Deal programs that dis-

criminated against African Americans explicitly. Id. at 175-85. In later years, redlining

prompted federal lawmakers to act on more than one occasion. The Equal Credit Opportunity

Act, Pub. L. 93-495 § 501 et seq. (1974), initially prohibited discrimination by creditors on the

basis of sex or marital status and was amended two years later to extend the prohibition to

apply to race, color, religion, national origin, or age. Pub. L. 94-239 § 701(a) (1976). The

Community Reinvestment Act required financial institutions to extend credit in local commu-

nities in which they were chartered to operate. Housing and Community Development Act,

Pub. L. 95-128 §§ 801, 802(b) et seq. (1977). Lenders have also charged Black people higher

interest rates. See, e.g., Ping Cheng et al., Racial Discrepancy in Mortgage Interest Rates, 51 J.

EAL

. F

. & E

CON

. 101, 118 (2015) (discussing interest rate disparity for home loans);

Kerwin Kofi Charles et al., Rates for Vehicle Loans: Race and Loan Source, 98 A

. E

CON

. 315, 315–19 (2008) (discussing interest rate disparity for auto loans); Mark A. Cohen,

\\jciprod01\productn\H\HLC\55-1\HLC103.txt unknown Seq: 8 2-SEP-20 10:38

138 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

quality has deep

—

but often erased or ignored

—

roots in the struggle for ra-

cial justice.

The financial position of Black Americans is the product of a

lengthy history that implicates government action at almost every turn, be-

ginning with slavery. Mortgages and collateralized bonds were created as a

way for slave owners to generate capital.

After the Civil War ended, em-

ployers paid low wages and governments imposed high taxes that dispropor-

tionately affected Black workers, forcing them into labor relationships of

debt bondage.

As W.E.B. Du Bois put it in his history of the Reconstruc-

tion era, “[i]t was the policy of the state to keep the Negro laborer poor, to

confine him as far as possible to menial occupations, to make him a surplus

labor reservoir and to force him into peonage and unpaid toil.”

After Re-

construction, the government excluded Black citizens from holding property

and land grants,

originating the practice of “redlining” in housing markets

to keep Black and Latinx citizens in poorer, racially isolated neighbor-

Imperfect Competition in Auto Lending: Subjective Markup, Racial Disparity, and Class Ac-

tion Litigation, 8 R

. L. & E

CON

. 21, 31–33 (2012) (discussing interest rate disparity for auto

loans); Devin G. Pope & Justin R. Sydnor, What’s in a Picture? Evidence of Discrimination

from Prosper.com, 46 J. H

. R

ESOURCES

53, 53–55 (2011) (finding that Black applicants

were 25–35% less likely to receive funding and were charged interest rates sixty to eighty

basis points higher than White applicants with similar profiles); Chad Bray, U.S. Sues N.Y.

Mortgage Firm Over Predatory Practices, W

ALL

. J. (Apr. 2, 2012), https://www.wsj.com/

articles/SB10001424052702304750404577320211217666588, archived at https://perma.cc/

89YB-8EXE (discussing interest rate disparity for mortgage loans).

More recently, race discrimination lawsuits filed by the federal Department of Justice in the

wake of the financial crisis that began in 2008 resulted in multimillion-dollar settlements by

large financial institutions that the Department accused of charging Black and Latino home

loan borrowers higher interest rates than comparably placed White borrowers. See Michael

Corkery, J.P. Morgan to Pay $55 Million to Settle Mortgage Discrimination Complaint, N.Y.

IMES

, Jan. 18, 2017, at B3; Charlie Savage, Countrywide Will Settle a Bias Suit, N.Y. T

IMES

Dec. 22, 2011, at B1; Charlie Savage, Wells Fargo Will Settle Mortgage Bias Charges, N.Y.

IMES

, July 13, 2012, at B3.

The Rev. Martin Luther King, Jr. came to champion economic justice through fighting

racial oppression; indeed, the march he was organizing when he was gunned down in Mem-

phis, Tennessee, challenged poverty and economic rights. See T

AYLOR

RANCH

, A

ANAAN

’

DGE

: A

MERICA

N THE

ING

EARS

, 1965

—

1968, 689 (2006); Trina Jones, Occupying

America: Dr. Martin Luther King, Jr., the American Dream, and the Challenge of Socio-

Economic Inequality, 57 V

ILL

. L. R

. 339, 341 (2012).

See Bonnie Martin, Slavery’s Invisible Engine: Mortgaging Human Property, 76 J. S.

EGAL

IST

. 817, 818 (2010); Louise Seamster, Black Debt, White Debt, 18 C

ONTEXTS

30, 31

(2019) (“Mortgages, after all, were first created to subsidize the slave trade.”); Edward E.

Baptist & Louis Hyman, American finance grew on the back of slaves, E

MPERIO DE

ALI-

(Mar. 7, 2014), https://norbertobarreto.blog/2014/03/14/american-finance-grew-on-the-

back-of-slaves, archived at https://perma.cc/5WU3-XXHM; Eric Herschthal, How Slavery

Gave Capitalism Its Start, D

AILY

EAST

(Apr. 24, 2015), https://www.thedailybeast.com/arti-

cles/2015/04/24/how-slavery-gave-capitalism-its-start, archived at https://perma.cc/6RVW-

7A9Z.

See W.E.B. Du Bois, Black Reconstruction in America: An Essay Toward a History of

the Part Which Black Folk Played in the Attempt to Reconstruct Democracy in America,

1860–1880 570 (2007); see also Richard Rothstein, The Color of Law: A Forgotten History of

How our Government Segregated America 154 (2017) (describing a ”sharecropping system of

indentured servitude [that] perpetuated aspects of the slave system”).

OIS

, supra note 45, at 570.

See Mehrsa Baradaran, The Color of Money: Black Banks and the Racial Wealth Gap

16–18 (2017).

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2020] Student Debt is a Civil Rights Issue 139

hoods.

Discrimination in a litany of other government programs hindered

access to home ownership and the related benefit of wealth accumulation.

We believe that we write at a moment of potential opportunity. The

burden of student indebtedness and the folly of pushing the cost of higher

education onto students who struggle to bear it garnered increasing popular

attention as outstanding student debt increased in the new millennium. As

we write this, candidates vying for the Democratic Party presidential nomi-

nation are staking out bold positions on higher education finance, addressing

both the vast pool of outstanding debt and the need to support current and

future students.

While the prospects of these proposals for federal reform

are poor if the Democratic Party does not seize control of Congress and

uncertain even if they do, individual states are also taking steps to reduce or

eliminate the cost of higher education.

Whatever the fate of any particular

initiative, the popular support of proposals that materialized over less than a

decade is evidence of a dramatic change in attitude toward higher education

finance.

In this Article, we marshal research undertaken by regulators, econo-

mists, and legal scholars who have studied the impact of debt to illustrate

why education debt is so pernicious. In Part I, we lay the groundwork for our

argument that student debt is an instrument of racial oppression. We catalog

the ways in which the present system of funding higher education hinders

resource-poor students, analyzing the false “choices” presented to students

of color in particular. Part I provides historical background, explaining how

See Rothstein, supra note 45, at 154–55.

Id. at 58–67.

See Senators Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) have both proposed

plans that would eliminate tuition at public universities and cancel all or at least a substantial

amount of student loan debt. College for All and Cancel All Student Debt, B

ERNIE

ANDERS

COM

, https://berniesanders.com/issues/college-for-all/, archived at https://perma.cc/ZPH5-

9WTL (last visited Oct. 26, 2019); Elizabeth Warren, I’m calling for something truly trans-

formational: Universal free public college and cancellation of student loan debt,

MEDIUM

(Apr. 22, 2019), https://medium.com/@teamwarren/im-calling-for-something-truly-trans-

formational-universal-free-public-college-and-cancellation-of-a246cd0f910f, archived at

https://perma.cc/S2UQ-NQFU.

See, e.g., David W. Chen, Free Tuition? Tennessee Could Tutor New York, N.Y. T

IMES

May 14, 2017, at A1 (describing Tennessee’s Promise program that seeks to fill the gap be-

tween federal students aides and the tuition at community colleges or colleges of applied tech-

nology); Lisa W. Foderaro, Free Tuition in New York Adds Powerful Pull at Decision Deadline,

N.Y. T

IMES

, Apr. 30, 2017, at A1 (describing New York State’s Excelsior Scholarship pro-

gram, which offers free tuition at a state’s two- and four-year publicly funded schools); John

Myers, California Gov. Gavin Newsom Has Signed His First Budget. Here’s Where the $215

Billion Will Go, L.A. T

IMES

, June 27, 2019, at A4 (explaining that the new California state

budget will enable lower tuition costs and competitive Cal Grant awards for more students and

provide additional help for low-income families and students with children); Simon Romero &

Dana Goldstein, New Mexico Announces Plan for Free College for State Residents, N.Y.

IMES

, Sept. 18, 2019, at A14; Emily S. Rueb, Washington State Moves Toward Free and

Reduced College Tuition, With Businesses Footing the Bill, N.Y. T

IMES

, May 10, 2019, at B4

(describing Washington’s 2019 Workforce Education Investment Act which aims to provide

free or reduced tuition for lower- and middle-income students attending community colleges

and public institutions).

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140 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

the current federal student aid system came into being and analyzing how

federal interventions in higher education finance have disparate, negative

effects on members of historically excluded and currently underrepresented

populations in or seeking higher education. This discussion also highlights

the special role of education in a democracy and the importance of ensuring

that this societal resource is equitably available.

In Part II, we propose possible solutions to the deepening crisis of stu-

dent borrowing and debt. We first explore the possibilities and limits of re-

course to a traditional civil rights model focused explicitly on racial equity

and identify the ways that the promise of this path has been undermined in

law and doctrine. We then develop an alternative road map to broad, sweep-

ing, socioeconomically egalitarian reforms that are facially race-neutral, but

would disproportionately benefit members of historically subordinated

groups

—

either through expanded public support of state colleges and uni-

versities or through vastly increased, means-tested aid. Either of these paths

would ensure the availability of higher education opportunity without impos-

ing potentially crippling repayment burdens on students and would dispro-

portionately benefit Black and Latinx students. Finally, we address more

modest reforms based on a consumer protection paradigm, including making

bankruptcy relief more available to struggling borrowers, expanding loan

forgiveness programs for graduates who pursue public interest careers, and

making other, specific changes to existing laws and regulations.

Our hope is that by diagnosing the problems student borrowing creates

and by describing these possible paths forward, we will prompt and inform

discussions among lawmakers who wish to fight education debt for current

and future generations of students. We hope to serve of the larger goal of

equitable access to higher education opportunity

—

to make “the myth of

higher education for all into vivid, democratic reality.”

I. E

DUCATION

CCESS AND

ACIAL

USTICE

Education is often touted as the “gateway to the middle class.”

For

centuries, that gate was closed to African American and Latinx students.

We are indebted to Professor Elengold for this frame. Kate Sablosky Elengold, Con-

sumer Remedies for Civil Rights, 99 B.U. L. R

. 587, 593 (2019) (discussing the extent to

which consumer protection doctrine provides a remedy for certain forms of discrimination).

1965 C

ONG

. R

21,880 (1965) (statement of Rep. Powell).

John Immerwahr & Tony Foleno, Great Expectations: How the Public and Parents

—

White, African American, and Hispanic

—

View Higher Education, P

UBLIC

GENDA ET AL

. 10

(2000), https://files.eric.ed.gov/fulltext/ED444405.pdf, archived at https://perma.cc/YSE7-

5HLQ (“[H]igher education has replaced the high school diploma as the gateway to the mid-

dle class.”)

See, e.g., W

ILLIAM

ARITY

ET AL

., S

AMUEL

OIS

OOK

ENTER ON

OCIAL

Q-

UITY

, W

HAT

RONG

BOUT

LOSING

ACIAL

EALTH

6 (2018) https://

insightcced.org/wp-content/uploads/2018/07/Where-We-Went-Wrong-COMPLETE-REPORT-

July-2018.pdf, archived athttps://perma.cc/W97R-59RV; Abbye Atkinson, Race, Educational

Loans & Bankruptcy, 16 M

ICH

. J. R

ACE

& L. 1, 1–5 (2010); Darrick Hamilton & William A.

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2020] Student Debt is a Civil Rights Issue 141

Today, on paper, the law promises students of color equal access to educa-

tion

—

yet many students of color find that, in practice, the harsh realities of

higher education financing shut them out of opportunity.

Today, debt and access to higher education

—

two historically signifi-

cant tools of societal exclusion

—

are closely intertwined. While debt puts

higher education within reach, it also limits opportunities for members of

subordinated groups, effectively restricting access to higher education by

discouraging and burdening borrowers. The necessity of borrowing shuts

marginalized people out of both the opportunity to learn and opportunity to

secure the benefits of higher-earning jobs, prestige, the possibility of wealth

accumulation to the benefit of their children, and the greater likelihood of

assuming a leadership role in society.

This Part analyzes the disparate impact of current federal policy in

higher education finance, analyzing the false choices available to aspiring

students. It then provides historical context for these disparities to argue that

the disparate harms of student debt constitute a matter of great civil rights

concern because education plays a special role in our democracy. As we

argue in section B, this disparate effect of student debt ought to be addressed

by law.

A. Higher Education Policy Choices Have Put Students

of Color Further Behind

In the United States, economic inequality is inextricably tied to, shaped

by, and maintained through racial subordination.

People of color, espe-

cially Black and Latinx students and their families, disproportionately lack

Darity, Jr., The Political Economy of Education, Financial Literacy, and the Racial Wealth

Gap, 99 F

. R

. B

ANK OF

. L

OUIS

. 59, 60 (2017), https://files.stlouisfed.org/files/

htdocs/publications/review/2017-02-15/the-political-economy-of-education-financial-literacy-

and-the-racial-wealth-gap.pdf, archived at https://perma.cc/HJ26-GGH7; Jackson & Reynolds,

supra note 3, at 335–368; Seamster, supra note 44, at 35; Raj Chetty et al., Mobility Report

Cards: The Role of Colleges in Intergenerational Mobility 1–3 (Nat’l Bureau of Econ. Re-

search, Working Paper No. 23618, 2017), http://www.nber.org/papers/w23618.pdf, archived at

https://perma.cc/C3KY-5PNG.

Unfortunately, only imperfect data is available because the Department of Education

does not regularly collect race data on borrowers “except in irregular sample surveys con-

ducted by its quasi-independent statistical arm.” Miller, supra note 23; see also Stella Min &

Miles G. Taylor, Racial and Ethnic Variation in the Relationship Between Student Loan Debt

and the Transition to First Birth, 55 D

EMOGRAPHY

165, 167 (2018) (noting that the ED “does

not regularly collect information concerning race on administrative forms”). Nevertheless, in-

dependent researchers have extensively delved into this issue and their research paints a grim

picture. See Part I.A., infra.

See infra Part II.0. Cf. Wade Henderson, The Student Loan Debt Crisis is a Civil Rights

Issue, A

MSTERDAM

EWS

(Mar. 7, 2018), www.amsterdamnews.com/news/2018/mar/07/stu-

dent-loan-debt-crisis-civil-rights-issue/, archived at https://perma.cc/X9N7-2YYQ.

See M

ONICA

RASAD

, T

AND OF

UCH

: A

MERICAN

BUNDANCE AND THE

AR-

ADOX OF

OVERTY

42 (2012) (describing how race “as economic interests” shaped political

institutions which, in turn, affected economic opportunities); see also Rothstein, supra note 45,

at 178–79 (describing how denial of equal access to housing and labor markets perpetuated

racial inequality across generations); discussion supra I.B.2.

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142 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

the financial resources of White and some Asian American people, so the

necessity of borrowing disproportionately burdens them.

In addition, lax

oversight from the Department of Education has enabled wrongful conduct

by for-profit colleges that deceptively target poor communities and commu-

nities of color, offering them educational services of poor quality

in ex-

change for federal dollars that students borrow and then must repay. Student

loans may not be directly predatory, but they enable predation.

The likelihood that Black students will borrow has increased relative to

White students since at least the year 2000. Repayment burdens dispropor-

tionately hamper Black students,

frustrating progress towards ending the

racial wealth gap. In the same time period, the likelihood that Latinx stu-

dents will borrow has fallen relative to White students.

It’s possible that

this difference is because more Latinx students who would need to borrow

are instead choosing to forgo higher education. Trends like these make clear

that student debt undermines the effectiveness of higher education as an en-

gine of socioeconomic mobility and driver of greater racial equity in the

distribution of life opportunities.

1. Wealth and the “Choice” to Borrow

Students need to borrow for college when they are unable to meet the

cost of attendance at their selected school with either grants, income, or per-

sonal or family wealth. More than half of all students attending 2- and 4-

year higher education institutions borrow federal student loans at some point

In 2013, more than 59% of White families and 51% of Asian families had accumulated

wealth above the nationwide median, but only 23% of Black and 25% of Latinx families were

similarly situated. See R

OSHARA ET AL

., C

FOR

OUSEHOLD

. S

TABILITY

, T

EMOGRAPHICS OF

EALTH

: H

, E

DUCATION AND

ACE

EPARATE

HRIVERS FROM

TRUGGLERS IN

ODAY

’

CONOMY

6 (2015), https://www.stlouisfed.org/~/media/files/pdfs/

hfs/essays/hfs-essay-1-2015-race-ethnicity-and-wealth.pdf, archived at https://perma.cc/7EC5-

NJMY. The absolute numbers are important too. The median wealth in the country was

$81,456 in 2013, but White median wealth was more than 1.5 times that, at $134,008. See id.

Black median wealth was just $11,184. See id. These aggregate figures obscure considerable

diversity: many White families are not wealthy, of course, and within the broad category of

“Asian” there is considerable diversity. One study that examined Asian communities in Los

Angeles found that the median net worth of people of Korean descent was less than 4% of that

of people of Japanese descent, for example. See Runes, supra note 2.

By low quality, we refer to low rates of student graduation than those at nonprofit and

public institutions and higher rates of student loan default than at those other institutions. See

generally Deming et al., supra note 5, at 142–43.

See, e.g., Chan et al., supra note 3, at 563 (“Given that high levels of student loan debt

may affect student degree completion, family formation, and other long-term outcomes, the

evidence that Black students are both more likely to borrow and borrow more than their White

peers suggests that the current loan-based financial aid system is likely to have disproportion-

ate consequences for Black borrowers both during and after college”).

See id. at 561 tbl.1. Latinx students who do borrow tend to borrow smaller amounts

than Black borrowers (and more similar to White borrowers). See id.

See, e.g., id. at 5.

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2020] Student Debt is a Civil Rights Issue 143

in their studies.

Borrowing has become ever more necessary in recent years

as federal and state governments slashed financial support for higher educa-

tion, shifting costs onto students and families,

and as socioeconomic ine-

quality has increased.

Because there is such a sizable and persistent racial wealth gap

in the

United States,

debt has racially disproportionate effects and is unavoidable

To be more precise, 55.2% of these students took out federal loans in 2015-16. D

AVID

ADWIN ET AL

., N

’

TR FOR

DUC

. S

TATISTICS

, 2015–2016 N

ATIONAL

OSTSECONDARY

TUDENT

TUDY

18 tbl. 7 (2018) https://nces.ed.gov/pubs2018/2018466.pdf, archived at

https://perma.cc/V8QB-P9NX.

See Barb Rosewicz et al., ‘Lost Decade’ Casts a Post-Recession Shadow on State Fi-

nances, P

HARITABLE

. (June 4, 2019), https://www.pewtrusts.org/en/research-and-anal-

ysis/issue-briefs/2019/06/lost-decade-casts-a-post-recession-shadow-on-state-finances,

archived at https://perma.cc/QXN2-FQ6Y (explaining the recent decline in state spending);

see also M

ETTLER

, supra note 38, at 66–67 (arguing that “policy drift” permitted the decline in

federal support); Glater, supra note 33, at 1577 (stating, “beginning in the late 1970s and then

for several decades thereafter, federal grant aid to students, which at one point covered nearly

80 percent of the cost of attending a public university, languished”).

The difference between the top and the bottom of the wealth distribution in the United

States is vast: Bill Gates, Jeff Bezos, and Warren Buffet collectively own more wealth than the

poorest half of Americans put together. See C

HUCK

OLLINS

& J

OSH

OXIE

, Inst. for Policy

Studies, Billionaire Bonanza 2018, at 3 (2018), https://ips-dc.org/wp-content/uploads/2018/11/

Billionaire-Bonanza-2018-Report-October-2018-1.pdf, archived at https://perma.cc/J59A-

GT3N. More broadly, 24% of all U.S. families owned 67% of the economy’s wealth in 2013.

See B

OSHARA ET AL

., supra note 59, at 3. These numbers are likely undercounting the wealth

gap since they are based on data from the Survey of Consumer Finances. The remaining fami-

lies are more likely to be Black or Latinx, less educated, and younger. See id. They are also

likely to earn less income. See Rakesh Kochhar & Richard Fry, Wealth Inequality Has Wid-

ened Along Racial, Ethnic Lines Since End of Great Recession, P

. C

. (Dec. 12,

2014), https://www.pewresearch.org/fact-tank/2014/12/12/racial-wealth-gaps-great-recession,

archived at https://perma.cc/5WHV-U9KG (finding that the median wealth of White house-

holds ($141,000) was thirteen times the median wealth of Black households ($11,000) in

2013); see also T

HOMAS

HAPIRO ET AL

., I

NST

SSETS

& S

. P

OLICY

, T

OOTS OF THE

IDENING

ACIAL

EALTH

: E

XPLAINING THE

LACK

-W

HITE

CONOMIC

IVIDE

1 (2013)

(finding that tracing the same households over twenty-five years showed that the total wealth

gap between White and Black families nearly tripled); Max Roser & Esteban Ortiz-Ospina,

Income Inequality, O

ORLD IN

ATA

, https://ourworldindata.org/income-inequality,

archived at https://perma.cc/2HQW-H74A (last updated Oct. 2016) (showing that inequality is

growing in English-speaking countries and decreasing in continental Europe and Japan).

Wealth concentration has spiked in recent decades. See Wealth Inequality in the United States,

NEQUALITY

ORG

, https://inequality.org/facts/wealth-inequality, archived at https://perma.cc/

4WH4-TH3C.

See L

AURA

ULLIVAN ET AL

., D

EMOS

ACIAL

EALTH

1 (2015), https://www

.demos.org/sites/default/files/publications/RacialWealthGap_1.pdf, archived at https://perma

.cc/8YMU-37E8; see also D

ARITY

ET AL

., supra note 55, at 6; A

RAUB ET AL

., D

EMOS

SSET

ALUE OF

HITENESS

: U

NDERSTANDING THE

ACIAL

EALTH

1–2 (2017),

https://www.demos.org/research/asset-value-whiteness-understanding-racial-wealth-gap,

archived at https://perma.cc/49SP-26H6.

The wealth gap persists among White and Black households, regardless of education

levels. “White households with a bachelor’s degree or post-graduate education (such as with a

Ph.D., MD, and JD) are more than three times as wealthy as black households with the same

degree attainment.” D

ARITY

ET AL

., supra note 55, at 6. Even more dramatically, “on

average, a black household with a college-educated head has less wealth than a white family

whose head did not even obtain a high school diploma.” Id.; see also Judith Scott-Clayton &

Jing Li, Black-White Disparity in Student Loan Debt More Than Triples After Graduation,

ROOKINGS

(Oct. 20, 2016), https://www.brookings.edu/research/black-white-disparity-in-stu-

\\jciprod01\productn\H\HLC\55-1\HLC103.txt unknown Seq: 14 2-SEP-20 10:38

144 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

for more members of historically subordinated groups.

