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Either We Break Our Pandemic Debts or Our Pandemic Debts Break Us

If millions had no hope of paying their bills before the pandemic, and millions more can’t pay now, what’s left to do but say no?

When the pandemic hit last year, 53-year-old Richard Ault was treading water. A longtime technologist in Silicon Valley, Ault had taken a break from the industry a few years back to work as a public school teacher. When he tried to return to the tech sector in 2018, he found it difficult to land a job despite his decades of experience. “It was a long shot even when the economy was good,” Ault said. “I’m very gray-haired.”

Ault burned through his savings the year before the pandemic, in part because he couldn’t find work and in part because a past substance use disorder meant he didn’t have a lot of savings left to begin with. He was struggling to pay down the debts he’d accrued. But eventually, he landed some gigs as a substitute teacher and Lyft driver. His one-bedroom in Mill Valley, just outside of San Francisco, was a reasonable price for the area and big enough to host his two teenage kids. Things were tight but stable enough. But as the pandemic hit, Ault lost his teaching jobs and stopped driving for Lyft out of concern for his health. Even with unemployment insurance, he couldn’t afford groceries and rent. “I was still a couple hundred short every month,” he said. “I used my credit cards to cover that gap.”

Eventually, Ault moved out of his apartment and onto a friend’s couch; he still owes his landlord three months of back rent, totaling nearly $7,000. “I felt the depth of hopelessness in fall of last year when I realized I could no longer host my kids,” Ault said. “That was bottoming out.” His car, the only thing he owns, had an engine failure last fall that ended up costing $5,000 to repair. In the last year, Ault’s credit card debt doubled, and now his total household debt hovers somewhere around $60,000. He sees no way to pay it off. He’s currently working part-time at REI, saving money for a lawyer who can help him file for bankruptcy.  

“It’s ridiculous to me to think that $1,000 to every family in this country is going to save the country,” Ault said of the government’s sporadic relief checks, especially living in a city with such a high cost of living. “It’s rearranging the deck chairs on the Titanic.

Ault is one of millions in the United States facing a similar crisis. Household debt, which has been on the rise for the last decade, reached an astronomical $14.56 trillion at the end of last year. As rent and mortgage debt piles up, nearly a third of people in the country are at risk of eviction or foreclosure. While credit card debt, which is now at $820 billion, fell overall, in part due to a decline in spending, some 51 million people still saw it increase during the pandemic. Student loan debt, the second-biggest type of household debt after mortgages, continues to skyrocket, reaching nearly $1.6 trillion

The Biden administration has extended moratoriums on evictions and student loan payments, but these are postponements, not fixes. These debts will come due soon enough. The previous administration’s disastrous pandemic response, including delayed or never-received unemployment payments that left people without money for months, created catastrophe on the ground. In areas facing climate disasters, like Texas, residents are seeing enormously price-gouged utilities bills piled onto existing debts. And now, with tax season rolling in, people who did collect unemployment might be looking at surprise tax bills on their benefits. These are mounting crises coming to a head.

Meanwhile, one of the first big clashes between the new administration and the progressive base that reluctantly helped elect it has been around student debt forgiveness. Biden has already rejected a proposal to cancel $50,000 in student loans, saying that he didn’t want to spend money on “people who have gone to Harvard and Yale and Penn.” (According to CNBC, only 0.3 percent of federal student borrowers go to Ivy League colleges.) 

While the past year has been a nightmare, with no real end in sight, it has also forced a necessary conversation about our ideas and assumptions around debt. If millions of people had no hope of paying their bills before the pandemic, and millions more can’t pay now, how do we make sense of a system that cycles people through ever-increasing debt? The answer that many are reaching is that we can’t. The question that is now being asked, over and over again, isn’t how do we pay what we owe but rather: What does our government owe us, and how can we collect?  

For many people, this year has been defined not only by the pandemic itself but by the debt that has come with it. The average amount that someone behind on their rent now owes is $5,600, which is about four months’ total. A third of the stimulus checks issued by the government last March went directly to paying off debts, rather than on goods or services. Many who have been steadily accumulating unpaid bills over the past year are now looking at an impending crisis once the moratoriums are lifted. 

Some lenders are doing anything they can to try to collect: Cea Weaver, an organizer with the New York–based Housing Justice for All, told me that one tenant on rent strike said that her landlord attempted to debit an entire year of rent from her bank account. 

“If you don’t have support for these people—suspension of debt service, suspension of rents—you’re going to have the whole character of society change,” Michael Hudson, an economist at the University of Missouri, Kansas City, told me, pointing to mass evictions as just one example of the upheaval. Without clearing people’s debt and making them whole again, Hudson argues that economic recovery will be sluggish as people, like those in the pandemic who used their stimulus to pay off creditors, spend more and more of their income on paying down debt. In this way, abolishing debt is good economic policy. And the impacts are fairly immediate: One 2018 report from the Levy Institute estimates that canceling student debt could increase real gross domestic product by an average of $86 billion to $108 billion per year. 

National household debt numbers, on their own, are so vast that they are rendered nearly meaningless; the massive figures also obscure the fact that debt in this country is distributed unequally. The character of debt in the U.S. is shaped by a history of discriminatory lending practices and disparities in generational wealth. Four years after graduation, Black borrowers hold nearly twice as much debt as their white counterparts; Black women hold an especially outsize portion of student debt. In 2016, the net worth of a Black family was 10 times less than that of a white household. 

