Student Debt and Asset Building: State Asset Learning Cluster Convening

Monday, August 17, 2015

The State Assets Learning Cluster conversation on student debt started with a presentation from Ray Boshara of the Federal Reserve Bank of St. Louis. He presented findings from the Bank's essay, The Demographics of Wealth. One clear point from that work is the extent to which age--along with race and educational attainment--may denote real financial fragility in today's economy. That's discouraging, certainly, but it also made the policy pragmatist in me wonder if there won't be some avenues through which to then push for policy changes, by mobilizing a broad and powerful cohort 'movement'. There's some risk, obviously, any time we might tend to distract from the dire racial inequity that characterizes wealth distribution today, but there's also the hope that helping a larger group of Americans understand the extent to which their dreams, too, may be slipping beyond their reach, will help to galvanize a commitment to reverse the tide.

I made the book's central argument: that the evidence suggests a need for a 'revolution' in financial aid policy, away from debt dependence, in order to not only foster improved educational outcomes and relieve the immediate strains of repayment, but more crucially to restore higher education's role as a catalyst of upward mobility and a meaningful conduit to equitable chances at life success. I also reflected on our experiences talking about the book, in the press, with other advocates, and just in general conversation, particularly the extent to which we have found openings to talk about Children's Savings Accounts with audiences, and in contexts, that we might not otherwise. This is where we had the most discussion, particularly during the networking lunch that followed, more around strategy, then, than around research. I shared candidly that I sort of 'backed into' looking at student borrowing, as a constraint on family's asset building and a corrosive force in children's ability to use education to climb. Humbly conceding that I'm no financial aid/student debt expert, I urged others to be part of these conversations with us, as we seek to move CSAs beyond the realm of the 'asset movement' by capitalizing on student debt's moment in the spotlight (or the hot seat, as the case may be). Indeed, SALC participants were clear that they wanted to transcend that segmentation and, instead, see asset building fully woven into economic and social policy. I have seen, in the past month, real opportunities to do that in the arena of financial aid, and I was more convinced than ever, driving back from St. Louis, that we can insert children's assets into the void opening up around dissatisfaction and alarm over student debt.

Underscoring the importance of not losing the inequity dimension in the push to universalize the problem, Mark Huelsman of Demos drove home the point that understanding the debt crisis today requires asking, "for whom?" is student borrowing a problem. He shared findings related to the racial and class divide in financial aid, and also pointed to what could be coming on the horizon, given the relatively nascent field of inquiry that has looked at long-term financial effects of student debt and their inequitable distribution among the population. We had a robust conversation after that, with practitioners on the ground talking about their efforts to link workforce development, educational opportunities, and asset-building, while others talked about their children's savings efforts or, in particularly exciting developments from my viewpoint, work around organizing grassroots responses to the racial wealth gap.

At AEDI, we have more chance than most researchers to see our findings applied in practice. From my perspective, though, we can never have too many. These kinds of opportunities--to see people in the field react to, build on, and challenge our findings and our analysis of their significance--are incredibly valuable, and have been one of the best things to come from the release of the book this summer. We look forward to more such occasions, and are grateful for the chance to walk in this space where the asset and debt fields collide.

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New Book Released

Today’s student loan system is in place because of a political compromise, and growing discontent with student debt may signal that this arrangement has run its course. While there are resources and organizations in place to help those struggling with debt, the time has come to consider a new direction for financial aid, William Elliott III and Melinda Lewis argue in “Student Debt: A Reference Handbook.”

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