Black students bor-

row at much higher rates than White students, and by the time they are in

their fourth year of study, 90% of Black and 72% of Latinx undergraduate

students have student loan debt, as compared to 66% of White students.

For many students, and disproportionately Black and Latinx students,

borrowing to finance their education is thus not a choice but a necessity.

Greater indebtedness in turn correlates with delays in major spending and

life decisions, from buying a home, to getting married, to having children.

dent-loan-debt-more-than-triples-after-graduatio, archived at https://perma.cc/A39N-KGG3.

In fact, “[i]t takes a post-graduate education for a black family to have comparable levels of

wealth to a white household with some college education or an associate’s degree.” Id.

In 2012–13, 29.3% of White undergraduate students were able to cover their full cost of

attendance with their expected family contribution and grant aid whereas only 12.4% of Black

students and 18.1% of Latinx students could do likewise. See Datalab, N

’

FOR

DUC

TAT

., https://nces.ed.gov/datalab/index.aspx?ps_x=cfgbmdc3, archived at https://perma.cc/

U5ZW-EAL8. Students can also work to try to meet their financial needs (and indeed 43% of

full-time undergraduate students and 81% of part-time students report being employed while at

school). See S

ARA

OLDRICK

-R

, P

AYING THE

RICE

: C

OLLEGE

OSTS

, F

INANCIAL

AND

THE

ETRAYAL OF THE

MERICAN

REAM

1 (2016); see also A

NTHONY

P. C

ARNEVALE ET AL

EORGETOWN

NIV

. C

DUC

. &

THE

ORKFORCE

, L

EARNING

HILE

ARNING

: T

ORMAL

1 (2015), https://1gyhoq479ufd3yna29x7ubjn-wpengine.netdna-ssl.com/wp-

content/uploads/Working-Learners-Report.pdf, archived at https://perma.cc/CJ3A-KAHM (es-

timating that a consistent 70%

—

80% of college students are active in both the labor market

and education); N

’

FOR

DUC

. S

TAT

., T

ONDITION OF

DUCATION

2019, at 1–4

(2019), https://nces.ed.gov/programs/coe/pdf/coe_ssa.pdf, archived at https://perma.cc/C79B-

L9ZA. For students who work, every hour worked is an hour that the student cannot dedicate

to their studies, however. It is thus unsurprising that a higher workload is associated with

lower grades. See Faye C. Huie et al., Employment and First-Year College Achievement: The

Role of Self-Regulation and Motivation, 27 J. E

DUC

. & W

ORK

110, 111 (2014) (finding that the

number of hours worked was negatively associated with performance); see also Michael Wenz

&Wei-Choun Yu, Term-Time Employment and the Academic Performance of Undergraduates,

35 J. E

DUC

. F

. 358, 358 (finding that a grade point average dropped by 0.0007 points per

work hour); Meredith Kolodner, 6 Reasons You May Not Graduate on Time (and What to Do

About It), N.Y. T

IMES

(Apr. 6, 2017), https://www.nytimes.com/2017/04/06/education/edlife/

6-reasons-you-may-not-graduate-on-time.html?login=email&auth=login-email, archived at

https://perma.cc/55RN-RKD7 (concerning longer time in school).

See Aissa Canchola & Seth Frotman, The Significant Impact of Student Debt on Com-

munities of Color, C

ONSUMER

. P

ROTECTION

UREAU

(Sept. 15, 2016) https://www.con-

sumerfinance.gov/about-us/blog/significant-impact-student-debt-communities-color, archived

at https://perma.cc/Z7JA-XA5A. These numbers were based on 2011–12 NPSAS data, which

undercounted the total debt load. See D

’

TOF

DUC

., 2015–16 N

ATIONAL

OSTSECONDARY

TUDENT

TUDY

(NPSAS:16) S

TUDENT

INANCIAL

STIMATES FOR

2015–16 F

IRST

OOK

, at B-29 (2018). Another study found that “[f]our years after earning a bachelor’s de-

gree, black graduates in the 2008 cohort held $24,720 more student loan debt than white

graduates ($52,726 versus $28,006), on average.” Scott-Clayton & Li, supra note 68, at 3.

See A

. S

TUDENT

SSISTANCE

, L

IFE

ELAYED

: T

MPACT OF

TUDENT

EBT ON THE

AILY

IVES OF

OUNG

MERICANS

1 (2015), https://file.asa.org/wp-content/uploads/2019/01/

28203317/Life-Delayed-2015.pdf, archived at https://perma.cc/V2G8-ATT5 (arguing that stu-

dent loans affect people’s ability to make major purchases and life decisions such as starting a

business, getting married, and starting a career in their choice of field); see also I

RENE

ARVARD

NIV

. J

OINT

FOR

OUS

. S

TUDIES

, S

TUDENT

OAN

EBT AND THE

OUSING

ECISIONS OF

OUNG

OUSEHOLDS

1 (2015) (concluding that the growth of student loan debt

will impact young households’ homeownership and saving outcomes); A

LVARO

EZZA ET AL

. R

ESERVE

., O

N THE

FFECT OF

TUDENT

OANS ON

CCESS TO

OMEOWNERSHIP

(2016) (finding that a 10% increase in student loan debt causes a 1%

—

2% point drop in the

homeownership rate for student loan borrowers during the first five years after exiting school).

\\jciprod01\productn\H\HLC\55-1\HLC103.txt unknown Seq: 15 2-SEP-20 10:38

2020] Student Debt is a Civil Rights Issue 145

For students of color, who disproportionately go on to earn lower incomes

and carry heavier debt burdens, disparities have even more severe conse-

quences, including longer time to repayment

and greater likelihood of de-

fault,

both of which strongly imply lesser or slower accumulation of

wealth.

But “credit is beneficial only to the extent that a borrower can

expect to have future cash flow to service the resulting debt.”

As discussed

below,

borrowers of color face a variety of structural challenges that make

a sufficient future cash flow a less likely proposition.

2. Predatory Schools and the “Choice” of Post-Secondary

Institution

Not only are Black and Latinx students more likely to need to borrow,

they disproportionately attend for-profit institutions that do not confer the

hoped-for income boost higher education is intended to provide. Student out-

comes

—

graduation and employment rates

—

are worse than at comparable

institutions.

The overwhelming evidence indicates that attending for-profit

schools sets many students back.

Yet over the last decade, for-profit institu-

tions of poor quality have captured greater shares of total student enrollment

through aggressive and often deceptive marketing.

For-profit colleges aggressively market to Black and Latinx students,

as well as other marginalized groups like women, single parents, immi-

See Miller, supra note 23 (discussing greater debt for Black borrowers twelve years

after graduation than initially borrowed).

See Volkwein et al., supra note 7, at 215.

See H

UELSMAN

, supra note 15, at 24–25 (noting that “the burden of paying off student

debt is taking away a sizeable portion of the ability to accumulate meaningful assets as work-

ers enter their prime earning years”).

Atkinson, supra note 33, at 1104.

See infra Section I.A.3.

Cf. Atkinson, supra note 33, at 1101 (describing the access to credit debate as, at best,

showing optimism bias, and at worst, a way to avoid difficult conversations).

See Adam Looney & Constantine Yannelis, A Crisis in Student Loans?, 53 fig.4

(Brookings Papers on Econ. Activity, Sept. 2015).

See Cellini & Chaudhary, supra note 6, at 126 (estimating labor market returns to a for-

profit education that “fall below the returns needed to offset the private and social costs of for-

pro?t associate’s degree attendance” and suggesting that for-pro?ts may not be worthwhile for

the average student); Patrick Denice, Does it Pay to Attend a For-profit College? Vertical and

Horizontal Stratification in Higher Education, 52 S

. S

. R

. 161–178 (2015) (finding

“that for-profit associate’s degree holders encounter lower hourly earnings than associate’s

degree holders educated at public or private, nonprofit colleges, and earnings that are not

significantly different than high school graduates.”)

Senator Elizabeth Warren has proposed banning for-profit schools from receiving federal

dollars as part of her presidential campaign. Warren, supra note 50 (“After an appropriate

transition period, ban for-profit colleges from receiving any federal dollars (including military

benefits and federal student loans), so they can no longer use taxpayer dollars to enrich them-

selves while targeting lower-income students, servicemembers, and students of color and leav-

ing them saddled with debt.”).

Deming et al., supra note 5, at 141–42.

A 2012 Senate investigation revealed many for-profit recruiting practices that were little

more than racial dog whistles.” Mark Huelsman, Betrayers of the Dream, T

MERICAN

\\jciprod01\productn\H\HLC\55-1\HLC103.txt unknown Seq: 16 2-SEP-20 10:38

146 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

grants, formerly incarcerated people, and military veterans.

While Black

and Latinx students make up less than one-third of all college students, they

represent nearly half of all those attending for-profit institutions.

Fifteen

percent of Black students attended private for-profit institutions: more than

students of any other race or ethnicity.

For-profit colleges are generally far

more expensive than their public and nonprofit counterparts.

The typical

business model relies on federal student loan dollars for revenue and profit.

Because for-profit schools charge higher tuition and enroll a disproportion-

ate share of poor students, they receive a disproportionate share of federal

student aid dollars.

The for-profit business model relies so heavily on fed-

eral money that lawmakers amended the HEA to require for-profits to get

less than 100% of their funding from federal student aid.

However, the

restriction is modest. Lawmakers curtailed the maximum federal share of

for-profit institutions’ revenue first to 85%, in 1992, and a few years later

adjusted that figure upward to 90%.

Notably, military and veteran’s bene-

fits are excluded from the 90% threshold, which obscures the fact that an

estimated 200 for-profit schools were at one point receiving more than 90%

of their revenue from federal dollars.

ROSPECT

(July 12, 2015), https://prospect.org/labor/betrayers-dream/, archived at https://per

ma.cc/WL52-AGM8.

See Alia Wong, ‘Dollar Signs in Uniform’: Why For-Profit Colleges Target Veterans,

The A

TLANTIC

(June 24, 2019), https://www.theatlantic.com/education/archive/2015/06/for-

profit-college-veterans-loophole/396731/, archived at https://perma.cc/A3MA-9BS4. See gen-

erally T

RESSIE

ILLAN

OTTOM

, L

OWER

: T

ROUBLING

ISE OF

-P

ROFIT

OL-

LEGES IN THE

CONOMY

(2018).

See Genevieve Bonadies et al., For-Profit Schools’ Predatory Practices and Students of

Color: A Mission to Enroll Rather Than Educate, H

ARV

. L. R

. B

LOG

(July 30, 2018), https://

blog.harvardlawreview.org/for-profit-schools-predatory-practices-and-students-of-color-a-mis-

sion-to-enroll-rather-than-educate, archived at https://perma.cc/Q9ZP-JE82.

See Status and Trends in the Education of Racial and Ethnic Minorities, Nat’l Ctr. For

Educ. Stat. (2010), https://nces.ed.gov/pubs2010/2010015/indicator6_24.asp, archived at

https://perma.cc/5EQ7-7V9V; see also Chung, supra note 13, at 1084–1101.

See Deming et al., supra note 5, at 159 (“For-profit students face higher sticker-price

tuition and pay higher net tuition (tuition plus fees minus grants) than comparable students.”)

See GAO-11-4, supra note 13, at 8; Rebecca R. Skinner, Cong. Research Serv., RL

32182, Institutional Eligibility and the Higher Education Act: Legislative History of the 90/10

Rule and its Current Status 1 (2007); Deming et al., supra note 5, at 150 (noting that

“[f]ederal student financial aid is the lifeblood of for-profit higher education”).

See Seamster & Charron-Ch´enier, supra note 31, at 204 (“In 2009–2010, for example,

for-profit institutions took in approximately a fifth of all Pell Grants for low-income students,

which were used by about 60 percent of black students in 2011. For-profits also captured $1.7

billion in GI benefits in 2012–2013 alone.”) (internal citations omitted).

See S

KINNER

, supra note 86, at 4 (describing the history of the 85/15 and 90/10 rules).

See Robert Kelchen, How Much Do For-Profit Colleges Rely on Federal Funds?,

ROOKINGS

: B

ROWN

. C

HALKBOARD

(Jan. 11, 2017), https://www.brookings.edu/blog/

brown-center-chalkboard/2017/01/11/how-much-do-for-profit-colleges-rely-on-federal-funds/,

archived at https://perma.cc/43SF-WDJR. The restriction is generally referred to as the “90-10

rule.” Tamar Lewin, Obama Signs Order to Limit Aggressive College Recruiting of Veterans,

N.Y. T

IMES

, Apr. 28, 2012, at A11.

See Lewin, supra note 89 (noting that a little over 10% of the approximately 2800 for-

profit schools would exceed the 90-10 rule if military and veteran’s benefits are included).

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2020] Student Debt is a Civil Rights Issue 147

Students at for-profit institutions pay more, are more likely to borrow,

and borrow larger amounts than those attending a non-profit or public

school. In fact, “[a]ssociate’s degree recipients at for-profit schools borrow

almost the same amount (only $956 less) than bachelor’s degree recipients at

public colleges.”

This, despite the fact that a typical bachelor’s degree re-

quires twice as many courses as an associate’s degree.

Despite paying more tuition and taking out more debt, students at for-

profit institutions do not experience better educational or labor market out-

comes. For-profit institutions have worse graduation rates than all other

types of institutions.

In 2008, “only 22 percent of the first-time, full-time

bachelor’s degree students at for-profit colleges overall graduate within six

years, compared with 55 percent at public institutions and 65 percent at pri-

vate nonprofit colleges.”

At some for-profit schools, the graduation rates

are even worse. The University of Phoenix, for example, currently reports a

17% graduation rate within 6 years for an undergraduate program of study.

For-profit borrowers also tend to have higher levels of unemployment and

lower median earnings than those who attend other types of institutions.

These numbers have only gotten worse over time.

A significant number of for-profit colleges have shuttered amidst law-

suits and investigations into financial mismanagement, and allegations that

their practices predatory, abusive, and illegal.

Most notoriously, Corinthian

Far more students who attend a private for-profit institution borrow federal loans (89%)

than those who attended a public two-year (48%), public four-year (62%), or private nonprofit

four-year (68%) institution. Miller, supra note 23, at tbl.1. Ninety-five of African Americans

who attended a for-profit school took out federal loans. See id. The numbers for whites (90%)

and Latinx (84%) groups were also very high. See id. The variation between African American

and Latinx students is consistent with research showing that some groups, including Latinx

students, are more hesitant to borrow student loans. See Serna, supra note 16 at 10 (describing

studies finding that “some students and families, especially those from low-income, first-gen-

eration, and underrepresented backgrounds, are debt averse.”)

UELSMAN

, supra note 15, at 10.

Looney & Yannelis, supra note 78, at 35, 53.

See Tamar Lewin, Report Finds Low Graduation Rates at For-Profit Schools, N.Y.

IMES

(Nov. 23, 2010), https://www.nytimes.com/2010/11/24/education/24colleges.html,

archived at https://perma.cc/WLR9-PFMS.

NIV

HOENIX

, 2019–2020 C

ONSUMER

NFORMATION

UIDE

6 (2019), https://www

.phoenix.edu/content/dam/altcloud/doc/about_uopx/Consumer-Information-Guide.pdf,

archived at https://perma.cc/3S95-B6XX.

See Looney & Yannelis, supra note 78, at 38.

See id.

See For-Profit Colleges Linked to Almost All Loan Fraud Claims, CBS N

EWS

(Nov. 9,

2017), https://www.cbsnews.com/news/study-most-student-loan-fraud-claims-involve-for-

profits, archived at https://perma.cc/6AVS-WBER. See, e.g., People v. Heald Coll., LLC, No.

CGC-13-534793, 2016 Cal. Super. LEXIS 13746, at *18–19 (Cal. Super. Ct. Mar. 23, 2016)

(finding Corinthian Colleges liable for misrepresenting job placement rates to students and

investors, running ads stating falsely that the colleges offered programs that were not offered,

unlawfully using military seals in advertising, inserting unlawful clauses in enrollment agree-

ments, and engaging in unlawful collection activities, among other practices); Stacy Cowley &

Erica L. Green, A College Chain Crumbles, and Millions in Student Loan Cash Disappears,

N.Y. T

IMES

(Mar. 7, 2019), https://www.nytimes.com/2019/03/07/business/argosy-college-art-

insititutes-south-university.html?module=inline, archived at https://perma.cc/Z4RC-9ELK;

\\jciprod01\productn\H\HLC\55-1\HLC103.txt unknown Seq: 18 2-SEP-20 10:38

148 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

Colleges, Inc. collapsed in 2015 in a wave of investigations and allegations

of fraud.

The attorney general of California sued Corinthian and won a $1.1

billion judgment against the company.

100

The judge in the case found that

Corinthian had misled prospective students about the courses of study of-

fered,

101

used insignia of various branches of the United States military in

recruiting materials without permission or approval,

102

engaged in unlawful

debt collection practices on loans to Corinthian students,

103

and misled stu-

dents about the ease of transferring credits earned at Corinthian institutions

to other institutions.

104

These practices, together, persuaded students to en-

roll

105

and undermined their subsequent opportunities.

106

The frequency of fraud, misrepresentation, and closures among for-

profit schools is striking.

107

This almost certainly contributes to the drop-out

rate and the difficulties that even students with a degree might have in the

labor market.

108

Closures, which obviously hamper completion of students’

Press Release, Federal Trade Commission, DeVry University Agrees to $100 Million Settle-

ment with FTC (Dec. 15, 2016), https://www.ftc.gov/news-events/press-releases/2016/12/

devry-university-agrees-100-million-settlement-ftc, archived at https://perma.cc/4LMQ-FZZJ.

See Erica L. Green, For Students Swindled by Predatory Colleges, Relief May Only Be

Partial, N.Y. T

IMES

, Dec. 21, 2017, at A17.

100

See People v. Heald, 2016 Cal. Super. LEXIS 13746.

101

See id. at *10–11.

102

See id. at *11–12.

103

See id. *14.

104

See id. *16.

105

See, e.g., Andrew Kreighbaum, Long Wait for Loan Forgiveness, I

NSIDE

IGHER

(Sep. 14, 2017), https://www.insidehighered.com/news/2017/09/14/students-waiting-borrower-

defense-claims-face-challenges-credit-obstacles-education, archived at https://perma.cc/

WM7P-9ABL (describing students who believed misrepresentations from for-profit

institution).

106

See id. (describing students coping with ruined credit and other consequences of

indebtedness).

107

See, e.g., Danielle Douglas-Gabriel, Argosy University Closes its Doors; Students

Scramble to Transfer, W

ASH

. P

OST

(Mar. 10, 2019), https://www.washingtonpost.com/educa-

tion/2019/03/09/argosy-university-closes-its-doors-students-scramble-transfer/?utm_term=.f9

c98272c93e, archived at https://perma.cc/67BY-7U8C; Michael Vasquez, FastTrain College

owner convicted of theft, conspiracy, M

IAMI

ERALD

(Nov. 24, 2015 2:39 PM), https://www

.miamiherald.com/news/local/education/article46253760.html, archived at https://perma.cc/

K9GE-QCDC; Jennifer Smola, Deal Forgives $12 Million of Debt for 4,800 For-Profit Col-

lege Students in Ohio, C

OLUMBUS

ISPATCH

(Jan. 3, 2019), https://www.dispatch.com/news/

20190103/deal-forgives-12-million-of-debt-for-4800-for-profit-college-students-in-ohio,

archived at https://perma.cc/GKP4-J9PT; Press Release, Office of Public Affairs, Dep’t of Jus-

tice, School Owner Pleads Guilty to $2 Million Bribery Scheme Involving VA Program for

Disabled Military Veterans, Apr. 16, 2018, https://www.justice.gov/opa/pr/school-owner-

pleads-guilty-2-million-bribery-scheme-involving-va-program-disabled-military, archived at

https://perma.cc/5EYM-2X93; Press Release, State of California Dep’t of Justice, Attorney

General Xavier Becerra Sues For-Profit Ashford University For Defrauding and Deceiving

Students, Nov. 29, 2017, https://oag.ca.gov/news/press-releases/attorney-general-xavier-

becerra-sues-profit-ashford-university-defrauding-and, archived at https://perma.cc/H6X4-

8EP6; Press Release, U.S. Attorney’s Office, Western District of Tex., Dep’t of Justice, For-

Profit College Kaplan To Refund Federal Financial Aid Under Settlement With United States,

Jan. 5, 2015, https://www.justice.gov/usao-wdtx/pr/profit-college-kaplan-refund-federal-finan-

cial-aid-under-settlement-united-states, archived at https://perma.cc/XX3F-8KXQ.

108

See Scott-Clayton, supra note 11, at 4.

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2020] Student Debt is a Civil Rights Issue 149

courses of study, provide a plausible explanation

109

of the higher default rate

of Black graduates.

110

3. Wealth, Racism, and the “Choice” to Repay

A borrower’s ability to repay a debt depends on two critical factors: the

periodic payment amount and the borrower’s income or wealth. For federal

student loans, the payment amount depends on how much was borrowed and

what repayment plan a borrower enrolls in. Income depends on many fac-

tors, including the borrower’s education, the state of the economy, the bor-

rower’s social capital, and the effects of discrimination in the labor market.

Typical Black and Latinx students face several challenges to repaying their

student loan debt. First, the typical student is less likely to have completed

their studies. Second, they are less likely to be placed in an income-driven

repayment plan. Third, when they graduate they face pernicious labor market

discrimination and reduced income. Fourth, if they experience any trouble

repaying, they have less wealth from which to draw upon to overcome any

shocks.

111

When a student is unable to pay back their loans, they face disastrous

consequences. A borrower “defaults” on a federal student loan if they fail to

make payments for nine months.

112

Defaulting on any financial product can

impact a borrower’s credit score

—

and in turn increase the price of credit and

insurance,

113

make it more difficult to rent an apartment,

114

and make it more

109

See e.g., Jillian Berman, Students Grapple With Fine Print on Student-Debt Forgive-

ness After Their College Closes, M

ARKET

ATCH

(Mar. 16, 2019), https://www.marketwatch

.com/story/students-grapple-with-fine-print-on-student-debt-forgiveness-after-their-college-

closes-2019-03-15, archived at https://perma.cc/S2UM-DGFK (explaining that students face

limited choices and financial challenges after Argosy University closed).

110

See Scott-Clayton, supra note 11, at 2.

111

See Fenaba R. Addo, et al., Young, Black, and (Still) in the Red: Parental Wealth, Race,

and Student Loan Debt, 8 R

ACE

& S

. P

ROBLEMS

64, 1 (2016) (arguing that “student loan

debt may be a new mechanism by which racial economic disparities are inherited across gener-

ations”); Jason N. Houle & Fenaba R. Addo, Racial Disparities in Student Debt and the Re-

production of the Fragile Black Middle Class, 5 S

. R

ACE

& E

THNICITY

4, 10 (2019) (finding

that “racial inequalities in student debt account for a substantial minority of the black-white

wealth gap in early adulthood”); id. at 1 (concluding that “debt trajectories are more informa-

tive than point-in-time estimates and that student debt may be a new mechanism of wealth

inequality that creates fragility in the next generation of the black middle class”); supra note

68 and accompanying text (starting with “The wealth gap persists”).

