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Women & Money

How Debt Defines Us

Whether it's crippling student loans or credit-card debt, ballooning mortgage payments or healthcare expenses, most Americans are on the brink of financial crisis. Can we recover?

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I am 37 years old, a Black queer single mother, and I owe $282,692 in federal student loan debt and $13,000 in private student loans serviced by Sallie Mae. This number takes up a huge amount of space in my mind. As a result, I am always thinking about debt and how it impacts our daily lives. I define debt broadly as a transaction between two entities, a void between the two parties; not limited to but including student loan debt, petty debt (like bail bonds that separate families), political debt, and crimes of humanity between countries or governments that linger for generations, emotional debt, the debt of death (think the long-term impact of HIV and losing so many lives in the 1980s), the debts of mass incarceration, or even the debts of the #MeToo movement.

Most debts are invisible. Culturally, we are making debt visible by discussing it in the media now more than ever. Billionaire Robert F. Smith made headlines when he canceled Morehouse College’s class of 2019 educational debt pledging to donate $40 million. Before that, Nicki Minaj was paying off her fans’ student loan debt on Twitter. Paid Off, a show on TruTV, aims to unshackle borrowers from their burden of debt. After being criticized for her personal and student-loan debt, Georgia gubernatorial candidate Stacey Abrams penned an essay for Fortune titled “My $200,000 Debt Should Not Disqualify Me For Governor of Georgia.” Abrams spoke about her debt in public in an attempt to end debt-shaming for herself and millions of others. And indeed, healthcare debt and student-loan forgiveness are key talking points among 2020 presidential hopefuls. Do a Twitter search for the hashtag #studentloans and you’ll find countless people showing screenshots of their debt. Our grandparents and great-grandparents would never have had the chutzpah to disclose this information to their closest relatives nevermind complete strangers. People want to talk about their troubles with debt. People want to feel free from the burden and silence of debt. This is a universal feeling growing among us.

Everyone is touched by debt: from the gross amounts of interest on student loans every month, to working families using credit cards to make ends meet between checks, to those driving depreciated cars with high interest, to those bankrupted by medical bills, to elders living in “underwater” homes, to inmates accruing debt when charged per day for their incarceration, to  those taking out payday loans at 400-percent interest to cover basic living costs, to the teachers and firefighters forced to take pay cuts because their cities are broke, to court-imposed fines, fees or penalties, to countries pushed into austerity and poverty by structural adjustment programs. Everyone owes something, and most of us (including our city governments, our colleges, and nonprofits) are in so deep in debt that it’ll be decades before we have any chance of getting out—if we have any chance at all.

Who you are and what groups you belong to matters, in a conversation about owing. Being Black, being a woman, being LGBTQ, and being of working age makes you the most vulnerable. According to the Survey of Consumer Finances conducted by the Federal Reserve every three years, 35 to 54 year olds carry the most debt at around $134,000 individually.

Race plays a factor in terms of access to generational liquid assets. Without generational wealth there is no safety net for basic needs or emergencies. The Survey of Consumer Finances found that only 43 percent of Black families had access to $3,000 worth of emergency funds compared to 73 percent of White families. This inequality has grown considerably since the last recession, nearly one in five or 20 percent of Black households had zero or negative net worth. The share of white households without any wealth is considerably smaller, at 9 percent. For people of color, these numbers are connected to a long history of laws, policies and practices that reproduce systemic wealth inequality. Some of these laws explicitly justified racial segregation, all of them used displacement to push some groups away from the opportunity to acquire generational wealth and towards the propensity of generational poverty.

After all, the United States is built on unceded, stolen Indigenous land. This legacy of economic violence continues in Native communities today. Many Indigenous nations have treaties with the United States government that designate land ownership; most only have rights to occupancy. Movements like Standing Rock manifested not only to fight corporate greed but to call out the U.S. government’s disinterest in Native self-determination. For African Americans, Black Codes, Convict Leasing, Jim Crow, separate-but-equal legislation, and relining practices kept Black families from acquiring not only land wealth but access to quality education and healthcare. Black farmers have been engaging in land battles against racist land policy since the turn of the 19th century. In urban and rural areas, Black, working-class and poor communities displaced in large numbers by the building of federal infrastructure projects such as Interstate 95.