But all of this translates acutely into people’s everyday lives. Richelle Brooks, a 33-year-old single Black mother of two middle-school kids told me that she holds $236,000 in student loan debt. The pandemic put her deeper in the hole, but Brooks was already in an untenable situation. A first-generation college student, she first took out loans to help pay for her living expenses while she was at school. She had faith in the idea, as so many of us are taught to believe, that a good education would unlock economic security: Brooks moved through an associate, bachelor’s, teaching credential, master’s, and doctoral degree—every time attempting to get a job that paid enough to support her and her two kids. She mostly found dead ends. “Each time I graduated, even though I was able to secure employment, it’s not a livable wage,” Brooks said. She told me about once juggling five jobs trying to make ends meet as a single parent. “A teacher making $60,000 in L.A.—you can’t do anything with that.”

Just before the pandemic, Brooks and her two kids were forced to move back into her mother’s home. She found a job as a teacher this year, but it’s a $20,000 pay cut from her last gig as an administrator. Brooks eventually ended up connecting with the Debt Collective, a debtors union fighting to abolish debt, and began organizing with them last year. Now she is on strike as part of a campaign to push Biden to act in his first 100 days of office. “Fighting this alone was very defeating. It made me feel like I was doing something wrong,” Brooks said. “Joining the collective, you realize that you did everything you were told and that everyone was sold the same promise. You realize the wrongdoings aren’t yours—they’re intentional by the system.” 

While the financial situation of everyday people in America has long been in crisis, the pandemic has widened the net of impact and made it harder to ignore. It has only become more apparent to more people that the systems trapping them in crushing household debt—whether it’s medical bills from our privatized health care system or astronomical rents—make it impossible to get by. In the past year, millions in debt have been on a de facto strike, simply because they could not pay. 

The debt abolition movement wants to take these atomized experiences and bring people together. The Debt Collective organizes around this idea of collective struggle: You are not a loan. “Oh, suddenly everything’s not going to burn down if we don’t pay,” Hannah Appel, economic anthropologist at University of California Los Angeles and co-founder of the Debt Collective, told me. The pandemic “reshaped the terrain and made things more visible that were already there.” 

Appel, who has been organizing around debt since the last recession, through projects like the Strike Debt and the Debt Collective, says that the conversation around student debt, particularly, has evolved radically over the past decade. During the Occupy protests, organizers’ call to cancel debt was ridiculed as both elitist and improbable. Now, even moderate Democrats like Chuck Schumer are pushing for $50,000 in student debt cancellation. Biden, who played a central role in creating the current crisis through a bankruptcy bill that made it nearly impossible for people to discharge student debt, is now the main target of organizers. “What’s possible now is undoing the legacy of Joe Biden,” Appel said. “It’s lovely that it might be Joe Biden who is forced to do it by activists—there’s something poetic about that.” 

Weaver, the New York tenant organizer, explained that the pandemic has similarly allowed them to push for narrative change around rent cancellation, including thinking about unpaid rent as debt akin to mortgages or student loans. “The pivot that we’d like to get to is to means-test landlords and not renters in a moment of crisis,” she said. In both of these movements, you see a drive against loneliness—a rejection of isolation in these struggles so many of us share. 

Some states are taking matters into their own hands—California passed a bill to use federal funds to pay landlords 80 percent of back rent, but only if those landlords agree to waive the other 20 percent. While the bill will provide many tenants with relief, Appel pointed out that this essentially acts as a bailout of landlords, many of whom have been preying on and profiting from renters for a long time. It also puts the fate of tenants’ debt in the hands of those landlords, who can choose not to take the deal, which would mean the state would only commit to paying off 25 percent of tenants’ rent. It’s a salve but not a solution. 

The debt abolitionists I spoke to all agreed that canceling debt was only half of the battle—the systems that gave rise to the debt in the first place also need to be reformed. Abolishing student debt is paired with a demand for free public college; medical debt, with Medicare for All. When it comes to housing, nearly half of renters were cost-burdened—or spending more than 30 percent of their income on rent—before the pandemic even hit. Canceling rent is one necessity, but it’s clear that the country also desperately needs some kind of robust social housing reform. Representative Ilhan Omar introduced a bill last April that models a good step forward: canceling rent and mortgages, but also pairing a landlord relief fund with tenant protections, such as prohibiting rental increases for five years. Omar, rightly, called it Congress’s responsibility to “step in to stabilize both local communities and the housing market” in the face of the pandemic recession. 

Organizers are ready for the current administration to put up a fight, and how far Biden will be pushed remains to be seen. While he called for federal rent and mortgage forgiveness on the campaign trail, he has yet to make good on that promise. And Biden’s rhetoric around student loans, and the fact that he’s kicked the issue down the road with a judicial review of his executive authority, signal that he’d prefer to sidestep it or offer modest reforms where radical overhaul is needed.  

In the meantime, people across the country are adrift, and the bills continue to pile up. The day that I spoke to Brooks was when Biden announced that he wouldn’t commit to canceling more than $10,000 worth of student loans. Brooks told me that without debt cancellation and full-scale reform of the institutions that put her into debt in the first place, the future for her family looks “terrifying.”

“My kids have been through a lot,” Brooks told me. “That’s the most disheartening piece of it all—at this point, the only thing I have to pass down to them is that debt.”