112

See Margaret Mattes & Persis Yu, Nat’l Consumer Law Ctr., Inequitable Judgments:

Examining Race and Federal Student Loan Collection Lawsuits 4 (2019), https://www.nclc

.org/images/pdf/student_loans/report-inequitable-judgments-april2019.pdf (explaining that

borrowers technically default after 270 days but are officially in default after 360 days),

archived at https://perma.cc/3LVY-QQUE; U.S. Dep’t of Educ., Don’t Ignore Your Student

Loan Payments or You’ll Risk Going into Default, Federal Student Aid, https://studentaid.ed

.gov/sa/repay-loans/default#default, archived at https://perma.cc/24N5-HD59 (last visited

Nov. 5, 2019).

113

See S

HAWN

REMSTAD

& A

RAUB

, D

EMOS

, D

ISCREDITING

MERICA

4 (2011),

https://www.demos.org/sites/default/files/publications/Discrediting_America_Demos.pdf,

archived at https://perma.cc/HK36-Y4RS.

114

See id.

\\jciprod01\productn\H\HLC\55-1\HLC103.txt unknown Seq: 20 2-SEP-20 10:38

150 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

difficult to get or hold a job.

115

The consequences of defaulting on federal

student loans are even more severe: after default, private loan servicers tack

on collection fees that can add many years to the loan repayment.

116

In addi-

tion, the federal government has the power to garnish wages or seize Social

Security payments and tax refunds.

117

Because federal student loans have no

statute of limitations, borrowers may face such collection methods until

death.

118

In a number of states, student loan borrowers who default on their

student loans may be unable to get a copy of their transcript

119

and may even

lose their professional license.

120

To top it off, borrowers face exceptional

hurdles to discharging their student loans in bankruptcy.

121

The Bankruptcy

Code permits discharge only if a borrower can establish that repayment of

the loan would result in an “undue hardship,”

122

a standard that is undefined

in legislation and harshly interpreted by courts.

123

Predictably, students who drop out of a post-secondary program are

more likely to default on their loans than those who complete.

124

Within the

population of students who did not complete, Black and Latinx students dis-

115

See id. at 2.

116

Fees vary by type of loan. See Collection Charges, F

, https://www.finaid.org/

loans/collectioncharges.phtml, archived at https://perma.cc/JGN8-LU5P. (collecting statutes

and regulations regarding collection costs). See also Collection Fees, N

’

ONSUMER

.: S

TUDENT

OAN

ORROWER

SSISTANCE

, https://www.studentloanborrowerassistance

.org/collections/consequences-of-default-federal/collection-fees/, archived at https://perma.cc/

ZCV8-8B69.

117

See Jillian Berman, Lawsuit Alleges the Government is Illegally Garnishing Tax Re-

funds of Student-loan Borrowers, M

ARKET

ATCH

(Jun. 23, 2019), https://www.marketwatch

.com/story/lawsuit-alleges-the-government-is-illegally-garnishing-tax-refunds-of-student-loan-

borrowers-2019-06-19, archived at https://perma.cc/XF5U-QK86.

118

20 U.S.C. § 1091a(a) (2008).

119

See Dave Lindorff, Holding Transcripts Hostage, L.A. T

IMES

(May 2, 2012), https://

www.latimes.com/opinion/la-xpm-2012-may-02-la-oe-lindorff-student-loan-default-201205

02-story.html, archived at https://perma.cc/C6EZ-6QWB.

120

See Courtney Nagler, Student Loan Debt Could Affect Your Job in 13 States, U.S.

EWS

& W

ORLD

. (Apr. 10, 2019), https://www.usnews.com/education/blogs/student-loan-

ranger/articles/2019-04-10/these-states-could-revoke-your-professional-license-over-student-

loan-debt, archived at https://perma.cc/EXB7-T7NR; Andrew Wagner, License Suspension for

Student Loan Defaulters, N

’

ONF

TATE

EGIS

. (Oct. 1, 2018) http://www.ncsl.org/

research/labor-and-employment/license-suspension-for-student-loan-defaulters.aspx, archived

at https://perma.cc/9EXD-LEV9.

121

See infra Part II.C.1 (describing exceptional treatment of student loans by the Bank-

ruptcy Code).

122

However, students may assert a “defense to repayment” if the borrower can show “any

act or omission of the school attended by the student that relates to the making of the loan for

enrollment at the school or the provision of educational services for which the loan was pro-

vided that would give rise to a cause of action against the school under applicable State law,”

34 C.F.R. § 685.206(c) (2016), or if the borrower can show a judgment has been issued against

the school, the school has violated the terms of a contract with the student, or the school

committed a “substantial misrepresentation” to the student,” 34 C.F.R. § 685.222(b)

—

(d)

(2016). As noted in Part II.C.2 infra, the Department recently modified these rules.

123

See infra Part II.C.1.

124

See Mike Brown, College Dropouts and Student Debt, L

ENDEDU

(Nov. 2, 2017), https:/

/lendedu.com/blog/college-dropouts-student-loan-debt, archived at https://perma.cc/6KJ5-

4JCS (finding that average college dropout leaves campus with over $10,000 in student loan

debt and more than half of college dropouts are not making payments toward their student loan

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2020] Student Debt is a Civil Rights Issue 151

proportionately default on their loans.

125

Sixty-five percent of Black students

and 48% of Latinx students who borrowed federal loans but did not com-

plete their undergraduate program defaulted on those loans twelve years af-

ter borrowing,

126

while only 38% of White students did.

127

Students who fail

to complete a for-profit program default even more often. While 50% of

White students who dropped out of a for-profit institution defaulted on their

federal loans within twelve years of starting their education,

128

similarly situ-

ated Black and Latinx students defaulted at the staggering rate of 75% and

63% respectively.

129

Tragically, these patterns reinforce stereotypes that

Black and Latinx people are unable to take advantage of educational oppor-

tunities when provided, when in fact, they illustrate just how great an obsta-

cle racial inequality, manifest in disparities in wealth, income, and other

opportunities, is for these students.

Even completing a course of study does not protect all students equally.

Twenty-three percent of Black students in the 2003-04 graduating cohort

defaulted on their loans over the course of 12 years, compared to 6% of

White students.

130

Professor Abbye Atkinson’s bankruptcy research finds that

Black college graduates are just as likely to file bankruptcy as Black people

without a degree, but the same is not true for White students.

131

She con-

cludes that “while a college diploma may help to insulate college graduates

in general and White graduates specifically from financial challenges as rep-

resented by bankruptcy filings, for African Americans, a college diploma

provides little economic insulation.”

132

Higher education does not confer the

same benefits on all students, at least in part because higher education does

not erase hundreds of years of racist and exclusionary policies, the non-

debt). Unfortunately, college completion does not seem to help Black graduates in bankruptcy.

See infra notes 131-132 and accompanying text.

125

We’ve known at least since 1992 that African American borrowers have a higher

chance of defaulting on their student loans than other groups. Laura Greene Knapp & Terry G.

Seaks, An Analysis of the Probability of Default on Federally Guaranteed Student Loans, 74

. E

CON

. & S

TAT

. 404, 408 (1992) (finding that “[a] black borrower has a higher

probability of default than a non-black borrower by about ten percentage points”). Annual

student borrowing reached $110 billion USD in 2012-2013. Growth of Annual Student Bor-

rowing Outpaces Growth in Students, P

ESEARCH

. (Oct. 6, 2014), https://www.pew-

socialtrends.org/2014/10/07/the-changing-profile-of-student-borrowers/st-2014-10-07-student-

debtors-03, archived at https://perma.cc/7S8L-ZTMY.

126

See id.

127

See Miller, supra note 23, at tbl.4.

128

See id. at tbls.4–5.

129

See id. at tbl.5. The default rates for Black non-completers are high across the board

(about two thirds for those who attended 4-year public and private non-profit four-year institu-

tions, and 54% for two-year publics). Id. By comparison, the default rate of White non-com-

pleters was about one-third at any of those types of institutions. Id.

130

See id. at tbl.4.

131

See Atkinson, supra note 55, at 12.

132

Id.

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152 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

economic effects of those policies,

133

and the impact of current discrimina-

tion in the labor market.

134

Even with all of these difficulties, default should in theory be avoida-

ble, because Congress has approved several income-driven repayment and

forgiveness plans to limit the negative effects of suffocating student loan

debt.

135

The default repayment plan for federal student loans requires a fixed

monthly payment amortized over a ten-year period.

136

This presents a prob-

lem for many students, since the returns to their education do not necessarily

accrue at the time loans are due.

137

Almost every federal student loan bor-

rower is currently eligible to enroll in an income-driven repayment (IDR)

plan.

138

Students who enroll in IDR are able to limit monthly payments to

10-15% of their income each month.

139

If a borrower remains current on

133

See, e.g., Michelle Alexander, The New Jim Crow: Mass Incarceration in the Age of

Colorblindness 245 (2012); Coramae Richey Mann, Unequal Justice: A Question of Color

129–219 (1993); Paul Butler, Stop and Frisk and Torture Lite, 12 J. C

RIM

. L. 57, 67, 68

(placing policing in context of slave codes and describing “subtle use of law enforcement as

the mechanism of racial subordination that connects stop and frisk to a lineage of racial subor-

dination tactics”); Paul Butler, 100 Years of Race and Crime, 100 J. C

RIM

. L. & C

RIMINOLOGY

1043, 1045–46 (2010) (“If we look at black-white racial disparities in education, housing,

health care, employment, the ratio is usually 2:1 or 3:1.”); Devon Carbado, From Stopping

Black People to Killing Black People: The Fourth Amendment Pathways to Police Violence,

105 C

. L. R

. 125, 128 (2017) (observing that “[a]cross the United States, police officers

routinely force interactions with African Americans;” that may culminate in violence; and

arguing that the Supreme Court “enables and sometimes expressly authorizes racial profiling”

by police); David Cole, The Paradox of Race and Crime: A Comment on Randall Kennedy’s

Politics of Distinction, 83 G

. L.J. 2547, 2556 (1995) (citing statistics on disproportionate

involvement in the criminal justice system); Lucy A. Jewel, The Biology of Inequality, 95

ENV

. L. R

. 609, 669 (2018) (applying new biological findings to the problem of inequality

and arguing that history and environment contribute to biological and neurological changes

that produce negative health and cognitive outcomes).

134

Lincoln Quillian, et al., Meta-analysis of Field Experiments Shows No Change in Ra-

cial Discrimination in Hiring Over Time, 114 P

ROC

. N

’

CAD

. S

. 10870, 10870 (2017)

(finding little has changed since 1989, when “whites receive[d] on average 36% more

callbacks than African Americans, and 24% more callbacks than Latinos . . . Accounting for

applicant education, applicant gender, study method, occupational groups, and local labor mar-

ket conditions does little to alter this result.”)

135

See infra Part II.C.2 for an expanded discussion of IDR and forgiveness programs.

136

The greater the total debt, the higher the monthly payment. See U.S. Dept. of Educ.,

Standard Plan, F

EDERAL

TUDENT

, https://studentaid.ed.gov/sa/repay-loans/understand/

plans/standard, archived at https://perma.cc/749X-GTZC (

LAST VISITED

. 6, 2019). There

are also “graduated” repayment plans, not linked to a borrower’s income, under which pay-

ments gradually increase over the repayment term, on the theory that the borrower’s earning

power rises over time. See 34 C.F.R. § 685.208(f).

137

See Susan Dynarski, An Economist’s Perspective on Student Loans in the United States

16 (Working Paper, 2014), https://www.brookings.edu/wp-content/uploads/2016/06/econo-

mist_perspective_student_loans_dynarski.pdf, archived at https://perma.cc/Y9JD-KZE9 (not-

ing the “mismatch between the timing of the costs and benefits of education”).

138

Income-Driven Repaymen Plans, E

DUC

. D

’

, https://studentaid.gov/manage-loans/re-

payment/plans/income-driven, archived at https://perma.cc/89NJ-4W6Y. IDR plans function

as “insurance to borrowers against default and poor labor market outcomes.”

139

See U.S. Dept. of Educ., Income-Driven Plans, F

EDERAL

TUDENT

, https://

studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven, archived at https://perma

.cc/PJG5-UJNR (last visited Nov. 6, 2019). These plans are listed at 34 C.F.R. §685.208(a)(1)

(2016). The specified fraction is defined with respect to the poverty line and considers the size

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2020] Student Debt is a Civil Rights Issue 153

payments for 20 or 25 years, depending on the IDR plan, the balance of the

loan is forgiven.

140

In IDR, the required monthly payment may be less than

the monthly interest due, or even $0, depending on a borrower’s income and

family size. IDR thus promises to enable those who encounter financial

hardship to remain current on their loans, although they may need to repay

for a very long time.

141

In theory, the availability of IDR should ensure very

low levels of defaults among student borrowers. But, in practice, these inter-

ventions have failed disastrously.

142

More than one million borrowers de-

faulted on their student loans in 2018.

143

That’s two borrowers defaulting

every minute of every day.

144

Students may not take advantage of the various repayment plans be-

cause they do not know about them.

145

But there is another, more disturbing

possibility: the companies that service student loans for the Department of

Education may not provide needed information to borrowers.

146

Student loan

servicers are firms hired by the Department to provide loan servicing and

collection

147

on its $1.5 trillion portfolio of student loans.

148

These servicers

of the borrower’s family. See, e.g., 34 C.F.R. §685.209(a) (2016) (describing one of the in-

come-linked repayment plans, dubbed “Pay As You Earn”).

140

These income-linked repayment plans operate in conjunction with Public Service Loan

Forgiveness, described infra in Part II.C.2.b.

141

Stretching out the repayment period to 20 or 25 years provides more time to satisfy the

obligation, but the borrower will end up paying much more in interest over that extended

period. In fact, for many debtors the obligation will grow to astronomical amounts because of

negative amortization. See John Patrick Hunt, Help or Hardship: Income-Driven Repayment in

Student-Loan Bankruptcies, 106 G

. L. J. 1287, 1309, 1313 (2017).

142

See C

ONSUMER

. P

ROTECTION

UREAU

, S

TUDENT

OAN

ERVICING

: A

NALYSIS OF

UBLIC

NPUT AND

ECOMMENDATIONS FOR

EFORM

10 (2015) https://files.consumerfinance

.gov/f/201509_cfpb_student-loan-servicing-report.pdf, archived at https://perma.cc/BP5D-

94WT.

143

1,080,300 Direct Loan borrowers defaulted in 2018. See U.S. Dept. of Educ., Direct

Loans Entering Default, F

EDERAL

TUDENT

, https://studentaid.ed.gov/sa/sites/default/files/

fsawg/datacenter/library/DLEnteringDefaults.xls, archived at https://perma.cc/T6DT-HKGK

(last visited Nov. 6, 2019).

144

$24.4 billion of Direct Loans entered default in 2018; $23.31 billion went into default

in the first three quarters of 2019. See id. For 2018, this averages to $22,615 per borrower,

although the average hides a great deal of heterogeneity. See id.

145

Increasing IDR Applications Among Delinquent Student Borrowers, O

. E

VALUATION

., https://oes.gsa.gov/projects/increasing-IDR-applications, archived at https://perma.cc/

4427-T2CH (last visited Nov. 5, 2019) (finding that 0.23% of a random sample of delinquent

borrowers enrolled in an IDR plan as opposed to 1.02% who were sent an email about IDR).

146

See Press Release, Consumer Fin. Protection Bureau, CFPB Sues Nation’s Largest Stu-

dent Loan Company Navient for Failing Borrowers at Every Stage of Repayment (Jan. 18,

2017), https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-nations-largest-stu-

dent-loan-company-navient-failing-borrowers-every-stage-repayment, archived at https://per

ma.cc/NE8A-UPJR (alleging that “Navient provided bad information in writing and over the

phone, processed payments incorrectly, and failed to act when borrowers complained about

problems”).

147

See U.S. Dept. of Educ., Loan Servicers, F

EDERAL

TUDENT

https://studentloans

.gov/myDirectLoan/additionalInformation.action, archived at https://perma.cc/U2CM-KPW7

(last visited Nov. 6, 2019).

148

This includes loans reinsured by the federal government and issued under the Federal

Family Education Loan (FFEL) Program, which ended on June 30, 2010. See U.S. Dept. of

Educ., Federal Family Loan Program Lender and Guaranty Agency Reports, F

EDERAL

TU-

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154 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

and debt collectors are subject to consumer protection laws, such as the

Equal Credit Opportunity Act,

149

the Fair Debt Collection Practices Act,

150

and the Consumer Financial Protection Act’s

151

prohibition against unfair,

deceptive, or abusive acts or practices.

152

Despite this, there are widespread

servicing failures.

153

These federal laws do not specifically address the forms

of harm inflicted by student loan servicers, and the servicers have fought

fiercely against the potential application of state consumer protection laws to

their businesses.

154

There is also good reason to believe that these failures disproportionally

harm communities of color. Due primarily to the Department of Education’s

failure to collect data on race, the evidence of disparate impact is incom-

plete. Nonetheless, there is some evidence that borrowers of color enroll in

IDR at lower rates than White borrowers.

155

While the reasons for under-

representation in these programs are unclear, the pattern is all too familiar.

156

The National Consumer Law Center has found that student loan servicers

DENT

, https://studentaid.ed.gov/sa/about/data-center/lender-guaranty, archived at https://

perma.cc/2C5F-PBDS (last visited Nov. 6, 2019).

149

15 U.S.C. §§ 1691 (2012).

150

15 U.S.C. § 1692(p) (2010).

151

Pub L. No. 111-203, 124 Stat. 1376 (codified at 12 U.S.C. § 5301 (2012)).

152

See id. at § 1061.

153

See, e.g., Dan M. Clark, Student Loan Servicer Settles with NY for $9M Over Decep-

tive Practices, N.Y.L. J. (Jan. 4, 2019), https://www.law.com/newyorklawjournal/2019/01/04/

student-loan-servicer-settles-with-ny-for-9m-over-deceptive-practices-claim/?slreturn=

20190508123924, archived at https://perma.cc/SZ9K-P23D; Danielle Douglas-Gabriel, Stu-

dent Loan Servicer Navient Hit with Three Government Lawsuits in One Day, W

ASH

. P

OST

(Jan. 18, 2017), https://www.washingtonpost.com/news/grade-point/wp/2017/01/18/student-

loan-servicer-navient-hit-with-three-government-lawsuits-in-one-day/?utm_term=

.baa5d2c4a441, archived at https://perma.cc/6MPN-G9XR; Don Thompson, California Sues

Nation’s Largest Student Loan Servicer, U.S. N

EWS

(June 28, 2018), https://www.usnews.com/

news/best-states/california/articles/2018-06-28/california-sues-nations-largest-student-loan-

servicer, archived at https://perma.cc/AK52-3RV3.

154

Department of Education servicers have repeatedly tried to use preemption as a shield

again the application of state consumer protection statutes. See, e.g., Nelson v. Great Lakes

Educ. Loan Servs., Inc., 928 F.3d 639 (7th Cir. 2019); Pennsylvania v. Navient Corp., 354 F.

Supp. 3d 529, 548–553 (M.D. Pa. 2018); Student Loan Servicing All. v. District of Columbia,

351 F. Supp. 3d 26, 46–72 (D.D.C. 2018). The Department of Education currently supports

efforts by servicers to avoid regulation. Federal Preemption and State Regulation of the De-

partment of Education’s Federal Student Loan Programs and Federal Student Loan Servicers,

83 Fed. Reg. 10, 619 (Mar. 12, 2018).

155

Data from the 2016 Survey of Consumer Finances suggests that less than 10% of Black

borrower households and less than 5% of Hispanic households use income-driven repayment

plans, while more than 15% of White borrowers do. See Kristin Blagg, The Demographics of

Income-Driven Student Loan Repayment, U

NST

.: U

. W

IRE

(Feb. 25, 2018), https://www

.urban.org/urban-wire/demographics-income-driven-student-loan-repayment, archived at

https://perma.cc/B543-FE27. However, recently released data from the Department of Educa-

tion’s Beginning Postsecondary Students Longitudinal Study (BPS) tracking students who en-

tered college in 2011–12 through 2017 suggests that Black borrowers with college degrees are

enrolling in IDR plans at rates higher than any other racial or ethnic group. See Miller, supra

note 26.

156

See, e.g., Seamster, supra note 44, at 30–35 (“The historical precedents for Black debt

show that Black people have been systematically excluded from the processes that allow one

to convert debt to an asset.”)

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2020] Student Debt is a Civil Rights Issue 155

chose to sue defaulted borrowers at higher rates in communities that have a

higher proportion of people of color.

157

Almost 60% of these cases result in a

default judgment.

158

Given that communities with higher numbers of people

of color generally have less wealth, the pattern of lawsuits makes little eco-

nomic sense.

The weight of student indebtedness will have a devastating effect on

borrowers in a future economic contraction. Beforehand, the obligation to

repay leaves less income available to build savings that could assist in

weathering a downturn. Once a downturn hits, the obligation to repay per-

sists. If a borrower’s income falls (for example, as a result of unemployment)

the consequences are much greater. These effects will ripple through the

economy, as struggling students cut back on spending and default on other

debts.

B. How We Got Here and Why We Need to Get Out

In the Civil Rights Era, lawmakers took steps to increase access to

American institutions. To enable equal access to the franchise, Congress pro-

hibited poll taxes

159

and restricted the use of literacy tests.

160

To enable equal

enjoyment of the right to travel, Congress prohibited discrimination in the

provision of accommodations.

161

To provide equal access to K-12 public ed-

ucation, lawmakers prohibited discrimination on the basis of race in school

assignments.

162

However, Congress took a different approach to increasing

access to higher education. First, to help returning World War II soldiers

readjust to civilian life, lawmakers provided veterans grant aid.

163

After the

launch of Sputnik, Congress expanded the availability of grant aid to people

who did not serve and established a modest student loan program to enable

the United States to compete more effectively in science and technology

research.

164

In the HEA, Congress further expanded grant and loan programs

more generally, but did not explicitly address racial exclusion.

165

But perhaps

157

See M

ATTES

& Y

, supra note 112, at 1.

158

See id.

159

See Voting Rights Act of 1965, Pub. L. No. 89-110, § 10, 79 Stat. 437, 442 (1965)

(codified as 52 U.S.C. § 10306 (2012)).

160

See id. § 4, 79 Stat. at 438–440.

161

See Civil Rights Act of 1964, Pub. L. No. 88-352, § 201, 78 Stat. 241, 243–44 (1964)

(codified as amended at 42 U.S.C. §§ 2000e-2000e-17 (1982)).

162

See id. §§ 401(b), 407, 78 Stat. at 246, 248. However, section 401(b) specified that

“ ‘desegregation’ shall not mean the assignment of student . . . to overcome racial imbalance.”

Id.

163

The law passed to achieve this was the Servicemen’s Readjustment Act, better known

as the “G.I. Bill.” See Pub. L. No. 78-346, § 400, 58 Stat. 284, 289 (1944) (codified at 38

U.S.C. § 3011).

164

For a more complete description of this history, see Glater, supra note 33, at 1575–79

(describing federal laws enacted over time to promote higher education access in pursuit of

changing goals).

165

Indeed, federal legislation included provisions that specifically allowed forms of racial

exclusion to persist, permitting fraternities and sororities to continue to discriminate on the

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156 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

inadvertently, lawmakers also created a regressive system that perpetuates

and exacerbates racial inequality. The federal government now uses two ma-

jor tools to promote access: student loans

166

and tax benefits.

