December, 2021
Washington — Historian Elizabeth Tandy Shermer has written a welcome addition to the literature of the nation's ongoing student debt crisis. The book, Indentured Students: How Government-Guaranteed Loans Left Generations Drowning in College Debt, looks back through the eras of the New Deal, the GI Bill, Sputnik, and the creation of the student loan industry.
The book is unusually insightful on topics ranging from hierarchies across higher education sectors, to the relationship of student financial aid to college prices, to inequities by race and sex that have actually been exacerbated by student loans.
What is missing in the book is more development of the "how" in the title, particularly during the tumultuous first decade of the twenty-first century. While earlier chapters admirably delve into the people who shaped policies for good or ill, the treatment of later eras leaves readers hanging without the same pursuit of who was responsible for what, why, and how. Example (p.279):
"With [the 2006] presidential primaries rapidly approaching, and investigations underway of abuses in student lending, the president fired industry insiders from a purposefully lax Education Department."
As someone who watched this happen from both inside the department and from subsequent litigation discovery, I can attest to the accuracy of the statement. I also admire its perspicacity, as it goes well beyond conventional wisdom and packs the punch of truth. But the book does not go on to explain how this left students drowning in debt. Who were these people? What did they do? What investigations? What abuses? Readers are left guessing.
If the Education Department was "purposefully lax" (and it was), what does that mean for borrowers who are now paying the price, as victims of predatory lending? Does it mean the Department should remediate the damage done? I believe the answer is yes, and that it can be done under existing statutory authority, namely the "compromise and settlement" provisions of 20 U.S.C. 1082.*
There is a straight line from the corruption of the early 2000s to the current student loan crisis.** One of the book's missed opportunities is that it does not illuminate this connection, to fulfill the promise of the book's title. Otherwise, this is a remarkably insightful book from which we all can learn.
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* The Biden Administration has an opportunity to offer significant student loan relief by use of the compromise and settlement authority as outlined in a recent work by Claire Torchiana and Winston Berkman-Breen of the Student Borrower Protection Center. See especially p. 44.
** Given what the Department of Justice knew about the corruption of the era, it is perplexing that it did not act as it did later in the college admissions scandal "Operation Varsity Blues," when the perpetrators were prosecuted under federal RICO statutes. The difference, apparently, is that the racketeering in the former case involved federal officials, which was just too hard for DOJ to take on.