For women, the struggle for ownership and wealth predates the founding of the colonies because the 13 colonies based its property laws on European marriage laws. Dating as far back as the 1700s women not only needed a husband or male relative to control her property but the woman could lose her property if accused of anything deemed “improper.” Barriers to access were written into law for centuries, reinforced by patriarchy and misogynist culture. This is perhaps the root to why women not only have limited access to wealth, but points to their tendency to rely on loans and the long road of paying them off. Today, women carry more debt (especially student loan debt) and take longer to pay it off as a direct result of wage inequality.

These ongoing struggles are the context of the data proving that debt not only becomes a necessity for people of color, women and other marginalized groups but that it is the only option when cultural practices continue to reproduce the Colonial violence upon which this country was founded.

Michael, a Black millennial and front-desk hotel clerk, says that his monthly student loan debt and other debt adds to chronic instability in his life despite the fact that he has a full-time job. In total, his undergraduate and graduate degrees cost him around $192,000. “My payment is supposed to be around $2,000 a month. I take home less than that per month if I don’t work overtime. Student debt has put me in a position so precarious that one false move and my entire life is irreparably destroyed.”

LGBTQ students report $16,000 more debt on average than their heterosexual peers, according to a survey of 11,000 students conducted in February 2019 by Student Loan Hero. The study also found that LGBTQ borrowers report higher levels of debt, particularly student loans, which they found more unmanageable than the general population. Jared Hudson, a 25-year-old gay man, says he wouldn’t have been able to attend college without loans and yet loans have spiraled him into a deeply unmanageable financial standing. When his parents died he no longer had security or their wisdom to guide him in decision making. Jared, a recent MFA graduate, is currently two months behind on rent in his shared apartment and owes hundreds of dollars to a self-storage company where most of his belongings are stored. If he doesn’t settle the storage unit account, his belongings will be auctioned. Some things are replaceable like furniture or holiday decorations but other items are more sentimental like his parents’ death certificates.

“My relationship with debt is one of stress. It’s like a ball of anxiety in my chest, spiky and pulsing red tendrils of frustration that individually connect to different accounts and causes heat to shoot up my back and my lungs to shrink whenever I get a Credit Karma alert on my phone.” Jared says that debt makes him feel hopeless, rushed, tired, restless, pointless, disgraced and ashamed over and over again. “I was thrown into a hole when I pursued my degree, believing with it I’d have a better life. I dove further into financial ruin when I went to get a master’s for a subject that I was truly passionate about, the one I want to make my career. Sprinkle the credit card debt in-between all of that, in the eight years I feel like my forward momentum has been hella slowed. It’s like walking through ever-thickening and ever-deepening sludge.”

Jared Hudson is not alone in this sludge. At least one in seven of us is being pursued by debt collectors. According to the 2018 Federal Reserve’s Quarterly Release on Household Debt and Credit, in the past ten years alone, more than 40 percent of individuals with a credit report had a collections account at some point. Collections are not limited to credit cards but also include—medical debt, rent payments, traffic tickets, utility bills and even unreturned library books.

Culturally we are constantly told that this is our own fault, that we got ourselves into this and that we should feel bad about it. “For many people of color, debt is often deeply connected to larger systems of oppression, inequality, and white supremacy which impact their lives on a daily basis,” says Kyana Brindle is a licensed psychotherapist who practices in New York City. “Navigating the feelings that may accompany debt and “owing”—guilt, shame, anger, grief and loss—can be taxing to one’s well being, particularly when the mental and emotional resources required to live as a person of color in the world are already strained. The long-term effects of stress on one’s mental health can make people of color especially vulnerable when we consider the challenges they already experience with having access to resources and services that may be supportive.”

In other words, since we believe debt is our fault, we also believe we deserve the shame, anxiety, and depression linked to the burden of owing even when the initial debt is a response to systemic inequality.

Tanisha Christie, a licensed social worker chose her career field because it allows her to better understand people in their social and family context. She believes it’s critical to look at the debt load and resulting stress for individuals but also important to look at the social, family and cultural contexts in which they live. Millennials, for example, are often returning home to live because they can’t find work that offers a livable wage. This is especially true for college grads who live in urban areas which are battle zones for realtor development and gentrification. They end up living with their Baby Boomer parents who are already stretched thin financially and can’t leave the workforce. This financial dependency when people are unable to launch themselves independently or the inability to retire safely shows up in the form of anxiety and depression. It shows up as hopelessness. Those who are divorced or widowed experience the same challenges. When people seek treatment for mental health they are then stepping into a healthcare system that is taxed and undeserving patients due to its own institutional debt load.