167

However,

both simultaneously enable access and increase existing socioeconomic ine-

quality.

168

Student loans impose a repayment burden and thereby undermine

the opportunity that education is intended to afford. Tax credits reward those

who earn more or have greater wealth to begin with.

1. Student Debt Crisis as a Case of Policy Drift

The dominance of loans in federal student aid reflects not a failure of

foresight or explicit malevolence so much as a failure of political will in the

face of rhetoric of private gain from higher education and the effective lob-

bying of industry groups that benefitted from the loan programs of the HEA.

Professor Suzanne Mettler has identified this as an instance of policy

“drift.”

169

However, the motives for allowing debt to expand were almost

certainly venal, rather than innocent. Over time, as tuition rose, “student aid

policies no longer functioned as effectively as they had in the 1970s.”

170

the same time, student lending became too prized by lenders

171

and too es-

sential for students and their families

172

for lawmakers to risk alienating

them. The availability of student loans benefitted powerful institutions: for-

basis of race. See Civil Rights Act, § 504, 78 Stat. at 251 (prohibiting the then-Commission of

Education from investigating the membership practices of college fraternities and sororities).

166

See supra Part I.B. Tax incentives to save for college, created after the HEA, are

known as “§ 529 plans,” after the relevant portion of the Internal Revenue Code. 26 U.S.C.S.

§ 529. These savings plans, which provide favorable tax treatment, are regressive in that fami-

lies saving for college expenses must use after-tax dollars; the more a family earns, the more

that family can save. Thus, these savings vehicles favor those who are wealthy and/or high-

income. See generally Michael A. Olivas, State College Savings and Prepaid Tuition Plans: A

Reappraisal and Review, 32 J. L. & E

DUC

. 475 (2003) (analyzing the plans, describing their

growing use, and warning of equity consequences of their design).

167

“In 2014, the federal government and society spent $23 billion on [education] tax

credits, an increase of about $15 billion or 177% since 2008 (in real dollars).” Bulman &

Hoxby, supra note 16, at 78; see also Jonathan D. Glater, To the Rich Go the Spoils: Merit,

Money, and Access to Higher Education, 43 J.C. & U.L. 195, 215 (2018).

168

See P

RASAD

, supra note 58, at 228–29 (arguing that the availability of home equity

loans “and the larger regime of private welfare in general” help improve life opportunities but

that access to credit do not achieve the same poverty reduction as that the policies of a welfare

state would); Atkinson, supra note 33, at 1093 (describing and criticizing adoption of access to

credit as a valid government social intervention).

169

ETTLER

, supra note 38, at 67.

170

Id.

171

See, e.g., Jonathan D. Glater & Karen W. Arenson, Lenders Sought Edge Against U.S.

in Student Loans, N.Y. T

IMES

, Apr. 15, 2007, at A1 (describing student loan companies’ efforts

to protect their lucrative student lending business against the federal government’s direct loan

program).

172

According to the College Board, more than 20 million students took out federal student

loans in from 2017 to 2018. See S

AUNDY

AUM ET AL

., C

OLL

. B

., T

RENDS IN

TUDENT

2018 at 16 fig.7 (2018), https://research.collegeboard.org/pdf/trends-student-aid-2018-full-re-

port.pdf, archived at https://perma.cc/9DBT-FTU8.

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2020] Student Debt is a Civil Rights Issue 157

profit education providers

173

and private lenders.

174

Because students could

rely on credit and still enroll, for years they did not try to pressure

lawmakers to act. But in the years leading up to and after the 2008 financial

crisis, borrowers have become much more vocal as costs and debt burdens

increased.

The legislative history of the Higher Education Act suggests that mem-

bers of Congress did not intend student loans to be the central federal inter-

vention to promote more access to higher education.

175

When President

Johnson signed the HEA

176

into law, creating the federal student aid regime

that has survived at least until this writing, he spoke not of loans but of

opportunity: the law “mean[t] that a high school senior anywhere in this

great land of ours can apply to any college or any university in any of the 50

States [sic] and not be turned away because his [sic] family is poor.”

177

The critical component of the HEA was the creation of “educational

opportunity grants,” scholarships available to students who needed the

money in order to enroll.

178

The law also expanded the infrastructure for the

loan program,

179

along with campus work-study.

180

It is unlikely that any

lawmakers foresaw that student debt would undermine the very students that

federal loans aimed to help. Rather, the record suggests that they viewed

these policy tools

—

grants, loans, and work study

—

as complementary. It is

hard to concoct a narrative in which intentions at this historical moment

173

For-profit education institutions derive the lion’s share of revenue from taxpayers. An

investigation of fifteen for-profit institutions by staff of the Senate Committee on Health, Edu-

cation, Labor and Pensions found that 86% of revenue came from federal programs. See S

TAFF

S. C

OMM

EALTH

, E

DUC

., L

ABOR AND

ENSIONS

, 112

ONG

., F

ROFIT

IGHER

DUCATION

: T

AILURE TO

AFEGUARD THE

EDERAL

NVESTMENT AND

NSURE

TUDENT

UCCESS

25 (Comm. Print 2012), https://www.help.senate.gov/imo/media/for_profit_report/

PartI-PartIII-SelectedAppendixes.pdf, archived at https://perma.cc/3NQU-5TWT. Not surpris-

ingly, over the past decade the for-profit education sector has spent millions on campaign

contributions. See For-Profit Education, O

PEN

ECRETS

, https://www.opensecrets.org/lobby/in-

duscode.php?id=H5300&year=2019, archived at https://perma.cc/RD5F-AQ8S.

174

The profitability of the guaranteed loan program, under which banks and other lenders

provided loans on terms set by Congress and guaranteed by the federal government, led

“banks to engage in rent-seeking behavior, mobilizing to protect the student loan system”

rather than students. M

ETTLER

, supra note 38, at 54. Thus, financial institutions actively lob-

bied against transferring the loan program to the government, where it resides now, by making

the remarkable claim that it was cheaper to pay lenders to make loans than to make the loans

directly. See, e.g., Kevin Bruns, The Hidden Costs of Direct Loans, C

HRON

. H

IGHER

DUC

(June 22, 2007), https://www.chronicle.com/article/The-Hidden-Costs-of-Direct/17649,

archived at https://perma.cc/FVC5-RLND (citing a study by the lenders’ trade group that

claimed “guaranteed loans cost taxpayers $2.16 less per $100 lent than direct loans”).

175

See supra notes 18

—

19 and accompanying text.

176

Higher Education Act of 1965, Pub. L. No. 89-329, 79 Stat. 1219 (1965) (codified at

20 U.S.C. §§ 1001–07 (2012).

177

President Lyndon B. Johnson, Remarks on Signing the Higher Education Act of 1965

(Nov. 8, 1965) https://digital.library.txstate.edu/handle/10877/5412, archived at https://perma

.cc/ZWX6-UL82.

178

HEA, § 401, 79 Stat. at 1232.

179

See HEA, §§ 421-428, 79 Stat. at 1236–1243.

180

See HEA, §§ 441-442, 79 Stat. at 1249–1251; M

ETTLER

, supra note 38, at 58.

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158 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

were anything other than benign, but unintended and negative consequences

have appeared over time.

181

If the HEA had provided funds to public universities to absorb more

students, the for-profit sector would not have had such ready access to fed-

eral money. But students can borrow to attend any kind of institution, in-

cluding for-profit schools. The incentives confronting these for-profit

entities were clear: the less spent on educational programming for the given

level of tuition charged, the greater the profits earned and shared with inves-

tors. If the education provided did not live up to student borrower expecta-

tions or to the company’s promises, the student was still indebted, the

company was still enriched, and the path to pursuing a claim of fraud was

difficult.

For decades, the availability of student loans has masked an insidious

and dramatic increase in socioeconomic inequality, because by borrowing,

students of lesser means can still obtain higher education. As loan amounts

have grown, the underlying differences in wealth and income across the

United States have become impossible to hide.

Borrowing by students has increased because the purchasing power of

federal grant aid has fallen

182

for decades, even as tuition has continued to

rise.

183

From the early 1970s through the mid-1980s, federal Pell grants kept

pace or even exceeded tuition at public, four-year colleges and universities;

but later, tuition grew faster than basic federal grant aid.

184

The purchasing

power of the Pell grants declined, covering a smaller share of public univer-

sity tuition and fees.

185

Household wages stagnated even as tuition rose at a

dramatic pace, making students and their families less able to bear the cost

of higher education

186

and more reliant on credit.

187

Loans have filled in the

gap as an ever-larger share of the cost of higher education shifted from the

federal and state governments to individual students and their families.

181

This is not a new problem. See generally Robert K. Merton, The Unanticipated Conse-

quences of Purposive Social Action, 1 A

. S

. R

. 894 (1936).

182

This trend is well-established and has been the case for decades. See, e.g., M

ETTLER

supra note 38, at 53; Susan B. Hannah, The Higher Education Act of 1992: Skills, Constraints,

and the Politics of Higher Education, 67 J. H

IGHER

DUC

. 498, 507 (1996).

183

See M

ETTLER

, supra note 38, at 53 fig.2.1.

184

See id. Under the Obama administration, the maximum Pell grant increased, but even

so, the purchasing power has not recovered sufficiently to cover the full need of most students.

See Aboozar Hadavand, Educational Aid Policy and Inequality: The Case for Merit- and Need-

Based Aid, 76 R

. S

. E

CON

. 535, 540 (2018).

185

See Hadavand, supra note 184, at 541 fig.3.

186

See, e.g., U.S. G

. A

CCOUNTING

FFICE

, H

IGHER

DUCATION

: T

UITION

NCREASING

ASTER

HAN

OUSEHOLD

NCOME AND

UBLIC

OLLEGES

’ C

OST

19 fig.2.1 (1996), https://

www.gao.gov/assets/160/155555.pdf, archived at https://perma.cc/DFB8-NPAH (noting that

as of 1995, “paying for tuition now takes about twice the proportion of household income as it

did in 1980”).

187

Cf. Atkinson, supra note 33, at 1156-57 (noting that government policies have “en-

couraged middle-class borrowers to look to credit to finance their well-being” and that “the

middle class has come to rely on credit to meet daily needs and as a means of filling in the

gaps left by the lack of satisfactory social insurance”).

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2020] Student Debt is a Civil Rights Issue 159

2. Student Debt: A Threat to Democracy

For decades now, the public debate has framed the decision to attend

college as a choice by an individual to pursue personal, private benefit.

188

The neoliberal perspective has emphasized the returns to the average gradu-

ate: better jobs, higher pay, and greater likelihood of upward class mobil-

ity.

189

But these benefits do not hold for many who entered the labor market

in the last two decades. Since at least the turn of the century, the wage pre-

mium from higher education “has been sustained solely because of falling

wages for lower levels of education,”

190

according to Julie Margetta Morgan

and Marshall Steinbaum. Their research, which used data from 2000-2017,

suggests that declining worker power has led employers to demand more

education for a given job.

191

Other economic research suggests that in many

areas of the economy, employers are exercising monopsony power to de-

press wages.

192

These are structural, political issues. The research findings

highlight the importance of policies that complement expanded investment

in higher education access. The policy proposals we offer below

193

would

ensure that more students from historically excluded groups can matriculate

and graduate, but such reforms should be implemented in the context of a

broader, progressive effort to combat both racism and inequality. While this

Article addresses higher education finance, the inequities perpetuated by stu-

dent debt cannot be fully addressed in isolation.

188

See David F. Labaree, Public Goods, Private Goods: The American Struggle Over

Educational Goals, 34 A

. E

DUC

. R

. J. 39, 59 (1997) (describing the ascendance of the goal

of “social mobility,” justifying the pursuit of education for its role in private accumulation of

wealth, in the United States).

189

See, e.g., P

AUL

AYLOR ET AL

., P

ESEARCH

., T

ISING

OST OF

Not Going

to College 29 (2014), https://www.pewresearch.org/wp-content/uploads/sites/3/2014/02/SDT-

higher-ed-FINAL-02-11-2014.pdf, archived at https://perma.cc/D8WJ-86M6 (discussing the

value of college education in its ability to help students get a better career). See generally

Douglas A. Webber, Are College Costs Worth It? How Individual Ability, Major Choice, and

Debt Affect Optimal Schooling Decisions, 53 T

EMP

. U. E

CON

. E

DUC

. R

. 296 (2015) (assess-

ing the value of education by analyzing yearly and lifetime earnings); Joanna Venator & Rich-

ard V. Reeves, Three Reasons College Matters for Social Mobility, B

ROOKINGS

(Feb. 6, 2015),

https://www.brookings.edu/blog/social-mobility-memos/2015/02/06/three-reasons-college-

matters-for-social-mobility, archived at https://perma.cc/XGL3-DR8R (illustrating the impact

of college education on individual’s social mobility).

190

Julie Margetta Morgan & Marshall Steinbaum, Roosevelt Inst., The Student Debt Cri-

sis, Labor Market Credentialization, and Racial Inequality: How the Current Student Debt

Debate Gets the Economics Wrong 12 (2008), https://rooseveltinstitute.org/wp-content/

uploads/2018/10/The-Student-Debt-Crisis-and-Labor-Market-Credentialization-final-1.pdf,

archived at https://perma.cc/TXT3-T5HQ (emphasis added) (noting that “the experience for

average Americans is one of running in place rather than getting ahead, as they are forced to

pursue additional education to achieve the same earnings that previous generations would get

with lower levels of credential”).

191

This phenomenon is termed “credentialization.” Id. at 4.

192

See Suresh Naidu, Eric A. Posner & Glen Weyl, Antitrust Remedies for Labor Market

Power, 132 H

ARV

. L. R

. 536, 537-38 (2018).

193

See infra Part II.

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160 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

The narrow neoliberal focus on individual, private economic returns

(and individual responsibility) also ignores the importance of an educated

public to our society at large. Education plays a critical role in a democracy:

“[d]emocratic politics puts a high premium on citizens being both knowl-

edgeable and articulate.”

194

We ignore the communal advantages of educa-

tion, and the risk if it becomes scarce, at our peril.

Lawmakers have long seen education as a means of enhancing democ-

racy and protecting desirable characteristics of the polity.

195

The Supreme

Court has also acknowledged that education is special,

196

although the jus-

tices have declined to recognize it as a fundamental right.

197

Yet the case for

greater access to advanced learning is greater now than it has ever been, as

the world’s challenges, knowledge, and technology grow ever more com-

plex. Education also implicates other rights that the Court has recognized as

fundamental, such as the right to vote

198

and the right to speak.

199

If we take the shared, social returns to higher education into account,

the United States is underinvesting in advanced learning.

200

Those with more

education enjoy better health,

201

are less likely to be implicated in the crimi-

nal law enforcement regime,

202

pay more toward the common good in the

form of higher income taxes,

203

are more engaged in political and civic

194

Amy Gutmann, Democratic Education 285 (1987).

195

See, e.g., Thomas Jefferson, Preamble to a Bill for the More General Diffusion of

Knowledge (1778), in 2 T

APERS OF

HOMAS

EFFERSON

526-27 (Julian P. Boyd ed., 1950)

(extolling education as the means of preventing the rise of a tyrannical government).

196

Brown v. Board of Educ., 347 U.S. 483, 493 (1954) (“Today, education is perhaps the

most important function of state and local governments. Compulsory school attendance laws

and the great expenditures for education both demonstrate our recognition of the importance of

education to our democratic society.”).

197

San Antonio v. Rodriguez, 411 U.S. 1, 37 (1973).

198

Harper v. Virginia Bd. of Elections, 383 U.S. 663, 670 (1966). But see Joshua A.

Douglas, Is the Right to Vote Really Fundamental?, 18 C

ORNELL

J. L. & P

. P

’

143, 200

(2008) (noting divergent doctrinal treatment of the right to vote in different cases).

199

Protected by the First Amendment, the right to freedom of speech is explicitly funda-

mental, U.S. C

ONST

. amend. I, and informed debate is critical to informed voting. Derek W.

Black, The Constitutional Compromise to Guarantee Education, 70 S

TAN

. L. R

. 735, 741

(2018) (“[C]itizenship require[s] education . . . .”). For this and other reasons, the right to

equitable access to education should be defended as such. Courts may recognize other princi-

ples

—

and other statutes, as Professor Elengold has argued

—

as bases for protecting civil

rights and we applaud such efforts, but we are reluctant to cede the fundamental and direct

demand for equity. See Elengold, supra note 52, at 639 (demonstrating that consumer protec-

tion law affords a viable avenue for vindication of certain civil rights).

200

See, e.g., L

INDA

ARLING

-H

AMMOND

, T

LAT

ORLD AND

DUCATION

8 (2015)

(arguing that the United States has lost ground relative to other nations and needs to move

more decisively than it has in the last few decades to establish a purposeful, equitable educa-

tion system).

201

ALTER

W. M

AHON

, H

IGHER

EARNING

, G

REATER

OOD

: T

RIVATE

& S

OCIAL

ENEFITS OF

IGHER

DUCATION

133-36 (2009). But note that higher debt is associated with

worse health. Chris Fitch et al., The Relationship Between Personal Debt and Mental Health:

A Systematic Review, 16 M

ENTAL

EALTH

. J. 153, 164 (2011); Thomas Richardson et al.,

The Relationship Between Personal Unsecured Debt and Mental and Physical Health: A Sys-

tematic Review and Meta-analysis, 33 C

LINICAL

SYCHOL

. R

. 1148, 1154 (2013).

202

AHON

, supra note 201, at 217-20.

203

Id. at 206-07.

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2020] Student Debt is a Civil Rights Issue 161

life,

204

and report higher levels of satisfaction and happiness in their lives.

205

Such benefits should be equally available to any who seek them.

Equal access to education opportunity is a civil right.

206

Thus, unequal

access to this critical path to empowerment in politics, culture, business, or

other leadership positions in our society should be understood as a civil

rights issue.

207

Unfortunately, members of groups in the past excluded by

law from educational opportunity still labor under the burden of past ineq-

uity in the form of lesser wealth and present inequity in the form of lower

wages in labor markets. Together, these trends leave them with fewer finan-

cial resources to pay the ever-increasing cost of college.

In concluding that education is less than a fundamental right and thus

accepting inequality in all these dimensions of life, the Supreme Court com-

mitted a grave error.

208

Fortunately, the Court’s constrained view need not

constrain lawmakers. The kinds of proposals pushed by the more progressive

candidates seeking the Democratic presidential nomination in 2020, such as

reducing or eliminating tuition at public colleges and universities, do not

confront constitutional obstacles

—

only political ones.

II. P

ATHS

ORWARD

The disproportionate and harmful effects of student debt on Black and

Latinx students demand a response.

209

In this Part we describe targets and

consequences of possible policy interventions. We also make clear the socie-

tal benefits of decreasing the adverse impact of student borrowing. The first

section identifies the intuitively obvious solution to racial subordination: a

race-conscious remedy aimed at alleviating the adverse impact on Black and

204

Id. at 206-09.

205

Id. at 223-24.

206

See Civil Rights Act of 1964, Pub. L. No. 88-352, tit. VI, § 601, 78 Stat. 252 (com-

monly known as Title VI of the Civil Rights Act of 1964, which prohibits race discrimination

in all federally-funded programs, including higher education).

207

See id. Unfortunately, the Supreme Court has declined to recognize education as a

fundamental right enshrined in the Constitution. San Antonio v. Rodriguez, 411 U.S. 1, 37

(1973).

208

There is a new, historically grounded argument that Rodriguez was wrongly decided,

because at the time of the adoption of the Fourteenth Amendment lawmakers believed “the

twin pillars of state citizenship . . . [were] education and voting”

—

and if the Amendment

guaranteed citizenship, citizenship meant voting, and voting required education. Black, supra

note 199, at 741 (arguing that “the original intent behind the Fourteenth Amendment included

a commitment to guarantee education as a core aspect of state citizenship” and so the Court

should recognize education as a fundamental right).

209

This is not an argument that the federal government should stop making student loans;

that would not solve the problem of debt-financed access to higher education and outstanding

debt. Other lenders would happily step in to fill the gap, charging higher interest rates than the

federal government does. The terms of such private education loans were one reason that

Congress created a federal loan program in the first place. See Jonathan D. Glater, Student

Debt and the Siren Song of Systemic Risk, 53 H

ARV

. J.

EGIS

. 99, 113 (2016) (noting that

terms of commercial loans were a reason the federal legislature expanded federal student

lending).

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162 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

Latinx students. This section develops the argument for such a remedy, then

identifies the challenges faced by such an effort under existing law and doc-

trine. The second section steps back to consider more broadly available,

facially race-neutral reforms implementing an anti-inequality paradigm to

eliminate the problem of student debt for all who currently owe and for all

who will pursue higher education in the future. The third section suggests a

set of incremental, carefully targeted policy reforms, all adopting a con-

sumer protection paradigm, that would help to resolve some of the more

egregious ill-effects of debt.

A. Hobbled Civil Rights Paradigm

If civil rights law and doctrine had developed differently, it might pro-

vide an effective, straightforward remedy for racial disparity in access to

education.

210

In speaking of civil rights, we adopt an expansive concept de-

rived from the Supreme Court’s assertion in Brown v. Board of Education

that “the opportunity of an education . . . where the state has undertaken to

provide it, is a right which must be made available to all on equal terms.”

211

Violations of civil rights, then, prevent full and meaningful access to and

participation in society. In this view, past laws that have prohibited discrimi-

nation on the basis of race in, for example, credit or public accommodations

protect civil rights.

212

This is so even though there is neither a fundamental

right to borrow nor to stay in a hotel, and even though the government does

not provide the service in question. The Civil Rights Act of 1964 includes a

prohibition on discrimination on the basis of race, applicable to recipients of

federal funds,

213

although the HEA does not.

The structural obstacle of student debt does not operate by discriminat-

ing explicitly on the basis of race. The terms of federal student loans do not

vary with the racial, ethnic, or other identity markers of individual borrow-

ers, nor are borrowers of particular racial or ethnic backgrounds denied ac-

cess to credit for education loans. Students are free to use their loans in a

variety of institutions. Further, every student who takes out the same type of

210

This is not meant to concede that there are no cognizable, viable claims that could be

made about the disproportionate and adverse effects of student indebtedness. For example,

there is some evidence that practices by student loan servicers might violate federal and state

consumer protection laws. See supra Part II.C.2. Such claims would aim to achieve remedies

narrower than higher education finance reform. In arguing that student debt implicates civil

rights, this Article contends also that access to higher education is not only a consumer protec-

tion issue. But see Elengold, supra note 52, at 639–40 (arguing that if civil rights law doesn’t

provide an appropriate remedy, consumer protection laws provide a viable avenue for vindica-

tion of certain civil rights).

211

347 U.S. 483, 493 (1954).

212

See, e.g., Equal Credit Opportunity Act 15 U.S.C. § 1691(a) (1974) (prohibiting dis-

crimination on the basis of race and other identity characteristics).

213

Civil Rights Act of 1964, supra note 206.

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2020] Student Debt is a Civil Rights Issue 163

federal student loan faces essentially the same terms.

214

This distinguishes

the harm of student lending from, for example, that of discriminatory mort-

gage lending. Each borrower’s socioeconomic context, which has been

shaped by a history of overt, de jure racial discrimination and continuing de

facto discriminatory treatment results in the disparate impact of student loan

debt on (primarily) Black and Latinx borrowers.

