by Rickey Gard Diamond
This post first appeared in Vermont Woman, (Holiday, Nov/Dec) 2014. 

I remember when I decided I had to get my college degree: A working mom with three kids at the time, when I graduated I would owe about $8000, or in 1980, the equivalent of what I might pay for a car. I decided to invest in me, knowing the degree would open doors that would stay shut otherwise.
Remarried, about five years later I got bad news; my husband’s job was eliminated. We contacted all our creditors and arranged partial payment plans while he looked for employment. Everyone was understanding and nice—except one.
The ironically named People’s State Bank that held my student loans was nasty. I had faithfully all but repaid, but in response to my story, their man refused any half-measures and threatened penalties, or else. We paid them somehow the next few months.
And I still remember the satisfaction I felt, placing my last check payment inside an envelope I addressed to: The People’s State Bloodsuckers. Ever since, we’ve made it our practice to use local, community banks and credit unions.

How Much, Too Much
People’s State Bank became Pinnacle Bank became Civitas Bank became Citizens Bank of MidAmerica and is now the absurdly named Fifth Third Bank. Our era has given us overly complex bank upheavals.
And student bank loans have gotten much bigger and been used by an increasing number of students. A recent Senate hearing heard testimony that about eight banks dominate that market—shades of too-big-to-fail? Student debt nationwide now outranks our nation’s credit card debt for the first time, at over $1.2 trillion. A trillion is a thousand billions, each billion a thousand millions.
With universities running themselves like profit-seeking corporations, and more importantly with the nation’s state governments encouraging the trend by reducing state education funds, college costs for students have skyrocketed. The national college boards publish tuition trends at their website, and from 1990-91 until 2013-14, national tuition costs on average more than doubled. Family incomes did not.
Here in Vermont, 63 percent of our students now need loans. Part of that might have to do with UVM’s ranking seventh in the top ten most expensive state schools (U.S. News & World Report, Oct. 28, 2014). This year’s in-state tuition costs $16,226. (University of Pittsburgh came in first at $17,772.) Board members at UVM and your local legislator need to drive some back roads in Vermont and look around.
This year’s average Vermont student debt is $28,299. We rank #13 in debt amount nationally, and not all students finish. The Project on Student Debt says the national average debt of graduates is $29,400, and from 2008 to 2012, average debt of combined government and private loans grew by 6 percent a year. Since Vermont’s tuition is relatively high, we should assume future state grads will be looking at considerably more, not less, than the state average most recently reported.

Loan Zombies
The mean fellow I met at People’s Bank years ago might have gone on to work in Washington, D.C., because by 2005 the bankers’ lobby had successfully changed the bankruptcy law to make banks’ student loans “non-dischargeable.” Bankruptcy, the last-ditch chance that people have when bad things happen—when their health fails, or the economy crashes—goes back to ancient times and literal slavery or “jubilee,” the forgiving of debt. In modern times, debtor’s prison was replaced by a court of law that could find debts impossible to repay. But since 2005, declaring bankruptcy in court will not free you from student loans: Not even your death will free your poor co-signers from your debt obligation.
I think maybe this explains the appeal of all those zombie movies. You can’t kill these loans. You can’t buy a home or start a business with these loans. They turn you into the walking dead.

Equal Output
The American Association of University Women (AAUW) came out with a new study in July, adding new light to the issue for women, saying: “Although women and men pay the same tuition for higher education—and tend to take out the same amount in loans—women are more burdened by their student loan debt after graduation. Just one year after graduation, women are paid on average 82 cents for every dollar their male counterparts are paid,” an 18 percent wage gap.
Even controlling for factors like chosen major, type of job, number of hours worked each week, AAUW still found a 7 percent wage gap, no matter the field. They invited Sen. Elizabeth Warren (D-MA) to their study’s press conference, and she called it “a one-two punch…. Women take on big debts to go to college, but they have less money to pay off those debts.” http://www.upi.com/Top_News/US/2014/06/04/Female-senators-tie-college-loan-push-to-equal-pay/2071401890697/

That’s not even mentioning what happens later, should a female graduate be foolish enough to want to start a family. Without paid family leave or help with childcare costs, she’ll be a debtor further handicapped.

A Different Approach
But if we’ve been persuaded that banks lending money is the only way forward for education, then at least let it be the lending of our own money, set at an interest rate with terms we can control.
The only bank in the country now capitalized by its own state tax revenues, (and aimed at supporting local banks and employment) The Bank of North Dakota began offering state students a refinance rate of 5.34 percent fixed, or 1.73 percent variable (with interest not varying more than 1 percent a year). For students locked in at higher rates, refinance was a godsend.
But BND also sponsors and talks freely about four loan deferment programs, including for economic hardship and unemployment, and three loan forgiveness programs, the latter encouraging debt-reduced careers in teaching and STEM.
They offer scholarships awarded to the top fifth of their high school students who qualify and choose to attend school in North Dakota. Comparatively speaking, North Dakota’s tuitions are a bargain at $7,265 in 2014—at least partly because the BND returns dividends to the state’s general fund.
Quick. Somebody tell AAUW and Elizabeth Warren. Student debt is a woman’s issue—and public banking gives states a chance to revive education and a future. Local legislators should look to this state solution.

Rickey Gard Diamond is editor of Vermont Woman and is on the board of The Public Banking Institute.