With so much focus on debt as an individual moral failing, few people talk about the way both loan providers and debt collectors use psychology and data analysis to figure out what makes us tick. The credit card industry used to be pretty straightforward: Companies offered cards and banks earned small amounts of revenue on those loans. Consequently, social scientists and mathematicians were brought in to calculate how the industry could earn more money. They realized that the biggest profits didn’t come from people who paid on time but people who paid late or even not at all. According to Charles Duhigg’s New York Times article “What Does Your Credit-Card Company Know About You,” the research conducted led to two major changes to the industry. The first was to issue a variety of cards at different interest rates to different customers versus a single low rate previously offered to all customers. After all, profit margins for private companies increase when we default. The second change was, how credit card companies began running social science experiments to determine the behavioral outcomes of their customers. Their tests mapped consumer reactions to everything from card colors to envelope sizes. They collected data and mapped out the human psyche. They used the data to find correlations between stimulus and risk. Then mapped that data and made correlations between behaviors and demographics. They asked questions like, “are new immigrants riskier than people born in  the United States?” The used the data and illogical correlations to deny credit, shrink available credit and squeeze out as much cash as possible before consumers defaulted.

Credit companies used this data to identify and profile us, debt collectors use this data combined with pathologies of fear and shame in their collection strategies. Our debt failures become their profit shares, therefore, they target those who are most likely to increase their gains. Ensuring our personal failure guarantees long-term payouts. American household debt hit a record $13.21 trillion in 2018. If you had to write that check, it would read $13,210,000,000,000. More than three-quarters of Americans are debtors. How is it possible 76 percent of us could all have just somehow failed to figure out how to properly manage our money, all at the same time? This is more than a coincidence.

David Graeber’s 5,000 Years of Debt explores the historical relationship of debt and social institutions such as barter, marriage, friendship, slavery, law, religion, war and government; in short, much of the fabric of human life in society. He explains that “if history shows us anything, it is that there’s no better way to justify relations[hips] founded on violence, to make such relations seem moral, than by reframing them in the language of debt—above all, because it immediately makes it seem that it’s the victim who’s doing something wrong.”

Focusing on debt as a moral issue perpetuates the bootstrap mythology that says economic wealth is simply a matter of working hard and personal responsibility. This prevents us from having honest conversations regarding the way wealth is determined by the families we grew up in, the neighborhoods we live in, and the mobility or immobility we have in larger society. Rohan Grey, a doctoral fellow at Cornell University, explains, “As any sophisticated financial investor will tell you when you’re wealthy debt isn’t a burden, it’s an asset. And default isn’t a moral failing, it’s an economic calculation. Only for the poor and vulnerable is debt understood as a matter of sin, a reflection on the character of the person rather than a response to the economic circumstances they find themselves in.” In other words, debt is a penalty for anyone who is not rich. This reality is then hidden behind either a veil of righteousness or a veil of shame depending on what social class you belong to.

The resistance to discuss privilege, class, and how wealth was historically amassed for white people in the original 13 colonies, puts an iron bit in the mouth of America. The bit is being removed slowly by a shift in culture initiated by organizing groups. The Occupy Wall Street offshoot collective Strike Debt started this work over a decade ago with campaigns that declared “You are Not a Loan,” and “We Are the 99%.” They created Rolling Jubilees, where they bought debt-collection accounts. They legally wiped almost $4 million in student loans, amounting to the indebtedness of 2,761 students. They released the Debt Resistors Guide, which NYU professor Andrew Ross, member of Strike Debt, and author of Bird On Fire: Lessons From The World’s Least Sustainable City, calls a “handbook for debtors everywhere to understand how this system really works, while providing practical tools for fighting debt in its most exploitative forms.” A decade later, the mood around debt resistance has ebbed and flowed in popularity. Perhaps we are looking for the liberation that Strike Debt posed as possible.

Debt haunts all of us. It stalks our thoughts, impacts our decisions, and isolates us from our own humanity, convincing us that we are the sum of our possessions and loans. The American Dream is built on debt pursuits—owning a home, having access to credit lines, owning a vehicle—which all require that we take out loans. These are the debts we can understand through our personal experience but what about the debts almost too big to comprehend, like National Debt? Then there are the debts that are hard to quantify: emotional labor, child-rearing, favors, personal loans, labor abuses in the workforce never mind the way sexism, racism and bigotry create cultural violence that can only be described as a debt between parties. Debt is on our minds constantly because it is inextricably linked to our survival. Talking about it is the first step toward liberation.

This is a part of our ongoing series, “Women & Money.” If you missed it, check the previous pieces in the series.

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