215

Importantly, this dispa-

rate impact is a direct result of the government’s choice to provide access to

higher education primarily through student debt.

A proper remedy for this harm would be broader than student aid. It

would include payment of reparations for the initial, catastrophic wrong of

race slavery: money payments to the descendants of slaves,

216

or perhaps

“baby bonds” to address the racial wealth gap.

217

But it would also necessi-

tate dramatic, structural changes in housing, criminal justice, employment

law, voting rights, and many other pieces of the economy. A proper remedy

for this harm would be specifically targeted to redress past (and ongoing)

wrongs incurred because of racism.

But even if Congress were inclined to engage in such race-conscious

legislation, any of these remedies would likely encounter a hostile reception

in the Supreme Court.

218

A majority of the Court has adopted an understand-

ing of discrimination as an individual phenomenon: the product of individ-

ual, intentional acts.

219

Efforts to remedy broader, structural disparities

—

those not obviously related to the conduct and malevolent intent of an indi-

214

The sole exception is that low-income students receive interest rate subsidies for some

of their loans while they are in school and for six months after graduation. See U.S. D

EPT

., What’s the difference between Direct Subsidized Loans and Direct Unsubsidized Loans,

https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#subsidized-vs-unsubsidized,

archived at https://perma.cc/9QR7-TL5N.

215

As noted earlier, we limit our argument to Black and Latinx students because the data

on other minority groups is unavailable.

216

The authors also note the difficulty inherent in deciding who is entitled to such repara-

tions; certainly other groups have been victims of de jure discrimination in the history of the

United States, and members of these groups continue to labor under a greater burden as a

result. See, e.g., Graham Hughes, Reparations for Blacks?, 43 N.Y.U. L. R

. 1063, 1064

(1968). In this Article we do not wish to engage in a game of “misery poker,” arguing that any

one group’s suffering is unique and so exceptionally deserving of remedy; see, e.g., Carrie

Griffin Basas, The New Boys: Women with Disabilities in the Legal Profession, 25 B

ERKELEY

J. G

ENDER

, L

, & J

USTICE

32, n.372 (2010) (defining misery poker). Rather, we suggest that

a first step toward greater equity in higher education access is recognition of the special obsta-

cles history has placed on subordinated groups

—

and the logical next step is structuring a

remedy that promotes access. The just response to racism in the past is antiracism in the

present. I

BRAM

X. K

ENDI

, H

OW TO

EAN

NTIRACIST

20 (2019) (“[T]here is no such thing as

a not-racist idea, only racist ideas and antiracist ideas . . . .”).

217

See generally Darrick Hamilton & William Darity, Jr., Can ‘Baby Bonds’ Eliminate the

Racial Wealth Gap in Putative Post-Racial America?, 37 R

. B

LACK

. E

CON

. 207 (2010).

218

See, e.g., Ian Haney L´opez, Intentional Blindness, 87 N.Y.U. L. R

. 1779, 1781–84

(2012) (describing the Court’s formalistic approach to explicit consideration of race in govern-

ment policy aimed at helping members of groups subject to discrimination).

219

See Reva Siegel, Why Equal Protection No Longer Protects: The Evolving Forms of

Status-Enforcing State Action, 49 S

TAN

. L. R

. 1111, 1113 (1997).

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164 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

vidual defendant

—

have received hostile treatment.

220

For example, a ma-

jority of the justices have shown considerable skepticism toward race-based

affirmative action.

221

If legislation is to offer a viable way forward, we need

a Court with a different understanding of discrimination and a national legis-

lature with a different perception of the government’s obligation to combat

it.

Because the prevailing civil rights paradigm, as implemented and inter-

preted, does not easily lend itself to addressing the structural barrier of stu-

dent loans, there is a mismatch between the problem we have identified and

the solutions that we offer in the next two sections. Our critique rests on the

observation that student loans contribute to the perpetuation of racial ine-

quality, but the remedies in the next two sections do not explicitly take race

into account. They are race-neutral, though they would disproportionately

benefit borrowers who are Black and Latinx. A disproportionate benefit,

however, does not constitute recognition of a historical and continuing

wrong. The demand for government intervention to promote accessibility of

higher education to those historically excluded rests on what Professor Gra-

ham Hughes called, back in 1968, the “moral claims of justice.”

222

The par-

ticular racial inequity analyzed in Part I amounts to just such a claim, and

Congress (and the Court) should provide a remedy.

223

Any race-conscious remedy would create challenges even as it would

promote equity. For example, Black Americans are not the only group that

has a valid claim for special consideration in a higher education finance

regime. Race-conscious remedies could fuel a politics of resentment, as

220

See Kevin Brown & Darrell D. Jackson, The History and Conceptual Elements of Criti-

cal Race Theory, in H

ANDBOOK OF

RITICAL

ACE

HEORY IN

DUCATION

9, 15 (Marvin Lynn

& Adrienne D. Dixson eds., 2013) (describing the Court’s adoption of the view that govern-

ment “actions motivated by racially neutral justifications which, nevertheless, generate a dis-

proportionately negative impact upon racial minorities are not considered to be

discriminatory”).

221

See Yuvrav Joshi, Affirmative Action Is About to Face a Judicial Assault, S

LATE

(Feb.

12, 2019), https://slate.com/news-and-politics/2019/02/affirmative-action-sffa-harvard-su-

preme-court.html, archived at https://perma.cc/HU8E-TLE5.

222

Hughes, supra note 216, at 1066.

223

The mismatch, between the moral wrong and remedies based on a paradigm focused

either on equity or on consumer protection, matters because there are obstacles in addition to

disparate, relative poverty that undermine higher education access for members of historically

subordinated groups. See, e.g., Jewel, supra note 133, at 658 (describing the “new science

[that] indicates that persons living in poverty . . . become saddled with persistent disabilities,

as the ill effects of deprived material environments seep into the body and mind and get passed

on, through biology”) and accompanying text. In higher education alone, a variety of institu-

tional policies and practices also hamper access and success for Black and Latinx students. For

example, criteria that disproportionately screen out these students in selective admissions

processes, inadequate academic support for them once enrolled, and lack of faculty mentors

and role models undermine prospects for success. These other barriers to Black and Latinx

students are beyond the scope of this Article, but we recognize that racial justice would require

attention to such obstacles and that the law should not only permit, but require, these steps.

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2020] Student Debt is a Civil Rights Issue 165

race-based affirmative action has.

224

As a practical matter a race-conscious

remedy would certainly provoke powerful resistance. We make the argument

because the racial justice claim is overwhelming. Providing additional finan-

cial assistance in whatever form for members of historically excluded

groups, especially Black people, is a move toward equity. This is not a claim

about enhancing efficiency, promoting innovation, or even improving the

quality of education, although these would certainly be results. This is sim-

ply a claim about fairness.

225

B. Bold

—

and Essential

—

Solutions

As the discussion above makes clear, achieving equity in access to

higher education implicates broader and deeper questions of racial and social

justice, and possible solutions very quickly expand beyond education to en-

compass re-engineering the national economy. That is far more than we

could hope to accomplish in a law review article. However, we do wish to

emphasize how profoundly linked educational inequity in the United States

is to wealth and income inequality along the lines of race. The practical

challenges of crafting a race-conscious remedy do not justify abandoning the

effort. But we also recognize opportunities in the current political moment

for remedies that will at least disproportionately benefit members of histori-

cally excluded groups.

226

The critical role of education in our society justifies bold thinking and

far-reaching reforms to improve access to higher education, rather than cau-

tious incrementalism aimed at addressing each of the myriad flaws of the

current, debt-centric system. The possibility of structural reform to promote

access to higher education has energized progressive advocates and academ-

224

See Ian F. Haney L´opez, “A Nation of Minorities”: Race, Ethnicity, and Reactionary

Colorblindness, 59 S

TAN

. L. R

. 985, 990 (2007) (describing the development of the percep-

tion that “preferential treatment for non-whites amounted to invidious discrimination”).

225

As Louise Seamster puts it:

And what if we let ourselves imagine what Black debt and White debt could mean?

Black debt could mean the unpaid debts owed to Black Americans

—

not only from

slavery, but the cumulative effects of redlining; wage theft and undervalued work;

discrimination in hiring, schools, and housing; programs and the massive destruction

of urban renewal; convict leasing and mass incarceration; and the uneven economic

fallout of the Recession. White debt could mean the debt owed for living on serially

stolen land and accruing generations of other stolen luxuries, large and small.

Seamster, supra note 44, at 35.

226

And also benefit poor and middle-class White students who face the prospect of bor-

rowing for higher education. The possibility of “interest convergence,” as identified by Der-

rick Bell decades ago, Derrick A. Bell, Jr., Brown v. Board of Education and the Interest-

Convergence Dilemma, 93 H

ARV

. L. R

. 518, 523 (1980), improves the odds of any reform

that increases accessibility of higher education. Recent research by Professor Haney L´opez

suggests the possibility of creating interest convergence. See I

ANEY

OPEZ

, M

ERGE

EFT

USING

ACE AND

LASS

, W

INNING

LECTIONS

AND

AVING

MERICA

xxi (2019) (summariz-

ing research that found that “merging race and class builds energy and excitement between

core constituencies indispensable to a resurgent Left” (sic)).

\\jciprod01\productn\H\HLC\55-1\HLC103.txt unknown Seq: 36 2-SEP-20 10:38

166 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

ics.

227

Two contenders for the Democratic presidential nomination in 2020

have proposed both mass debt forgiveness and virtual elimination of tuition

at public colleges and universities, two steps that would radically reduce the

barriers to higher education. In this section we briefly discuss the plans of-

fered by Senators Bernie Sanders and Elizabeth Warren, respond to actual

and potential criticisms of such an expanded investment in access, and offer

an argument based on racial justice, which is too often left aside in favor of

pragmatic claims about individual cost and benefit of debt and degrees,

228

favor of comprehensive federal intervention in higher education finance. We

conclude with a proposal for revitalizing the government’s role in financing

higher education.

1. Debt Forgiveness

For current borrowers,

229

cancelling student loan obligations outright is

the most far-reaching and effective potential policy intervention.

230

Cancella-

tion would provide immediate relief from the harms of debt because borrow-

ers simply would not have to repay their loans.

231

This revolutionary policy

solution would benefit the over 43 million Americans who collectively owe

more than $1.6 trillion in student debt.

232

227

See, e.g., Adolph Reed, Jr. & Sharon Szymanski, Free Higher Education, 90 A

CADEME

39, 43 (2004); Preston H. Smith II & Sharon Szymanski, Why Political Scientists Should Sup-

port Free Public Higher Education, 36 P

. S

. & P

. 699, 702 (2003).

228

See, e.g., Astead W. Herndon, Warren Proposal Would Erase Student Loan Debt for

Many, N.Y. T

IMES

, Apr. 23, 2019, at A16 (“[S]cholars and education advocates said Ms.

Warren’s policy would improve the financial futures of a debt-burdened generation of young

people, and help reduce the racial wealth gap between white people and racial minorities, who

have been disproportionately burdened by student loans.”).

229

For prospective students, of course, forgiveness alone will do little. That leads to the

discussion below. See infra Part II.B.2.

230

Activists and scholars have been calling for a debt jubilee. See, e.g., Sarah Jaffe, Opin-

ion, The People Power Behind Sanders’s Debt Cancellation Plan, W

ASH

. P

OST

(Jun. 26, 2019),

https://www.washingtonpost.com/opinions/2019/06/26/people-power-behind-sanderss-debt-

cancellation-plan, archived at https://perma.cc/FF39-C33B; About Us, S

TUDENT

EBT

RISIS

https://studentdebtcrisis.org/about, archived at https://perma.cc/9K2M-QCXJ (last visited Oct.

22, 2019) (describing itself as an “organization dedicated to fundamentally reforming student

debt and higher education loan policies”); Luke Herrine, The Law and Political Economy of a

Student Debt Jubilee, 68 B

UFF

. L. R

. (forthcoming 2020) (manuscript at 25-26) (making the

case for a student debt jubilee).

231

See S

COTT

ULLWILER ET AL

., T

ACROECONOMIC

FFECTS OF

TUDENT

EBT

AN-

CELLATION

19 (2018), http://www.levyinstitute.org/pubs/rpr_2_6.pdf, archived at https://perma

.cc/D3KP-4RPW (modeling a proposal whereby the federal government would “either

purchase and then cancel, or, equivalently, take over the payments on student debt currently

held by the private sector”). “[I]t is time to undertake a real labor market policy, and to

overcome squeamishness about acknowledging the failures of the status quo. This includes

acknowledging that student debt accumulated to date might not be economically feasible for

debtors to carry and, eventually, pay off.” Id. at 16.

232

See Stratford, supra note 1. One recent paper used a “natural experiment” to estimate

the effects of debt relief. It found that borrowers reduced their debt by 26% were 11% less

likely to default on other accounts, enjoyed increased geographic mobility, and their income

increased $3,000 over a three-year period. See Marco Di Maggio et al., Second Chance: Life

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2020] Student Debt is a Civil Rights Issue 167

Two leading presidential candidates for the upcoming election have

proposed plans to cancel varying amounts of student loan debt.

233

Senator

Elizabeth Warren announced a “transformational” plan to cancel student

loan debt for more than 95% of Americans with student loans and to provide

tuition-free public college nationwide through increased federal financial

support.

234

Her proposal would cancel up to $50,000 in student loan debt for

borrowers in households with annual incomes of less than $100,000, and

provide a decreasing amount of forgiveness for those in households earning

between $100,000 and $250,000.

235

Under the proposal, the forgiven debt

would not count as income for tax purposes.

236

And the proposal would pay

for forgiveness through a tax imposed on “ultra-millionaires,” the 75,000

families in the United States whose fortunes total at least $50 million.

237

Senator Sanders’ plan would forgive all student debt for all borrowers,

regardless of income.

238

His proposal would tax financial transactions rather

than the wealthiest households but, collecting $0.50 for every $100 traded,

0.1% of every bond trade, and 0.005% on every derivative transaction.

239

Thus, while this proposal would benefit more borrowers, it would take less

direct aim at economic inequality. In advocating for their respective propos-

als, Senator Sanders and Senator Warren emphasize the harm of debt and the

benefit of its cancellation.

240

To be sure, if either plan is implemented, most

of the negative effects and implications of student borrowing and existing

debt would be eliminated at once.

241

But there is a stronger argument to be

Without Student Debt 3-4, 14, 17 (Nat’l Bureau of Econ. Research, Working Paper No. 25810,

2019).

233

Luke Herrine has argued that under current law, a president could enact a debt cancel-

lation plan wiping out most (or even all) federal student loan debt by asking her Secretary of

Education to use her prosecutorial discretion. See Herrine, supra note 230, at 39 (arguing that

the Department of Education “has absolute discretion to determine when to stop collections,

when to collect less than the full amount, and when to release claims debtors’ in toto”). With a

compliant Secretary of the Treasury, a president could even tackle the problem of taxation on

cancellation of indebtedness “income.” Id. at 66-74.

234

Warren, supra note 50.

235

See id.

236

See id.

237

See id. This last provision is important to recognize in weighing the concern over

regressivity, because it adopts a direct method of addressing the effects of wealth and income

inequality through the Internal Revenue Code.

238

See B

ERNIE

ANDERS

COM

, supra note 50.

239

Id.

240

See Warren, supra note 50 (“[S]tudent loan debt [is] . . . crushing millions of families

and acting as an anchor on our economy. It’s reducing home ownership rates. It’s leading fewer

people to start businesses. It’s forcing students to drop out of school before getting a degree.

It’s a problem for all of us.”); B

ERNIE

ANDERS

COM

, supra note 50 (“[Cancellation of debt

would] boost[ ] the economy by $1 trillion over the next ten years, and creat[e] up to 1.5

million new jobs every year. By canceling student debt, we will save the average student loan

borrower around $3,000 a year in student loan payments. That money will be freed up to spend

on everything from housing to starting a business . . . .”).

241

For example, eliminating student borrowers’ repayment obligations would free them to

make life choices that would be less constrained. One more subtle implication might be a

reduction in pressure on professors to inflate student grades. See R. Todd Jewell et al., Whose

Fault Is It? Assigning Blame for Grade Inflation in Higher Education, 45 A

PPLIED

CON

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168 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

made, a claim that hearkens back to the ambition and idealism of the archi-

tects of the federal interventions in higher education finance of years past.

Public higher education represents a shared aspiration that higher education

should be available to all members of the public who wish to pursue it. The

argument is bolstered when placed in historical context of racial exclusion

and discrimination. When entire segments of the national community have

been unfairly and unjustly stopped at the campus gate, that in itself creates

an ethical obligation to ensure that access in the future is allocated in a fair

and just fashion. To be clear, then, restricting meaningful access as we cur-

rently do,

242

based on wealth and income, is unjust.

Greater access to higher education should help to close gaps in wealth

and income that track race. These gaps are the legacy of the same history of

unjust exclusion and discrimination, not just in education but in the labor

market.

243

Yet the imposition of debt undermines the capacity of education to

bolster earnings,

244

making it more likely that borrowers who belong to his-

torically excluded groups will be unable to enjoy the socioeconomic boost

higher education should provide and that their children will operate at a dis-

advantage, too. Racial, socioeconomic inequality is a durable phenomenon

and overcoming it demands willingness to invest our shared, public

resources.

245

The monetary cost of a debt forgiveness program depends on the pro-

gram’s structure and scope. For example, debt forgiveness could be limited

1185, 1199 (2013) (suggesting that at the institutional level, grade inflation may “result from

national or regional trends in competition for students and public funding formulas or other

policies that may encourage universities to add students”). In the absence of such a plan,

borrowers will continue to face financial risk, the danger of default, and the prospect of collec-

tion methods that include garnishment of wages and even Social Security benefits decades

after taking out a federal education loan in the first place. See supra note 128 and accompany-

ing text.

242

By “meaningful” here, we refer to access that results in comparable outcomes; in-

debted students face constraints after completion or dropping out that are materially worse

than students who do not need to borrow, and as a result, higher educational opportunity for

students who must borrow is less likely to achieve the goals higher education is intended to

achieve

—

it is less meaningful. See Jonathan D. Glater, Debt, Merit, and Equity in Higher

Education Access, 79 L. & C

ONTEMP

. P

ROBS

. 89, 91 (2016).

243

ARSHALL

TEINBAUM

, J

AIN

AMILY

NST

., S

TUDENT

EBT AND

ACIAL

EALTH

NE-

QUALITY

31-32 (2019), https://phenomenalworld.org/content/2-higher-education-finance/1-stu-

dent-debt-racial-wealth-inequality/student_debt_and_racial_wealth_inequality_final_7-19-19

.pdf, archived at https://perma.cc/9LJY-BN4J (“[L]abor market discrimination means that

black students have to obtain more degrees, and go into more debt, to obtain the same jobs

with the same salaries that white people can obtain with fewer degrees and less debt.”).

244

The effect is compounded by differences in wages, as alluded to above, see supra Part

I.A.3, because the income effect of a given level of education is smaller for Black people

relative to White people. See Sandy Baum, Jennifer Ma, & Kathleen Payea, E

DUCATION

AYS

ENEFITS OF

IGHER

DUCATION FOR

NDIVIDUALS AND

OCIETY

14 fig.1.4 (2013).

245

ENDI

, supra note 216, at 218 (2019) (“The story of our generation will be based on

what we are willing to do. Are we willing to endure the grueling fight against racist power and

policy?”). Neither forgiveness of student debt nor elimination of tuition at public institutions

of higher education would constitute reparations for the historic and catastrophic impact of

slavery on Black people. That does not weaken the moral argument for taking these steps,

which represent an effort to create the kind of republic we want to inhabit.

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2020] Student Debt is a Civil Rights Issue 169

according to borrower income, as Senator Warren proposed,

246

or based on

other characteristics such as whether the student obtained a degree, which

she did not propose. Forgiveness could also be limited to undergraduate bor-

rowers, an approach that neither Senators Sanders nor Warren took.

247

A loan

forgiveness program would cost less if fewer borrowers were eligible,

whether because of higher income or the nature of the degree. For example,

a debt cancellation program would cost less if the income eligibility cap was

$100,000 rather than $250,000, or if it covered only undergraduate debt.

More restrictive income eligibility caps would leave more borrowers with

lingering student debt. Similarly, excluding graduate and professional stu-

dents might limit their career options after completion or dropping out.

248

this Article we do not make an argument for forgiveness based on cost,

249

but

instead make the normative case for wiping out as large a share of outstand-

ing student debt as possible.

250

Critics charge that widespread student debt cancellation is regressive.

251

First, critics note that college graduates generally earn more than those who

have not achieved a degree, suggesting that student debt forgiveness benefits

246

Warren, supra note 50.

247

Graduate and professional school students account for 17% of federal student loan

borrowers, but 38% of federal education loans. See S

ANDY

AUM

& P

ATRICIA

TEELE

, G

RADU-

ATE AND

ROFESSIONAL

CHOOL

EBT

: H

UCH

TUDENTS

ORROW

4 (2018), https://www

.urban.org/sites/default/files/publication/95626/graduate-and-professional-school-debt_0.pdf,

archived at https://perma.cc/W4N8-HWVW.

248

See Erica Field, Educational Debt Burden and Career Choice: Evidence from a Finan-

cial Aid Experiment at NYU Law School, 1 A

. E

CON

. J.: A

PPLIED

CON

. 1, 15 (2009) (finding

that law students who received aid in the form of grants were “over one third (36 percent)

more likely to enter public interest law after two years” post-graduation).

249

Cf. Zach Friedman, Bernie Sanders: I Will Cancel All $1.6 Trillion of Your Student

Loan Debt, F

ORBES

(June 24, 2019), https://www.forbes.com/sites/zackfriedman/2019/06/24/

student-loans-bernie-sanders/#3d23a6843fc2, archived at https://perma.cc/4SM3-FYHM (dis-

cussing Sanders’ proposal to raise more than $2 trillion over the next 10 years to fund the loan

forgiveness plan); Michael Stratford, How Elizabeth Warren Would Cancel Student Loan Debt,

OLITICO

(July 24, 2019), https://www.politico.com/story/2019/07/24/elizabeth-warren-2020-

student-loan-debt-1428361, archived at https://perma.cc/BPS8-KMY6 (stating that while the

Congressional Budget Office has not determined how much Warren’s program would cost,

Warren has suggested funding it with 2% “wealth tax” on individuals with a net worth above

$50 million).

250

As Professor Martha McCluskey notes, “[t]o solve problems of inequality and insecu-

rity, we need to advance universal human economic rights, not just increase discretionary

targeted redistributive spending.” Frank Pasquale et al., Eleven Things They Don’t Tell You

about Law & Economics: An Informal Introduction to Political Economy and Law, 37 L. &

NEQ

. 97, 105 (2019).

251

See, e.g., Prachi Bhardwaj, Student Loan Showdown: Let’s Compare How Elizabeth

Warren and Bernie Sanders Would Make You Debt Free, M

ONEY

(June 26, 2019), http://money

.com/money/5647971/elizabeth-warren-bernie-sanders-student-loan-debt, archived at https://

perma.cc/2G5D-LVEF (describing the criticism that Sanders’ and Warren’s plans are expensive

and ill-advised since they cater to higher-income Americans and cover loans taken out for

tuition at private schools); Clare Lombardo, Student Debt Forgiveness Sounds Good. What

Might Happen If the Government Did It?, NPR (July 10, 2019), https://www.npr.org/2019/07/

10/738506646/student-debt-forgiveness-sounds-good-what-might-happen-if-the-government-

did-it, archived at https://perma.cc/Q3PJ-8FNR.

