You can’t pick yourself up by the bootstraps if your feet are chained to the floor. Debt is preventing Americans from moving up and our increasingly predatory economy makes that possible.
This year, Colorado’s General Assembly closed the “Zombie Debt” loophole in our Fair Debt Collections Practices Act. It was an important win for consumers, who deserve to not be harassed over debt they have already paid or might never have owed. It’s one more step in the right direction for a state that has also pushed back against insanely high interest rates from the payday lenders we see on numerous street corners in our community.
Those payday lenders and debt buyers, however, are just the tip of the iceberg. When we think of payday loans we think of shackles that suck away people’s freedom and make every step forward a little less long. It turns out, there are many other places in our economy where that happens.
Take student debt. Once upon a time in our country, going to college meant affordable tuition and some fees. Today, it is assumed that most families will have to rely on debt to access education after high school. It takes years to pay it off and, in Colorado, loan servicers aren’t even regulated. The Federal Reserve reports that student debt is a rising cost for Americans, moving from 3.3 percent of total household debt in 2003 to 10.6 percent today. For-profit colleges add an extra peril, with bad actors that leave their students with debt and no degree to show for it.
Debt is not the only predatory force in our economy. High investment fees, self-interested financial advice, upside down tax incentives and hidden contract language all weaken the financial power of middle class aspiring Coloradans. The lower your income, the harder it is to build your wealth.
It doesn’t have to be this way. For starters, costs for drivers of opportunity like education, infrastructure, and health assistance don’t need to be rising as fast as they are and don’t need to require debt to afford them. If we put just a few tenths of a percent of Colorado’s total personal income into these public systems, we wouldn’t have to pay as much.
We can also do a lot more to rein in predatory practices. We actually started to under our last President. Dodd-Frank, the Consumer Financial Protection Bureau, the fiduciary rule – all of these were created because people realized that, in the aftermath of the Great Recession, our economy had become too vulnerable to speculators and predators. Federally, these protections are being rolled back now and it will have to be up to states that want to have the most stable and sustainable economies to create their own safeguards. Colorado should be among them.
But this isn’t just about protections and laws. It’s about a reclaiming a culture that says that its in our economy’s best interests to make sure that low income and middle class Americans feel secure and are able to get ahead. There shouldn’t be a shackle on their ankle, holding them back and denying them the social mobility we all associate with America and Colorado.
We’re a country and a state that values freedom above all else. A predatory economy feeds the kind of debt that is the opposite of freedom. It holds us down and stops us from moving up. Its time to call our predatory economy what it is and we should act to end it.
Scott Wasserman is the president of the Bell Policy Center and the Bell Action Network, which provide research and advocacy for fiscal reform, education policy, economic security and other issues affecting the well-being of working families in Colorado. He is the former deputy chief of staff to Gov. John Hickenlooper and chief of staff to former Lt. Gov. Joe Garcia.