Ah, student debt. 43.3 million Americans have it. And Hillary Clinton feels our pain.
As part of her latest platform proposal, the Initiative on Technology & Innovation, Clinton is proposing that a small subset of the currently-afflicted be eligible for some forgiveness, to the tune of $17,500. Sounds like a step in the right direction, at first blush.
Unfortunately, this newly-eligible will subset will consist solely of the young “innovators who start social enterprises or new businesses in distressed communities.”
There’s much to laud in Clinton’s new proposal, including access to debt-free college and employee profit-sharing. But, debt relief for entrepreneurs seems tone deaf at best, trending toward a neoliberal approach to systemic class inequality: liberate the job creators, for they will save us all.
The preponderance of student debt is falling on people for whom 3-5 years spent tinkering on a new business idea and foregoing wage earnings is impossible to imagine. For these debtors, student debt is just one in a constellation of monthly bills that allow for no rest. Who can afford to take on the time, opportunity cost, and risks of entrepreneurship — some statistics place the current startup failure rate at 90% — when the next paycheck is the key to keeping the lights and heat on?
At best, such a policy will address a small fraction of current debtors. As Ben Norton observes in Salon, “It defies reason to expect the more than 43 million Americans who have student loans to become entrepreneurs. This is approximately 13 percent of the total population; they can’t start business with a 90 percent failure rate in hopes of potentially having part of their student loans forgiven.”
Currently, low-income debtors are eligible for student loan deferment. However, actual forgiveness is a privilege reserved for a scant few professions, most of which involve public service of some kind: social workers, military personnel, nurses, firefighters, librarians, etc.
Adding entrepreneurs to this list while continuing to exclude, say, retail workers misunderstands the scope of the student debt problem, incentivizing high-risk career choices instead of establishing viable and secure economic paths for the vast majority of graduates.
Yes, debt relief is good, wherever it comes. And yes, innovation, especially in low-income communities, can lead to better jobs. But, providing loan forgiveness as a reward to innovators who are, presumably, doing better financially than the people who work for them is insufficient in the face of an entrenched problem that demands comprehensive solutions. It tells a story that we’ve all heard by now, and yet which somehow doesn’t make its way into so many policy proposals: it’s expensive to be poor in this country.