\\jciprod01\productn\H\HLC\55-1\HLC103.txt unknown Seq: 40 2-SEP-20 10:38

170 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

people less in need of government aid than those without college degrees.

252

Second, critics characterize the decision to pursue higher education as a per-

sonal, individual investment in a future income stream, and argue that there

is no good reason to subsidize higher education access because borrowers

will earn a hefty return on their investment.

253

These criticisms are misguided.

254

First, they do not consider the public

benefit of adding a debt-free, productive, educated person to the community.

The liberated borrower may pay more in taxes,

255

through their consumption

support commerce and employment, and produce goods and services of

value to the economy. Those with higher education impose fewer costs on

government by requiring less spending on health

256

and other benefits.

257

The

benefits hold for borrowers who take out loans to pay for graduate and pro-

fessional education as well, because they may earn more

—

and will also pay

correspondingly more in taxes, assume leadership positions in society, and

otherwise generate shared good. Higher education is not a purely private

252

Adam Looney, How Progressive is Senator Elizabeth Warren’s Loan Forgiveness Pro-

posal?, B

ROOKINGS

(Apr. 24, 2019), https://www.brookings.edu/blog/up-front/2019/04/24/

how-progressive-is-senator-elizabeth-warrens-loan-forgiveness-proposal/, archived at https://

perma.cc/AY2N-CWVB.

253

See, e.g., Herndon, supra note 228, at A16 (quoting various critics, including Beth

Akers of the Manhattan Institute, concerned by the prospect of a windfall to high-earning

borrowers: “It’s hard for me to stomach the idea of billing the masses

—

about two thirds of

whom don’t benefit from the earnings power afforded by a college degree

—

so that college

graduates can enjoy the fruits of their education without the hindrance of having to pay for

it”). Although it should be noted that taxpayers do not actually need to be “billed” to enable

government to spend how it wishes. See Peter Coy et al., Warren Buffett Hates It. AOC Is for

It. A Beginner’s Guide to Modern Monetary Theory, B

LOOMBERG

(Mar. 21, 2019), https://www

.bloomberg.com/news/features/2019-03-21/modern-monetary-theory-beginner-s-guide,

archived at https://perma.cc/9MVK-9NAP.

254

This concern over regressivity also proves too much: federal student aid overall is

regressive. The federal government does pay the interest on some loans to students with finan-

cial need while they are enrolled in school and for the first six months after graduation, but it

otherwise offers federal student loans at the same rates to all borrowers, conferring a subsidy

on those with greater financial resources who could afford to pay more. U.S. D

EPT

What’s the difference between Direct Subsidized Loans and Direct Unsubsidized Loans, https:/

/studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#subsidized-vs-unsubsidized,

archived at https://perma.cc/9QR7-TL5N. Public support of public universities means that

higher income and wealthier students benefit from lower tuition than they could pay. If critics

truly wish to correct for these income disparities through student aid and taxpayer funding of

colleges and universities, there should be considerably more variation in pricing than there

already is. See C

OLL

. B

., supra note 37, at 3 (reporting the differences in growth rates of

average reported tuition and average, actual, net price paid by students).

255

ENRY

EVIN ET AL

., T

OSTS AND

ENEFITS OF AN

XCELLENT

DUCATION FOR

LL OF

MERICA

’

HILDREN

9 (2007), https://academiccommons.columbia.edu/doi/10.7916/

D8FJ2RDT/download, archived at https://perma.cc/XN9G-E6LR; see also D.E. Bloom, M.

Hartley, & H. Rosovsky, Beyond Private Gain: The Public Benefits of Higher Education, in

NTERNATIONAL

ANDBOOK OF

IGHER

DUCATION

296 (James J. F. Forest & Philip G.

Altbach eds., 2007).

256

Jennifer Ma, Matea Pender, & Meredith Welch, Education Pays 2016: The Benefits of

Higher Education for Individuals and Society 36-38 (finding that individuals with more educa-

tion are less likely to smoke, less likely to be obese, and more likely to exercise).

257

Id. at 35 (explaining that individuals with more education are less likely to live in

households receiving public assistance).

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2020] Student Debt is a Civil Rights Issue 171

good and neither is forgiveness, and to the extent that we wish to recapture

some of the private, economic gain received through public subsidy, the tax

code offers a more direct solution.

Second, if implemented well it is possible that forgiveness could con-

tribute to the narrowing of the racial wealth gap, calculated as a ratio of

Black to White wealth.

258

On the other hand, if implemented poorly, forgive-

ness could contribute to a widening of the gap in absolute dollar terms.

259

While Senator Warren’s proposal does not specify the mechanism, presuma-

bly the gap would narrow because Black and Latinx students disproportion-

ately need to borrow and so would disproportionately benefit if that need

vanished.

260

However, it is also the case that if White students disproportion-

ately pursue graduate and professional study, borrow, and subsequently earn

correspondingly larger amounts, debt forgiveness might not narrow the gap.

Alternatively, forgiveness might not narrow the wealth gap as much, though

the elimination of the need to borrow might in turn encourage more Black

and Latinx students to pursue graduate and professional education. Predic-

tion is a tricky business.

Debt does not operate in a vacuum but in the context of other life

events of borrowers: particular borrowers, especially Black borrowers, dis-

proportionately borrow, and particular borrowers, especially Black and La-

tinx borrowers, disproportionately fail to complete and disproportionately

default. Forgiveness disproportionately benefits those borrowers, reducing

the harm of failure to complete. Because after graduation Black and Latinx

students earn lower wages than White students, forgiveness also dispropor-

tionately benefits them. Because Senator Warren has also proposed raising

revenue to pay for forgiveness by taxing the nation’s wealthiest families, the

proposal is overall progressive.

261

Debt forgiveness is important, but a one-time student loan forgiveness

program does little for future students facing the prospect of debt. Congress

must end the debt financing model of education altogether.

262

258

Senator Warren argues that her proposal would help close the racial wealth gap. See

Warren, supra note 50.

259

For a full discussion of the challenge of choosing the proper measure of the wealth gap,

see Louise Seamster, How Should We Measure the Racial Wealth Gap? Relative vs. Absolute

Gaps in the Student Debt Forgiveness Debate, S

CATTERPLOT

(July 27, 2019), https://scat-

ter.wordpress.com/2019/07/27/how-should-we-measure-the-racial-wealth-gap-relative-vs-ab-

solute-gaps-in-the-student-debt-forgiveness-debate, archived at https://perma.cc/HB6H-

WUZL.

260

See S

TEINBAUM

, supra note 243, at 19 (analyzing the Warren and Sanders proposals)

(“[T]he major effect of cancellation is to push disproportionately many black households into

positive net wealth territory, which significantly reduces racial wealth inequality.”).

261

See Warren, supra note 50.

262

As Professor Abbye Atkinson has noted, “[c]redit, as currently conceived, cannot

work for everyone,” and especially those in already precarious circumstances. Atkinson, supra

note 33, at 1105. We agree with her that “it is time to redirect our energies toward the more

important issues of worsening economic instability and inequality that plague not only low-

income families but middle-class families as well.” Id. It is to a piece of that task that the next

section turns.

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172 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

2. Revitalizing the Government’s Role in Higher Education

Public higher education should be accessible to the public, regardless of

wealth or income.

263

In the nation that has more wealth than any other and a

greater abundance of higher education resources than any other, every aspir-

ing student should have an equal opportunity to learn. A nation with a his-

tory of racially discrimination bears the obligation to enable access to

opportunity in a fair and equitable manner to all students. Public discussion

of free higher education represents an opportunity to revive the 1960s-era

vision of a higher education finance regime that does not perpetuate unjust

disparities.

Senators Warren and Sanders have each proposed reducing tuition at

public colleges and universities to zero.

264

Under Senator Warren’s plan, the

“federal government w[ould] partner with states to split the costs of tuition

and fees and ensure that states maintain their current levels of funding on

need-based financial aid and academic instruction.”

265

To cover additional

costs of room and board, Senator Warren would also expand need-based

grant aid that could be used for expenses other than tuition and fees.

266

Sena-

tor Sanders, in turn, proposed legislation “to provide at least $48 billion per

year to eliminate tuition and fees at four-year public colleges and universi-

ties, tribal colleges, community colleges, trade schools, and apprenticeship

programs.”

267

The proposed legislation adopts the current definition of

“costs of attendance” in the U.S. Code

268

and provides that room, board, and

other miscellaneous costs

269

would be covered for the neediest students.

270

The subsections that follow outline two broad possibilities, each of

which has percolated in policy discussions for years.

271

First, we develop a

263

For a sampling of scholars who have made this argument before us, see C

HARLIE

A-

TON

ESIGNING

INANCIAL

ID FOR

ALIFORNIA

’

UTURE

22, https://ticas.org/files/pub_files/

designing_financial_aid_for_californias_future.pdf, archived at https://perma.cc/GQ8E-

KEGM (making recommendations about how much Californian students could pay in out of

pocket costs to remain debt-free); M

AHON

, supra note 202; David Deming, Tuition-Free

College Could Cost Less Than You Think, N.Y. T

IMES

(July 19, 2019), https://www.nytimes

.com/2019/07/19/business/tuition-free-college.html, archived at https://perma.cc/FSW2-LR8P.

264

See B

ERNIE

ANDERS

COM

, supra note 50 (identifying the proposals of Senator Sand-

ers); Warren, supra note 50 (identifying the proposals of Senator Warren).

265

Warren, supra note 50.

266

See Warren, supra note 50. Specifically, Senator Warren would “invest an additional

$100 billion over the next ten years in over the next ten years in Pell Grants

—

and expand who

is eligible for a Grant

—

to make sure lower-income and middle-class students have a better

chance of graduating without debt.” Id.

267

ERNIE

ANDERS

COM

, supra note 50.

268

See College for All Act of 2019, S. 1947, 116th Cong. § 901(a)(3), citing 20 U.S.C.

§ 1087ll (2010).

269

This includes, for example, the cost of textbooks. See id.

270

That is, those who are eligible for Pell grants. See College for All Act, S. 1947 supra

note 269 at § 901(d)(8).

271

See, e.g., G

UTMANN

, supra note 194, at 226 (observing that the reform “with the great-

est merits from the standpoint of nondiscrimination is eliminating tuitions almost entirely and

subsidizing higher education so heavily as to insure equal access to all qualified students”).

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2020] Student Debt is a Civil Rights Issue 173

model for a sharp expansion of public funding from both the federal and

individual state governments. This system, which we regard as the ideal step

to enable fair access to higher education opportunity, would shift costs from

students and their families back

272

to the national community.

273

Second, we

explore a more modest proposal to change the existing student aid struc-

ture.

274

This alternative would use drastically increased, more effectively

targeted means-tested aid to students as individuals instead of funding di-

rected to the institutions they attend.

275

This, too, would reallocate the cost of

higher education away from students. Either reform would increase equity of

access, but the consequences and political perils differ, not always in obvi-

ous ways.

(a) Federal Aid to the States

Achieving the goal of free public college requires substantial state and

federal action. The effort would go a long way toward promoting fairness in

access by eliminating the financial barriers that disproportionately under-

mine the ambitions of aspiring Black and Latinx students, whose families

have less wealth and earn lower incomes than do those of White and some

Asian students. The benefits would extend beyond college enrollment, be-

cause students would complete programs of study unburdened by debt. Stu-

dents who otherwise might have had to borrow might be more likely to

pursue careers that benefit the public, now that they lack the burden of debt

—

or in gratitude for the public investment that enabled their education.

276

Direct financial support from the federal government to public colleges

and universities would best serve the goal of equal educational opportunity

for all.

277

Public colleges and universities still receive significant revenue

from state governments.

278

The federal government can directly support pub-

272

“Back” because the burden on students and families grew in the 1980s and more

quickly in the 1990s and 2000s; in the 1970s, federal grant aid was sufficient to cover all or

nearly all the cost of attending a public, state university. Professor Mettler has carefully ana-

lyzed the decline in public support and consequences for students. See M

ETTLER

, supra note

38, at 52.

273

Again, Senator Warren’s proposal would use revenue generated by a tax on the wealthi-

est families in the nation to cover the cost. Warren, supra note 50. But for our purposes, the

relevant point is that collectively, the community would have determined that the cost should

not be borne by the individual student and that student’s family, but by collective action

—

under the Warren proposal, the act of taxing those with the greatest wealth. See id.

274

See infra Part II.B.2.b.

275

Id.

276

See, e.g., Field, supra note 248 (finding that when grant aid replaced loans, law student

recipients were more likely to pursue public interest careers).

277

Public institutions educate 14.5 million of the nearly 20 million postsecondary students

in the United States. U.S. D

’

TOF

DUC

., D

IGEST OF

DUCATION

TATISTICS

tbl.303.25,

https://nces.ed.gov/programs/digest/d18/tables/dt18_303.25.asp?current=yes, archived at

https://perma.cc/KYE8-GDSA.

278

TATE

IGHER

DUC

. E

XEC

. O

FFICERS

’

, S

TATE

IGHER

DUCATION

INANCE

: FY

2018 15 (2019), https://sheeo.org/wp-content/uploads/2019/04/SHEEO_SHEF_FY18_Report

.pdf, archived at https://perma.cc/SLX9-TN9P (“Over the last 25 years, total state and local

\\jciprod01\productn\H\HLC\55-1\HLC103.txt unknown Seq: 44 2-SEP-20 10:38

174 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

lic colleges and incentivize state legislatures to increase their levels of fund-

ing with carefully structured grants contingent on state commitment to

keeping tuition at zero, but either structure entails tradeoffs. The former ap-

proach has the benefit of avoiding potential resistance from state legislatures

opposed to increased spending on higher education but is predicated in a

different and perhaps larger federal involvement in higher education. The

latter has the advantage of encouraging states to contribute to the cost of

eliminating tuition and fees but runs the risk of inconsistency of access

across the different states and may carry the risk that states will use the

money to pursue other, less progressive goals.

Increased federal support could operate in several different ways. The

simplest and most straightforward

279

policy is “block grants” to states for

higher education funding, contingent on state institutions maintaining tuition

at zero.

280

Senator Sanders’ proposal would require states to pay one-third of

the cost of reducing tuition to zero, with the balance covered by a federal

grant to the state.

281

This structure would reduce financial barriers to higher

education that disproportionately hinder Black and Latinx students.

In the absence of federal intervention, states could still choose to dedi-

cate revenue to reducing or eliminating the cost to students. Some states, like

New Mexico, California, Tennessee, Washington, and New York, are mov-

ing in this direction. New York created the Excelsior Scholarship in 2017,

providing free tuition at the state’s public colleges and universities for stu-

dents whose families earn no more than $125,000 per year.

282

In Tennessee, a

support for public higher education grew 127.5 percent in unadjusted terms, from $42.3 billion

in 1993 to $96.1 billion in 2018. After adjusting for inflation, state and local funding in 1993

was $80.7 billion, meaning that in constant dollars, funding increased 19.1 percent over the

last 25 years. Incorporating changes in FTE enrollment, state and local funding decreased 4.2

percent since 1993.”).

279

If federal funds were distributed directly to institutions, reducing the risk that different

state legislatures might be more or less receptive to the goal of increasing higher education

access, then institutions would have to apply for funds. After all, grant recipients do not always

comply with grant terms. See Eloise Pasachoff, Agency Enforcement of Spending Clause Stat-

utes: A Defense of the Funding Cut-Off, 124 Y

ALE

L.J. 248, 274 (2014) (identifying a typology

of forms of noncompliance).

280

Under this scenario, states would have the option to join the new institutional-aid re-

gime; the existing federal student aid system could be wound down. In this way, the direct

institutional-aid program would not run into the problem identified by the Supreme Court in

National Federation of Independent Business v. Sebelius, in which a majority of the justices

invalidated Medicaid expansion imposed upon states under penalty of losing all federal Medi-

caid money. Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 585 (2012) (“What Congress

is not free to do is to penalize States that choose not to participate in that new program by

taking away their existing Medicaid funding.”). It is perhaps a closer call if current Title IV aid

under the HEA were to be shut down at the same time, making participation in a new program

potentially less of a choice.

281

College for All Act of 2019, S. 1947, 116th Cong. § 901(b)(2) (2019), https://www

.govinfo.gov/content/pkg/BILLS-116s1947is/pdf/BILLS-116s1947is.pdf, archived at https://

perma.cc/5ZZ5-UJ4G.

282

Press Release, Office of Gov. Andrew M. Cuomo, Governor Cuomo Signs Legislation

Enacting First-in-the-Nation Excelsior Scholarship Program to Provide Tuition-Free College to

Middle Class Families (Apr. 12, 2017), https://www.governor.ny.gov/news/governor-cuomo-

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2020] Student Debt is a Civil Rights Issue 175

state that pioneered free community college, the interim president of the

state’s university system announced in 2019 the creation of a free tuition

program for students whose families earn less than $50,000 annually.

283

The

Washington legislature in 2019 passed a law that will cover tuition and fees

for students whose families

284

earn about $50,000 a year or less, paid for by a

“surcharge” on companies that employ highly skilled workers.

285

In Califor-

nia, lawmakers in 2017 expanded funding for community colleges to elimi-

nate the state equivalent of tuition and fees.

286

Anything less than a national initiative, however, will ensure that op-

portunities remain tied to geography, preserving inequalities that correlate

directly with location and indirectly with race.

287

(b) Direct Federal Aid to Public Institutions

An alternative pathway for institutional support could be requiring pub-

lic colleges and universities to apply directly for federal funding. This ap-

proach avoids the challenge of incentivizing states to maintain their own

financial support of these institutions and prevents the exploitation by the

states of the fungibility of funds. However, it also increases the role of the

federal government in college and university operations, because through

any application process, the federal government could influence or even di-

rect applicant institutions to, for example, offer particular courses of study,

methods of teaching, techniques of student assessment, standards for faculty,

or compensation of faculty and staff.

288

This risk is always present, even

under the current system, because institutions receive funds from the federal

signs-legislation-enacting-first-nation-excelsior-scholarship-program-provide, archived at

https://perma.cc/F3LR-TCKG.

283

Jason Gonzales, University of Tennessee to launch free college program that mirrors

successful Promise, Reconnect programs, N

ASHVILLE

ENNESSEAN

(Mar. 14, 2019), https://

www.tennessean.com/story/news/education/2019/03/14/university-of-tennessee-launching-

free-college-tuition-program/3139831002, archived at https://perma.cc/4GLE-Z4R6.

284

The figures are for a family of four. Rueb, supra note 51.

285

Id.

286

. E

DUC

. C

ODE

§76396.1 (2018); see also Legislative Analyst’s Office, C

REATING A

EBT

REE

OLLEGE

ROGRAM

3 (2017), https://lao.ca.gov/reports/2017/3540/Debt-Free-Col-

lege-013117.pdf, archived at https://perma.cc/V8U6-23EV (directing, in a report called for by

the California legislature, the legislative analyst’s office to “provide the Legislature with op-

tions for creating a new state financial aid program intended to eliminate the need for students

to take on college debt”).

287

In states that do not expand funding for public higher education institutions, those who

disproportionately cannot afford to enroll or will be discouraged from doing so will dispropor-

tionately belong to the same populations historically excluded from educational opportunity.

For an analogous example, see Samantha Artiga et al., The Impact of the Coverage Gap for

Adults in States not Expanding Medicaid by Race and Ethnicity, K

AISER

AMILY

OUNDATION

(Oct. 26, 2015), https://www.kff.org/disparities-policy/issue-brief/the-impact-of-the-coverage-

gap-in-states-not-expanding-medicaid-by-race-and-ethnicity, archived at https://perma.cc/

NX25-8LQ6.

288

Professor Derek Black has argued that the Education Department effectively has al-

ready done this. Derek W. Black, Federalizing Education by Waiver?, 68 V

AND

. L. R

. 607,

613 (2015) (describing use of the power to waive compliance with federal law as a tool to

impose other requirements on schools).

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176 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

government for myriad purposes other than funding student aid.

289

The fed-

eral government could leverage control over funds to influence what col-

leges and universities teach and has indeed threatened to do so.

290

Still, an

executive who actually ignores the norm may not receive a friendly recep-

tion in the courts.

291

Reducing the cost of all public higher education, either through aid to

states or to individual institutions, is not means-tested. It would confer a

considerable financial benefit on students from wealthy and high-income

families. Yet the benefits to most students, who do not hail from such privi-

leged families, greatly outweigh this consideration.

292

Opening the doors of

opportunity through free public college would disproportionately benefit

Black and Latinx students. Any windfall to the wealthy must be balanced

against the benefit to students from groups historically excluded from educa-

tional and economic opportunity, and thus against the value of vindicating

rights too long recognized on paper but not in practice. The value of access

to those long denied it far exceeds what the families of wealthy students

might pay in tuition.

We imagine the provision of free public college would be coupled with

progressive reforms to the federal tax code that would generate additional

revenue. Revenue from higher taxes on the wealthy could be directed to

supporting public colleges and universities in either of the ways that we have

suggested. Though beyond the scope of this Article, we believe that tax re-

form

—

not tuition pricing and financial aid

—

provides the most direct path

to correcting wealth and income inequality.

293

The two approaches described

289

In fact, the Trump Administration did weigh in on the substance of an academic pro-

gram funded by a federal grant, and went so far as to demand changes. Erica L. Green, U.S.

Orders Duke and U.N.C. to Recast Tone in Mideast Studies, N.Y. T

IMES

, Sep. 20, 2019, at A1.

But the Administration did not attempt to use student aid funds as leverage; the grant money at

issue was authorized under a different provision of the HEA, not Title IV. Id.

290

President Donald Trump notoriously threatened to cut federal funding of specific pub-

lic universities in response to actions he viewed as inconsistent with the obligation to preserve

freedom of speech. Thomas Fuller & Christopher Mele, Berkeley Cancels Milo Yiannopoulos

Speech, and Donald Trump Tweets Outrage, N.Y. T

IMES

(Feb. 1, 2017), https://www.nytimes

.com/2017/02/01/us/uc-berkeley-milo-yiannopoulos-protest.html, archived at https://perma.cc/

24L9-LMYV. Similarly, the Trump Administration threatened to deprive two universities of

federal HEA funds because the Education Department found course materials to be biased.

Green, supra note 290, at A1.

291

The Supreme Court for decades has recognized the importance of independence and

freedom in the context of higher education, both in what is said on public university campuses

and

—

more relevant for present purposes

—

in their governance. See, e.g., Sweezy v. New

Hampshire, 354 U.S. 234, 250 (1957) (warning that “impos[ing] any straitjacket upon the

intellectual leaders in our colleges and universities would imperil the future of our Nation”).

292

Sara Goldrick-Rab et al., Reducing Income Inequality in Educational Attainment: Ex-

perimental Evidence on the Impact of Financial Aid on College Completion, 121 A

. J.

. 1762, 1762 (2016) (reporting results from a randomized control trial of grants to students

from low-income families and finding that “offering students additional grant aid increases the

odds of bachelor’s degree attainment over four years, helping to diminish income inequality in

higher education”).

293

Glenn Hubbard, former chair of the Council of Economic Advisers under President

George W. Bush, made this point eloquently in an op-ed. Glenn Hubbard, Tax Reform is the

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2020] Student Debt is a Civil Rights Issue 177

above are the best ways to expand higher education access and solve the

problems created by the current system. It is difficult to overstate the bene-

fits this overhaul would bring to students who pursue higher education, to

their families, and to public providers of higher education.

294

Students and

their families would avoid the costs and risks of taking on life-altering debt

to cover tuition. Reducing tuition to zero would ensure that willing and capa-

ble students apply and enroll. Students would face less pressure to work

while enrolled, freeing them to take full advantage of their postsecondary

education experience. And poorer students would face less pressure to pur-

sue only courses of study and career pathways that they anticipate will result

in higher incomes, providing greater freedom to choose diverse opportuni-

ties in public service.

While enrolled, students incur expenses other than tuition and fees, and

those costs can be considerable.

295

Financial support of institutions does not

reduce the cost of attending a particular college, university, or other program

to zero because students must pay for housing, food, books, and the technol-

ogy that is ever more essential to functioning in a contemporary higher edu-

cation environment. Some students suffer food insecurity or outright hunger

while enrolled; others struggle to find affordable housing.

296

In some high-

cost areas, the burden can be acute, forcing some students to live in cars or

on the street.

297

There is a tradeoff between borrowing and working: borrow-

ing frees up more time for students to study, but to incur debt is to incur risk.

Some students no doubt elect to work longer hours while enrolled than they

otherwise would, taking valuable time from their studies and thereby in-

Best Way to Tackle Income Inequality, W

ASH

. P

OST

(Jan. 10, 2014), https://www.wash-

ingtonpost.com/opinions/tax-reform-is-the-best-way-to-tackle-income-inequality/2014/01/10/

112710ea-68ca-11e3-a0b9-249bbb34602c_story.html, archived at https://perma.cc/A6X9-

LZA4.

294

But see Tressie McMillan Cottom, Why Free College is Necessary, D

ISSENT

AGAZINE

(Fall 2015), https://www.dissentmagazine.org/article/tressie-mcmillan-cottom-why-free-col-

lege-necessary, archived at https://perma.cc/UG6J-UZZE (arguing that “free college would

likely benefit only an outlying group of students who are currently shut out of higher education

because of cost

—

students with the ability and/or some cultural capital but without wealth”).

295

See, e.g., C

OLLEGE

OARD

, T

RENDS IN

OLLEGE

RICING

3 (2019), https://re-

search.collegeboard.org/pdf/trends-college-pricing-2019-full-report.pdf, archived at https://per

ma.cc/CQ59-6APN.

296

See, e.g., H

OPE

FOR

OLL

., C

MTY

AND

USTICE AT

EMPLE

NIV

., 2018

EAL

OLLEGE

URVEY

EPORT

: D

ENVER

(2019), https://hope4college.com/wp-content/

uploads/2019/09/RC2018_Denver_Report_20190906.pdf, archived at https://perma.cc/X8D4-

98AZ (reporting that 40% of survey respondents experienced food insecurity in the last 30

days and 18% experienced homelessness in the previous year); G

ABRIEL

ETEK

, T

2019-

2020 B

UDGET

: S

TUDENT

OOD AND

OUSING

NSECURITY AT THE

NIVERSITY OF

ALIFORNIA

2 (2019), https://lao.ca.gov/reports/2019/4014/student-food-housing-uc-042519.pdf, archived

at https://perma.cc/76HZ-3K34 (warning of a “notable proportion” of students at the Univer-

sity of California reported both housing and food insecurity).

297

See, e.g., R

ASHIDA

RUTCHFIELD ET AL

., S

ERVING

ISPLACED AND

OOD

NSECURE

TUDENTS IN THE

CSU 6 (2016), https://presspage-production-content.s3.amazonaws.com/

uploads/1487/cohomelessstudy.pdf?10000, archived at https://perma.cc/FAP4-J247 (describ-

ing survey responses from California State University officials who indicated their belief that

more than 8% of students were homeless).

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178 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

creasing the risk of dropping out or of performing poorly in class.

298

Requir-

ing poorer students to work longer hours while pursuing their studies

adversely affects their ability to have meaningful interactions with their

classmates and teachers, and increases the risk that they will drop out.

299

students are to pursue higher education on an equal footing, compelling

some students

—

disproportionately those who are Black and Latinx

—

work while enrolled is counterproductive.

To address costs of higher education beyond tuition and fees, then, the

federal government should provide need-based grant aid, either directly or

through colleges and universities, so that students can graduate debt-free.

300

Only a combination of zero tuition and provision of adequate living stipends

can eliminate the pernicious effects of debt.

C. Helpful but Insufficient Fixes: A Consumer Protection Paradigm

The proposals in this section address the problem of current outstanding

debt. The most ambitious reforms aim to erase the burden of repayment for

those suffering the most, automatically placing borrowers on flexible repay-

ment plans and easing the path to cancellation of repayment obligations in

bankruptcy. The more modest reforms aim to curb abusive practices that can

make managing a loan next to impossible, including stronger oversight of

loan servicers and providing borrowers with more options to protect them-

selves from education providers that defraud them. None of these proposed

reforms are sufficient to “fix” the problem of student debt in its entirety, but

they are absolutely necessary in a world of incremental change.

This section first describes necessary changes in how student loans are

treated in bankruptcy proceedings to make it easier for borrowers to elimi-

nate or discharge their obligations. The next section advocates for changes in

repayment plan structure, expanded forgiveness for borrowers who take pub-

lic interest jobs, tougher regulation of for-profit higher education providers,

298

Indeed, one study of student borrowing found that the likelihood of completing courses

of study was higher for students who took out loans. Benjamin M. Marx & Lesley J. Turner,

Student Loan Nudges: Experimental Evidence on Borrowing and Educational Attainment, 11

. E

CON

J. 108, 131 (2019). This is not to suggest that student loans are an absolute good but

a relative one: currently existing alternatives are worse. Dynarski, supra note 138, at BU8.

299

L. W. P

ERNA ET AL

., I

MPROVING

DUCATIONAL

PPORTUNITIES FOR

TUDENTS

ORK

22-23 (2007), https://repository.upenn.edu/cgi/viewcontent.cgi?article=1313&context

=gse_pubs, archived at https://perma.cc/9ADX-EG25.

300

Maintaining availability of low-cost loans could also help students cover their living

expenses while enrolled. See Alana Semuels, Free Tuition is Not Enough, T

TLANTIC

(Oct.

15, 2015), https://www.theatlantic.com/business/archive/2015/10/free-tuition/410626/,

archived at https://perma.cc/9MQ8-SGKJ (describing costs of books and living expenses even

when attending a tuition-free program of study). The preservation of federal work-study fund-

ing would also help poorer students defray living expenses. While we prefer enabling students

to graduate debt-free because of the pernicious effects of carrying debt, we recognize that, as a

practical matter, keeping these forms of student financial support would avoid the need to

wind down the vast student aid public and private infrastructure.

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2020] Student Debt is a Civil Rights Issue 179

and a more robust process allowing students to cancel their debts if their

education provider defrauded them.

1. Bankruptcy Reform

Americans turn to bankruptcy as the last line of protection from finan-

cial ruin. Bankruptcy provides debtors with a “fresh start” by permitting

them to discharge their debts, canceling the obligation to repay.

301

In turn,

debtors must liquidate their nonexempt assets or agree to pay a modest

amount to creditors over a three- or five-year period.

302

The primary path to a

fresh start is through bankruptcy discharge, a procedure that “renders the

debt uncollectible from the individual and protects the debtor from future

attempts at collection, making it a violation of a court order to do so.”

303

People declaring bankruptcy can discharge almost all consumer debts,

304

in-

cluding credit card debt, medical bills, tort or contract liabilities, and mort-

gage or auto loan deficiencies.

305

But student debtors do not face the same path to relief available to

others in bankruptcy. The only category of consumer debt that is not auto-

matically discharged in bankruptcy is student loans.

306

Under section

523(a)(8) of the Bankruptcy Code, federal or private student loans are only

dischargeable in bankruptcy if debtors meet an exceptionally high “undue

hardship” standard. But the statute doesn’t define “undue hardship,” and

301

Thomas H. Jackson, The Fresh-Start Policy in Bankruptcy Law, 98 H

ARV

. L. R

1393, 1397 (1985) (describing forms of protection of human capital and certain exempt prop-

erty from creditors); but see Katherine Porter & Dr. Deborah Thorne, The Failure of Bank-

ruptcy’s Fresh Start, 92 C

ORNELL

L. R

. 67, 83-93 (2006) (presenting empirical evidence that

many debtors who received a discharge still struggle to repay bills).

302

Chapter 7

—

Bankruptcy Basics: How Chapter 7 Works, U.S. C

OURTS

, https://www

.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics,

archived at https://perma.cc/9ZY3-TNX2; Chapter 13

—

Bankruptcy Basics: How Chapter 13

Works, U.S. C

OURTS

, https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/

chapter-13-bankruptcy-basics, archived at https://perma.cc/YW9Z-2ARY.

303

Dali´e Jim´enez, Ending Perpetual Debts, 55 H

OUS

. L. R

. 609, 611-12 (2018); see

also 11 U.S.C. § 524(a) (2019); Taggart v. Lorenzen, 139 S. Ct. 1795, 1799 (2019) (holding

that a creditor may be held in “civil contempt for violating a discharge order where there is not

a ‘fair ground of doubt’ as to whether the creditor’s conduct might be lawful under the dis-

charge order”).

304

Consumer debts are generally defined as an “obligation of a consumer to pay money

arising out of a transaction in which the money, property, insurance or services which are the

subject of the transaction are primarily for personal, family, or household purposes.” 15

U.S.C. § 1692a(5) (2012); cf. Jim´enez, supra note 306, at 644 n.226.

305

For the different sections of the federal bankruptcy statutes describing the scope of the

bankruptcy discharge depending on the type of bankruptcy filed, see 11 U.S.C. § 1328 (2005)

and 11 U.S.C. § 1141 (2010),.

306

The relevant statute, 11 U.S.C. § 523(a)(8) (2010), does not use the phrase “student

loans” and instead lists three categories of educational obligations. Most courts that have con-

sidered the question recently have held that there are some loans, such as bar loans, that one

might colloquially refer to as “student loans” but that do not qualify for exceptional treatment

under the Bankruptcy Code. See Jason Iuliano, Student Loan Bankruptcy and the Meaning of

Educational Benefit, 93 A

. B

ANKR

. L. J. 277, 305 (2019).

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180 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

scholars have found a great deal of variation in how courts apply the tests

that have been developed to assess whether debtor hardship is undue.

307

This section discusses two tools judges can use to discharge student

loan debt in bankruptcy court, despite the challenging standards. Our first

proposal is informed by the evidence we described in Part I. Our goal is to

have bankruptcy courts make more informed decisions when adjudicating

student loan cases by considering the value of the education the student re-

ceived. Under current tests, courts evaluate whether a debtor’s current inabil-

ity to repay their loans will continue in the future.

308

Few courts consider the

value of the education received by the student.

309

This is inconsistent with

the original legislative purpose underlying the exceptional treatment of stu-

dent debt under the Bankruptcy Code.

It wasn’t always this way. Before 1976, student loans were treated like

other consumer debts

—

that is, freely dischargeable so long as the debtor

did not obtain them through fraud.

310

Congress has since amended this sec-

tion of the Bankruptcy Code five times, on each occasion further restricting

the availability of discharge to student loan debtors.

311

The last change, in

307

See, e.g., Note, Forgive and forget: Bankruptcy reform in the context of for-profit col-

leges, 128 H

ARV

. L. R

. 2018, 2039 (2015); Daniel A. Austin, The Indentured Generation:

Bankruptcy and Student Loan Debt, 53 S

ANTA

LARA

L. R

. 329, 372 (2013); Jason Iuliano,

An Empirical Assessment of Student Loan Discharges and the Undue Hardship Standard, 86

. B

ANKR

. L. J. 495 (2012); Rafael I. Pardo & Michelle R. Lacey, The Real Student-Loan

Scandal: Undue Hardship Discharge Litigation, 83 A

. B

ANKR

. L.J. 179 (2009); Rafael L.

Pardo & Michelle R Lacey, Undue Hardship in the Bankruptcy Courts: An Empirical Assess-

ment of the Discharge of Educational Debt, 74 U. C

INCINNATI

L. R

. 405, 529 (2005); Chris-

tian A. Pereyda, Is Undue Hardship an Undue Burden?, 35 A

. B

ANKR

. I

NST

. J. 40, 41, 59-61

(2016); Ben Wallen, One Standard to Rule Them All: An Argument for Consistency in Educa-

tion Debt Discharge in Bankruptcy Proceedings, 16 H

OUSING

. & T

L. J. 232, 251

(2016) (arguing that all courts should adopt a modified standard of the totality of the

circumstances).

308

Brunner directs a court to consider whether the current state of affairs “is likely to

persist for a significant portion of the repayment period of the student loans” while the totality

test speaks about this in terms of the debtor’s “reliable future financial resources.” See infra

notes 341-42 and accompanying text. Courts vary as to what is the appropriate future period

for consideration. Is it the original term of the loans? A longer term if the loans could be

refinanced? Forever? See In re Price, 573 B.R. 579, 602–06 (Bankr. E.D. Pa. 2017), rev’d sub

nom. DeVos v. Price, 583 B.R. 850 (E.D. Pa. 2018).

309

“The court [in Brunner] stated that consideration of educational benefit was improper

because it made the federal government an insurer of educational value. The court rejected the

view that discharging loans serves as a form of punishment for schools with unsatisfactory

educational programs. Discharge does not impact the schools, but rather hurts the taxpayers

who foot the bill for unpaid student loans.” Robert F. Salvin, Student Loans, Bankruptcy, and

the Fresh Start Policy: Must Debtors Be Impoverished to Discharge Educational Loans, 71

. L. R

. 139, 160–61 (1996).

310

See 11 U.S.C. § 35(a) (1976) (repealed 1978); 11 U.S.C. § 523(a)(2) (2019) (exempt-

ing from discharge most debts that were “obtained by false pretenses, a false representation, or

actual fraud”). “There are nineteen enumerated exceptions to the bankruptcy discharge. Most

have to do with debts owed to the federal or state governments[,] fraud or defalcation, certain

kinds of injuries caused to persons or property, . . . or debts in connection with a divorce or

separation agreement.” Jim´enez, supra note 306, at 630–31.

311

The Higher Education Amendments of 1976 (section 439A) made student loans pre-

sumptively nondischargeable for five years, unless the debtor could prove undue hardship or if

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2020] Student Debt is a Civil Rights Issue 181

2005, presumptively barred discharge of private student loans

—

those

neither made nor guaranteed by the federal government

—

from financial

firms that had already priced the risk of default into the loan price.

312

The

law benefited private financial firms, which issued loans with interest rates

as high as 20%, and those firms lobbied in favor of the bill.

313

To the extent

that legislators claimed this change would help make loans available to more

students,

314

it failed to do so.

315

The legislation had no long-term effect on

loan availability,

316

the cost of the loans increased by an average of 0.35%,

and more students were required to borrow with a co-borrower.

317

Concerned about fraud and abuse, Congress opted to treat student loan

borrowers more harshly than other consumer debtors.

318

Lawmakers were

particularly worried that recent graduates would dump debts in bankruptcy

and go on to highly lucrative careers.

319

This concern motivated the passage

they filed a Chapter 13 case. In 1990, Congress extended the period of presumptive nondis-

chargeability to seven years and included cases filed under Chapter 13. Crime Control Act of

1990, Pub. L. No. 101-647, 104 Stat. 4865 (1990); see also Salvin, supra note 309, at 148. In

1998, most publicly funded or guaranteed student loans became presumptively nondischarge-

able irrespective of how long they had been in repayment. Higher Education Amendments of

1998, Pub. L. No. 105-244, 112 Stat. 1581 (1998). The last amendment was enacted in 2005,

when Congress added private student loans to that list. Alexei Alexandrov & Dali´e Jim´enez,

Lessons from Bankruptcy Reform in the Private Student Loan Market, 11 H

ARV

. L. & P

’

. 175, 178 (2017).

312

See C

ONSUMER

. P

ROT

. B

UREAU

, P

RIVATE

TUDENT

OANS

13-16 (2012), https://

files.consumerfinance.gov/f/201207_cfpb_Reports_Private-Student-Loans.pdf, archived at

https://perma.cc/VN2L-SXA6.

313

Id. at 97 app. fig.2 (showing original private student loan interest rates that vary from

nearly 0% to almost 20%). Most private student loan interest rates are variable rates; that is,

fixed to an index which can increase over time. Id. at 28 and accompanying text, 97 app. fig.1.

314

The sole explanation found in the Congressional Record for granting private lenders

the same treatment as federal loans came from then-Representative Lindsey Graham, who

argued that the change “would make sure that the loan volume necessary to take care of

college expenses are [sic] available for students.” 145 C

ONG

. R

. H2711 (daily ed. May 5,

1999) (statement of Rep. Graham); see also Xiaoling Ang & Dali´e Jim´enez, P

RIVATE

TUDENT

OANS AND

ANKRUPTCY

: D

OUR

-Y

EAR

NDERGRADUATES

ENEFIT FROM THE

NCREASED

OLLECTABILITY OF

TUDENT

OANS

?, S

TUDENT

OANS AND THE

YNAMICS OF

EBT

175,

211 (Brad Hershbein & Kevin M. Hollenbeck eds., W.E. Upjohn Inst., 2014).

315

Written Testimony Before the H. Judiciary Subcomm. on Antitrust, Commercial, and

Admin. Law, 116th Cong. 14 (2019) (statement of Dali´e Jim´enez, Professor of Law), http://

docs.house.gov/meetings/JU/JU05/20190625/109657/HHRG-116-JU05-Wstate-JimnezD-

20190625.pdf, archived at https://perma.cc/T7HX-9RX5 (arguing that “making private stu-

dent loans nondischargeable harmed students”).

316

Id. (noting that private student loan “originations increased after 2005 from 6.6 billion

to 7.8 billion in 2006 and a height of 10.1 billion in 2008 and after the recession, volumes

leveled out at pre-2005 levels (5.6 and 5.7 billion in 2010 and 2011, respectively)”).

317

Id. at 14-15 (citing Ang & Jim´enez, supra note 314, at 179 (estimating the causal effect

of the law change one year later)).

318

“[I]t is dangerous to enact a law that is almost specifically designed to encourage

fraud.” Pereyda, supra note 307, at 419–32 (citing the Congressional Record and describing

“the stereotype of the abusive student loan debtor” and the genesis of the student loan excep-

tion to discharge).

319

Pereyda, supra note 310, at 426 n.111-15 and accompanying text (noting that while

Congress was initially concerned with recent graduates, courts focused in on attorneys and

doctors); see also U.S. H. C

OMM

ON THE

UDICIARY

, 116

ONG

., O

VERSIGHT OF

ANK-

RUPTCY

AW AND

EGISLATIVE

ROPOSALS

1hr:40mins (June 25, 2019) (statement of Rep.

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182 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

of the 1976 law, but because there was no empirical evidence to support it,

Congress prevented the law from taking effect for a year, and two members

of Congress asked the General Accounting Office (GAO)

320

to investigate

historical cases of abuse in the interim.

321

The subsequent GAO report found

that in most of the bankruptcy cases they studied, student loan claims consti-

tuted less than 60% of all debts.

322

In addition, bankruptcy claims involved

less than one percent of the total federal student loans issued to date.

323

This

led Representative Don Edwards to conclude that “the number of abusive

bankruptcies is a small minority of the whole,”

324

and to refer to the treat-

ment of student loans in bankruptcy as a “discriminatory remedy for a ‘scan-

dal’ which exists primarily in the imagination.”

325

Nevertheless, efforts to

amend the law over the years have not succeeded.

Subsequent studies have also found no evidence of systematic or wide-

spread abuse.

326

The bankruptcy rate for student loan borrowers has re-

mained at less than two percent in all the studies available.

327

The most

recent study on the topic examined private student loan borrowers before

Sensenbrenner), https://judiciary.house.gov/legislation/hearings/oversight-bankruptcy-law-

and-legislative-proposals, archived at https://perma.cc/8LH7-BZPY.

320

In 2004, the General Accounting Office was renamed the Government Accountability

Office. GAO Human Capital Reform Act of 2004, Pub. L. No. 108–271, 118 Stat. 811 (2004).

321

H.R. R

. N

. 95-595, at 132 (1977) (describing the order of events).

322

OBERT

P. K

ELLER

, G

UARANTEED

TUDENT

OAN

ROGRAM

ANKRUPTCIES

, H.R.

Doc. No. 77-83, at 24 (1977), http://archive.gao.gov/f1102a/101903.pdf, archived at https://

perma.cc/T4AS-K9FG (hereinafter “1977 GAO Report”). Median income in 1976 was

$12,690. U.S. C

ENSUS

UREAU

, H

OUSEHOLD

ONEY

NCOME IN

1976

AND

ELECTED

OCIAL

AND

CONOMIC

HARACTERISTICS OF

OUSEHOLDS

1 (Jan. 1978), https://www2.census.gov/

prod2/popscan/p60-109.pdf, archived at https://perma.cc/L4YQ-KNE8. The report’s finding is

not surprising, given the stigma attached to a bankruptcy filing and the lingering, adverse

effects for debtors who subsequently wish to borrow. 15 U.S.C. § 1681c(a)(1) (bankruptcy

remains on a credit report up to 10 years); see also Michael D. Sousa, The Persistence of

Bankruptcy Stigma, 26 A

. B

ANKR

. I

NST

. L. R

. 217 (2018) (finding that “the stigma sur-

rounding personal bankruptcy has actually increased over time, rather than decreased, and this

trend paradoxically tracks the number of consumer bankruptcy filings each year”).

323

Individual Views of Chairman James G. O’Hara, H.R. Rep. No. 95-595, supra note

320, at 148.

324

Letter from Representative Don Edwards to Ronald J. Iverson, State of Vermont Stu-

dent Assistance Corporation, H.R. Rep. No. 95-595, at 155 (referring to the 1977 GAO

Report).

325

Id. at 134 (also noting that “it is inappropriate to view the program as social legislation

when granting the loans, but strictly as business when attempting to collect”). After consider-

ing the GAO report, Chairman O’Hara’s subcommittee “unanimously agreed . . . that educa-

tional loans should be treated the same as all other loans in bankruptcy.” Id. at 132.

Unfortunately, the House Judiciary Committee rejected such an amendment. Id.

326

RADY

C. W

ILLIAMSON

, N

’

ANKR

. R

. C

OMM

’

, B

ANKRUPTCY

: T

EXT

WENTY

EARS

213 (1997), https://govinfo.library.unt.edu/nbrc/report/07consum.pdf, archived

at https://perma.cc/WMS9-NVP8 (finding that “the available evidence does not support the

notion that the bankruptcy system was systematically abused when student loans were more

easily dischargeable” and recommending the abolishment of section 523(a)(8)).

327

See, e.g., R

EPORT OF THE

OMMISSION ON THE

ANKRUPTCY

AWS OF THE

U.S., P

ART

1 at 179 (1973) (finding that the bankruptcy rate for student loans was 0.23% in 1972); Indi-

vidual Views of Chairman James G. O’Hara, H.R. Rep. No. 95-595, at 152 (1977); C

ONSUMER

. P

ROT

. B

UREAU

, supra note 312, at 64 (reporting a 0.2 to 1.1% bankruptcy rate for private

student loans).

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2020] Student Debt is a Civil Rights Issue 183

and after the 2005 change in the law and failed to find strategic behavior of

this kind by private student loan borrowers.

328

To discharge student loans, debtors must convince a judge that repaying

the loan “would impose an undue hardship” on them and their depen-

dents.

329

This process generates a number of concerns. To obtain a hardship

exception, debtors must first file what is in essence a federal lawsuit,

330

which raises access to justice concerns.

331

“Undue hardship” is not de-

fined.

332

The case law has developed very unevenly, leading one consumer

protection attorney to describe the standard as “an empty vessel, susceptible

to being filled with whatever policy objectives courts deem appropriate.”

333

Federal circuit courts have adopted two different undue hardship tests: the

Brunner test, which is used by the most of the circuits,

334

and a “totality of

the circumstances” test adopted by the Eighth Circuit

335

and used by most

First Circuit

336

bankruptcy courts.

337

328

Rajeev Darolia & Dubravka Ritter, Strategic Default Among Private Student Loan

Debtors: Evidence from Bankruptcy Reform, E

DUC

. F

. & P

’

28 (Jan. 2019) (finding no

evidence “that the moral hazard associated with [private student loan] dischargeability

[before the law changed] appreciably affected the behavior of student loan borrowers

systematically”).

329

11 U.S.C. § 523(a)(8) (2010).

330

In bankruptcy parlance, the debtor must file an “adversary proceeding” seeking a de-

termination of dischargeability. Fed. R. Bankr. Proc. 7001(6) (2010). “Adversary proceedings

resemble other federal lawsuits insofar as Part VII of the Bankruptcy Rules governing such

proceedings virtually incorporates (with occasional modification) the Federal Rules of Civil

Procedure.” Pardo & Lacey, The Real Student-Loan Scandal: Undue Hardship Discharge Liti-

gation, supra note 307, at 187 n.39.

331

Compare Rafael I. Pardo, Taking Bankruptcy Rights Seriously, 91 W

ASH

. L. R

1115, 1155 (2016) (reporting on an empirical study finding that self-represented student loan

debtors had much greater difficulty in getting their loans discharged than if they had an attor-

ney), with Jason Iuliano, Student Loans and Surmountable Access-to-Justice Barriers, 68 F

L. R

. 377, 388 (2016) (finding, based on a different study, that self-represented student

borrowers achieved slightly better results, discharging slightly more debt, than those repre-

sented by a lawyer).

332

Undue hardship isn’t defined in the nondischargeability section of the Bankruptcy

Code, section 523, but the same term is used in the next section, 524. See 11 U.S.C. § 524(m)

(2010). This section, which wasn’t added until 2008, states that “it shall be presumed that such

agreement is an undue hardship on the debtor if the debtor’s monthly income less the debtor’s

monthly expenses . . . is less than the scheduled payments on the reaffirmed debt.” Id. (empha-

sis added); see also Pardo & Lacey, Undue Hardship in the Bankruptcy Courts: An Empirical

Assessment of the Discharge of Educational Debt, supra note 307, at 511-12 (arguing that now

that Congress has defined “undue hardship” somewhere else in the Code, courts should look

to this definition when interpreting “undue hardship” in the nondischargeability context).

333

Salvin, supra note 309, at 170.

334

Elizabeth K. Lamphier, Are Student Loans No Longer the “Third Rail” of Bankruptcy?,

37 A

. B

ANKR

. I

NST

. J., 1 n.4 (2018), https://insolvencyintel.abi.org/i/931745-are-student-

loans-no-longer-the-third-rail-of-bankruptcy/1?, archived at https://perma.cc/REN8-MBP4

(listing circuit opinions adopting Brunner).

335

In re Long, 322 F.3d 549, 554 (8th Cir. 2003) (announcing and adopting the totality of

circumstances test).

336

In re Schatz, 602 B.R. 411, 417, 420 (B.A.P. 1st Cir. 2019) (noting that “the U.S.

Court of Appeals for the First Circuit . . . has not yet adopted a specific test” and remanding

the case to the bankruptcy court for a “proper application of the totality of the circumstances

test”).

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184 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

The Brunner test requires debtors to show they (1) “cannot maintain,

based on current income and expenses, a ‘minimal standard’ of living” for

themselves and dependents if required to repay their loans; (2) that “addi-

tional circumstances exist indicating that this state of affairs is likely to per-

sist for a significant portion of the repayment period of the student loans,”

and (3) that they have made “good faith efforts to repay the loans.”

338

The

totality test directs courts to evaluate “(1) the debtor’s past, present, and

reasonably reliable future financial resources; (2) a calculation of the

debtor’s and [their] dependent’s reasonable necessary living expenses; and

(3) any other relevant facts and circumstances surrounding each particular

bankruptcy case.”

339

Both judicial glosses

340

have received a great deal of criticism

341

due to

their oftentimes harsh results.

342

For example, in a recent Fifth Circuit case,

337

Despite the different language in the tests, note that it is not clear that they produce

significantly divergent results. Pardo, supra note 331, at 1141 (reporting that “debtors exper-

ienced litigation success 38.8% of the time in Brunner jurisdictions and 40.6% of the time in

totality jurisdictions,” a difference that is not statistically significant); see also Pardo & Lacey,

Undue Hardship in the Bankruptcy Courts, supra note 310, at 486-509 (arguing that the best

way to explain the substantive outcome was “differing judicial perceptions of how the same

standard applies to similarly situated debtors”).

338

See U.S. Dept. of Educ. v. Gerhardt (In re Gerhardt), 348 F.3d 89, 91 (5th Cir. 2003)

(citing Brunner v. N.Y. Higher Educ. Servs. Corp. (In re Brunner), 831 F.2d 395, 396 (2d Cir.

1987)).

339

Long, 322 F.3d at 554 (citing Andrews v. South Dakota Student Loan Assistance Corp.

(In re Andrews), 661 F.2d 702, 704 (8th Cir. 1981) and Andresen v. Nebraska Student Loan

Program, Inc. (In re Andresen), 232 B.R. 127, 132 (B.A.P. 8th Cir. 1999)).

340

See In re Krieger, 713 F.3d 882, 884 (7th Cir. 2013) (“It is important not to allow

judicial glosses, such as the language in Roberson and Brunner, to supersede the statute it-

self.”); In re Price, 573 B.R. at 603 (“While the Brunner test has developed a talismanic

quality over the years, it is merely a judicial gloss on the statutory standard of ‘undue

hardship.’”).

341

See, e.g., Douglass G. Boshkoff, Limited, Conditional, and Suspended Discharges in

Anglo-American Bankruptcy Proceedings, 131 U. P

. L. R

. 69, 118 (1982) (observing that

“[i]t is absolutely clear that rules of condition which do not use a fixed level of payment to

determine eligibility for discharge inevitably cause the judge to become an arbiter of the

debtor’s lifestyle”); Rebekah Keller, The “Undue Hardship” Test: The Dangers of a Subjective

Test in Determining the Dischargeability of Student Loan Debt in Bankruptcy, 82 M

. L. R

211, 239 (2017); John A.E. Pottow, The Nondischargeability of Student Loans in Personal

Bankruptcy Proceedings: The Search for a Theory, 44 C

. B

. L. J. 245, 268 (2006)

(“Judges use the undue hardship test to back-end income-contingency into the American sys-

tem - albeit in an unpredictable and expensive way”); William L. Ryan, U.S. Higher Educa-

tion Financing Has Significantly Changed, So Too Should Seventh Circuit Student Loan

Discharge Law, 38 N. I

. U. L. R

. 436, 465 (2018); Salvin, supra note 309, at 139-202;

Aaron N. Taylor, Undo Undue Hardship: An Objective Approach to Discharging Federal Stu-

dent Loans in Bankruptcy, 38 J. L

EGIS

. 185, 236 (2012).

342

See, e.g., Salvin, supra note 309, at 142-43 (describing a case in which the debtor “will

remain liable on her student loan until she is seventy-five years old, ten years after the age at

which it would be customary for her to retire” and noting that the court issued the decision

without discussing the debtor’s retirement savings). Some courts go so far as to require that the

debtor prove “a certainty of hopelessness,” regardless of whether they use Brunner or a total-

ity test. Compare Oyler v. Educational Credit Mgt. Corp. (In re Oyler), 397 F.3d 382, 386 (6th

Cir. 2005) (using the “certainty of hopelessness” formulation in a Brunner jurisdiction), with

Mulherin v. Sallie Mae Servicing Corp. (In re Mulherin), 297 B.R. 559, 566 (Bankr. N.D.

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2020] Student Debt is a Civil Rights Issue 185

Judge Edith Jones denied a discharge to an unemployed 63-year old bor-

rower suffering from diabetic neuropathy who owed almost $8,000 in loans

from community college.

343

The court declined to find that it would be an

undue hardship for this borrower to repay her loans, notwithstanding the fact

the debtor was nearing retirement age and had a history of needing to quit

jobs because her medical condition prevented her from standing for long

periods of time.

344

The best way to fix this system is simple: undo the special treatment of

student loans in bankruptcy through legislation.

345

Several House and Senate

bills in the 2019 legislative session aim to do just that.

346

But even without

Congressional action, judges already have tools at their disposal to improve

the current system. Indeed, some judges have begun using their discretion to

forgive student loan debt.

347

As one bankruptcy court put it, a student loan is

an investment made with a view toward increased economic productivity

skills

—

that is, the chance of better employment.

Because it is an investment . . . and because the expectation can reason-

ably be said to be increased income for the student after the schooling termi-

nates, then it is reasonable to say that the person who made the investment is

entitled to repayment, even in the face of bankruptcy.

348

Iowa 2003) (using the “certainty of hopelessness” formulation in a totality of the circum-

stances jurisdiction).

343

In re Thomas 931 F.3d 449, 449 (5th Cir. 2019).

344

According to the court, which applied the Brunner standard, “[t]he plain meaning of

the words chosen by Congress is that student loans are not to be discharged unless requiring

repayment would impose intolerable difficulties on the debtor.” Id. at 452. “How one set of

ambiguous words

—

‘undue hardship’

—

can have a plain meaning but need to be explained

through another set of ambiguous words

—

‘intolerable difficulties’

—

was not explained.” Bob

Lawless, The Fifth Circuit Finds a Way to Make it Even Harder to Discharge Loans in Bank-

ruptcy, C

REDIT

LIPS

LOG

(Aug. 2, 2019, 5:39 PM), https://www.creditslips.org/creditslips/

2019/08/the-fifth-circuit-finds-a-way-to-make-it-even-harder-to-discharge-student-loans-in-

bankruptcy.html, archived at https://perma.cc/3QRS-YFC3.

345

Many have called for such a reform, including the 1978 Commission on Consumer

Bankruptcy. W

ILLIAMSON

, N

’

ANKR

. R

. C

OMM

’

, supra note 326, at § 1.4.5, at 207-17.

346

See, e.g., Student Borrower Bankruptcy Relief Act, H.R. 2648, 116th Cong. § 1

(2019); Discharge Student Loan in Bankruptcy Act, H.R. 770, 116th Cong. § 1 (2019). An-

other bill would focus only on privately originated student loans. Private Student Loan Bank-

ruptcy Fairness Act, H.R. 885, 116th Cong. § 1 (2019).

347

See Katy Stech Ferek, Judges Wouldn’t Consider Forgiving Crippling Student Loans

—

Until Now, W

ALL

. J. (June 14, 2018), https://www.wsj.com/articles/judges-wouldnt-con-

sider-forgiving-crippling-student-loans-until-now-1528974001, archived at https://perma.cc/

LS3P-CUTH (listing some of the ways that judges are looking for “wiggle room”). But see In

re Thomas, 931 F.3d at 449.

348

In re Powelson, 25 B.R. 274, 275-76 (Bankr. D. Neb. 1982) (“The most obvious exam-

ple would be the doctor who, while in medical school, borrows money to increase his eco-

nomic potential, becomes a doctor and enjoys a significantly higher amount of income. It

seems reasonable in that case generally to say that he should be obligated to repay that loan

because it made him the doctor that he is.”). However, note that this rationale is also applica-

ble to many kinds of loans that are dischargeable

—

for example, medical debts or car loans,

which do not receive exceptional treatment under the Bankruptcy Code. See Atkinson, supra

note 55, at 16-17 n.57.

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186 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

But what if the borrower did not graduate? Or attended a for-profit

school that provided only questionable credentials?

349

The discharge excep-

tion contains, as one attorney put it, “a rebuttable presumption that educa-

tion increases a person’s economic opportunities and ability to repay,”

350

but

if the person can show that their future prospects are not improved as a result

of the education received, a court should take that into account. In the case

of for-profit schools and certificate programs, this is a likely scenario, as

discussed above.

351

For-profit students receive modest or no salary bumps

even when they graduate, and no bump at all if they fail to complete a course

of study. As we also discussed in Part I.A.3 above, Black and Latinx bor-

rowers routinely encounter labor market discrimination in hiring and wages,

leading to decreased earning potential. Bankruptcy judges should weigh

these factors when deciding whether the borrower’s current financial situa-

tion is likely to improve in the future to enable repayment. Bankruptcy

judges “themselves must guard against falling victim to the same cognitive

flaws that lead debtors to underestimate risks.”

352

Second, judges examining dischargeability under a totality of the cir-

cumstances test can appropriately consider the possibility of exploitative

misconduct by the servicer or by the institution attended as among the

“other relevant facts and circumstances surrounding each particular bank-

ruptcy case.”

353

Exploitative misconduct is a salient factor that is relevant to

an “undue hardship” determination. Judges should therefore examine

whether, for example, the school or servicer was found to have engaged in

predatory practices. To use the question posed by one judge as an example of

what a court might consider under a “totality” regime: “Was the student

inveigled into obtaining the loan and taking particular courses in college

when the college authorities should have known that upon graduation from

college the student had little chance of obtaining employment in that

field?”

354

A few courts have considered these factors, but as an affirmative argu-

ment it has not received much traction. In 1989, for example, a bankruptcy

judge in Pennsylvania noted that “far too many school operators are exploit-

ing America’s neediest people and their dreams for a new start in life. They

promise education and jobs which students never receive, leaving them deep

349

As noted below, the Department of Education has a “Borrower Defense Rule” that

permits a discharge of federal student loans under certain circumstances. 34 C.F.R. §685.206.

We discuss some of the current issues with the rule below, see infra Part II.C.2.e, but at this

point, suffice it to say that if a borrower is in bankruptcy and seeking a discharge of their

student loans, it is wholly inefficient to send them to deal with the Department of Education.

350

Salvin, supra note 309, at 196.

351

See supra Part I.A.

352

Salvin, supra note 309, at 197.

353

In re Long, 322 F.3d 549, 554 (8th Cir. 2003)

354

In re Littell, 6 B.R. 85, 88 (Bankr. D. Or. 1980).

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2020] Student Debt is a Civil Rights Issue 187

in debt.”

355

The debtor in that case had obtained a “Doctor of Motors” de-

gree, but “did not possess the necessary qualifications and skills to obtain

employment upon completion of this program.”

356

Similarly, a Florida bank-

ruptcy court noted its awareness “of many scams where profit-hungry solici-

tors enroll people into educational programs which provide nothing of

practical value to the student and from which the ‘graduates’ are able to

achieve little if anything.”

357

Without deciding whether the debtor’s $7,250

medical technician training was such a program, the court looked to other

facts that led it to conclude that “it appears doubtful . . . that she will ever

obtain work as a medical technician.”

358

Considering the likely earnings pre-

mium a borrower received from their education and taking into account

questionable or outright fraudulent practices by the institution are steps en-

tirely consistent with the reasoning underlying the exceptional treatment of

student loans in bankruptcy.

These are modest suggestions. Like those in the next section, they

would move the needle in the right direction, but only for a small subset of

the population in need. Congress should take up the much bolder reforms

described above, but until that happens, bankruptcy judges can do their small

part. Given the context of systemic inequality described in Part I, if bank-

ruptcy judges do follow these recommendations, they will at least reduce the

racially disparate impact of student indebtedness.

359

2. Other Reforms

There are several incremental reforms that Congress or the Department

of Education could implement to reduce the harmful effects of student loans,

particularly for students of color. This section collects and briefly describes

proposals for such reform. The discussion below provides a starting point for

addressing the issues; we do not attempt a comprehensive treatment.

355

In re Correll, 105 B.R. 302, 307 (Bankr. W.D. Pa. 1989) (discharging the debt and

stating that “[t]he abuse which Congress sought to prevent does not appear in this case. We do

not have a highly-educated debtor filing for bankruptcy relief to avoid his student loan

obligations”).

356

Id. at 307.

357

In re Vazquez, 194 B.R. 677, 680 (Bankr. S.D. Fla. 1996).

358

Id. at 679.

359

See generally Paul Kiel & Hannah Fresques, Data Analysis: Bankruptcy and Race in

America, P

UBLICA

(Sept. 27, 2017), https://projects.propublica.org/graphics/bankruptcy-

data-analysis, archived at https://perma.cc/K779-9FAR (discussing racial patterns in bank-

ruptcy filings and outcomes); Jean Braucher et al., Race, Attorney Influence, and Bankruptcy

Chapter Choice, 9 J. E

MPIRICAL

EGAL

TUD

. 393, 419 (2012) (reporting on two studies,

including an experimental vignette study, suggesting that bankruptcy attorneys are part of the

reason for the racial disparities in bankruptcy chapters); Mechele Dickerson, Racial Steering in

Bankruptcy, 20 A

. B

ANKR

. I

NST

. L. R

. 623, 623 (2012) (reviewing previous study and

noting that “race matters, has always mattered, and will always matter in bankruptcy”).

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188 Harvard Civil Rights-Civil Liberties Law Review [Vol. 55

(a) Streamlined and Reformed Income-Driven Repayment Plans

Congress has enacted a panoply of income-driven repayment (IDR)

plans which allow borrowers to limit their monthly payments to 10 or 15%

of their income, as discussed previously.

360

Tying the monthly payment obli-

gation to borrower income is theoretically a good solution for those having

trouble repaying, but the execution has left much to be desired.

The Problems: First, many borrowers remain unaware that these plans

exist.

361

Even if people know about the plans, they are extremely compli-

cated. There are multiple versions, with differing eligibility criteria: Income-

Contingent Repayment, Income-Based Repayment, Pay As You Earn Repay-

ment, and Revised Pay As You Earn Repayment.

362

These different versions

have different eligibility criteria, repayment terms, and impose different

limits on the maximum monthly payment.

363

They require annual recerti-

fication

—

a process that does not go smoothly for over half of borrowers

enrolled in IDR.

364

This complexity rewards borrowers who have the time

and expertise to navigate these options, and penalizes those who do not.

365

Because the Department of Education requires borrowers to go through

their loan servicers for assistance in selecting a repayment plan,

366

borrowers are vulnerable to deception by servicers seeking to maxi-

mize profits rather than minimize repayment burden.

367

And when

360

See supra Part I.A.3.

361

See supra note 145 and accompanying text.

362

See U.S. Dep’t of Educ., supra note 139 (describing various income-linked repayment

plans).

363

Ann Carns, Revised Program Will Reduce Student Loan Repayments, N.Y. T

IMES

(Aug. 14, 2015), https://www.nytimes.com/2015/08/15/your-money/revised-program-will-re-

duce-student-loan-repayments.html, archived at https://perma.cc/QTP3-TU5C (describing a

“confusing menu of income-related repayment options, all with varying criteria”).

364

Diane Cheng & Jessica Thompson, The Inst. for Coll. Access & Success, Make It

Simple, Keep It Fair: A Proposal to Streamline and Improve Income-Driven Repayment of

Federal Student Loans 3 (2017), https://files.eric.ed.gov/fulltext/ED588517.pdf, archived at

https://perma.cc/5ZY2-G4FY.

365

Resource-poor students, who are disproportionately Black and Latinx, are less likely to

succeed in navigating this complex system. See, e.g., Anandi Mani et al., Poverty Impedes

Cognitive Function, 341 S

CIENCE

976, 980 (2013).

366

See U.S. Dep’t of Educ., Who Is My Loan Servicer?, F

. S

TUDENT

, https://

studentaidhelp.ed.gov/app/answers/detail/a_id/196/~/who-is-my-loan-servicer%3F, archived

at https://perma.cc/32BJ-8TNS (“Why pay for help with your federal student loans when your

loan servicer will help you for FREE [sic]? Contact your servicer to apply for income-driven

repayment plans, student loan forgiveness, and more.”).

367

In a lawsuit against one large servicer, the California Attorney General alleged pre-

cisely this form of misconduct. First Amended Complaint at 7-14, People v. Navient Corp.,

No. CGC-18-567732 (Cal. Super. Ct. Oct. 16, 2018), https://oag.ca.gov/system/files/attach-

ments/press_releases/CA%20AG%20First%20Amended%20Complaint%20-%20Navient.pdf,

archived at https://perma.cc/8PQF-M6Z8; see also Zack Friedman, How This New Navient

Memo Affects Your Student Loans, F

ORBES

(Sept. 30, 2019, 8:30 AM), https://www.forbes

.com/sites/zackfriedman/2019/09/30/student-loans-navient-student-loan-repayment/, archived

at https://perma.cc/8KHQ-LFQM (describing internal Navient memo that stated, “Our battle

cry remains ‘forbear them, forbear them, make them relinquish the ball’”).

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2020] Student Debt is a Civil Rights Issue 189

the balance of the loan is forgiven, the borrower may face a large tax

liability.

368

Solutions: Proposals to improve IDR abound.

369

At a minimum, a sin-

gle, streamlined repayment plan tied to income should be the default for all

borrowers,

370

with automatic annual recertification.

371

This plan should have

a short time horizon, perhaps as little as ten years, to enable students to

engage more quickly in productive spending and borrowing. The cost of loan

forgiveness under this more generous conception of income-linked repay-

ment would rise. But it is nevertheless good policy, as it would effectively

increase federal subsidies to low-income students pursuing higher education.

Why this isn’t enough: Providing more time to repay likely would re-

duce the likelihood of default or financial calamity. However, extended re-

payment would do little for the borrower who encounters a sudden life

challenge, such as sudden illness in the family, a car accident, or other event.

The extended repayment obligation also hampers wealth accumulation,

372

368

See Cheng & Thompson, supra note 367. See generally Gregory Crespi, Should We

Defuse the Tax Bomb Facing Lawyers Who Are Enrolled in Income-Based Student Loan Re-

payment Plans?, 68 S. C. L. R

. 117 (2016).

369

See, e.g., John R. Brooks, Income-Driven Repayment and the Public Financing of

Higher Education, 104 G

. L.J. 229, 229–90 (2015) (conceptualizing IDR payments as tax

payments and making recommendations accordingly). Some proposals call for the federal gov-

ernment to opt in automatically borrowers to a system of automatic paycheck withdrawal. See,

e.g., C

OMM

FOR

CON

. D

., A

UTOMATIC FOR THE

ORROWER

: H

EPAYMENT

ASED ON

NCOME

EDUCE

OAN

EFAULTS AND

ANAGE

ISK

2–41 (2014), https://files.eric.ed

.gov/fulltext/ED558514.pdf, archived at https://perma.cc/3VDR-7E7S.

370

The Trump administration has also proposed a single IDR plan. See Proposals to Re-

form the Higher Education Act, W

HITE

OUSE

(Mar. 18, 2019), https://www.whitehouse.gov/

wp-content/uploads/2019/03/HEA-Principles.pdf, archived at https://perma.cc/MV5D-WPXR;