Debt is a tool of oppression

It has been widely documented that debt is often used as a tool of oppression. Across centuries and geographies, powerful elites have used debt not only as a means to extract profit, but also as a means to silence and coerce the working class. 

When the Spanish crown outlawed the slavery of indigenous peoples in 1542, colonists circumvented that mandate by placing indigenous peoples under debt peonage to ensure that they would remain in a state of servitude. Similar and widespread exploitation was used as a tool for all colonists to maintain power and steal land from indigenous communities across the Americas. Certainly indigenous peoples’ debt peonage is an egregious example of how debt was the foundation of one form of oppression, but examples abound of how this plays out on a daily basis in our own lives. 

Take, for example, student debt. The unreasonable cost of even formerly-public college requires loans of incapacitating principal and compounding interest. Although interest rates for federally held student debt are set by Congress, they range from 4.53 percent for undergraduate loans to 7.08 percent for parent, graduate or professional loans. These rates are shocking on their own, especially given that the average interest rate for a 30-year fixed mortgage is 2.8 percent. Meanwhile, privately held student loan interest rates — ranging anywhere from 1.2 to 14.5 percent — are not. In both cases, interest rates can compound over time, burying people further into debt that becomes increasingly impossible to ever repay, much like the debt peonage of the indigenous peoples in the 16th century. Fast forward to the present day, indigenous students who took out loans for their education are also dealing with the impact of crippling student debt and the trauma and financial effects of intergenerational wealth theft — including indigenous land theft — and are again, disproportionately affected by these issues. 

Or consider consumer debt more broadly, now at a harrowing $14.6 trillion. Credit card interest rates are so under regulated by both federal and state governments that the credit card industry has driven people further into poverty by masquerading extractive debt as the democratization of credit. Current interest rates sit at an average of 16.12 percent, with one-third of borrowers paying interest rates higher than 20 percent. Those paying interest rates of 20 percent or higher are most often the least paid and most marginalized among us. Usurious interest rates — which could be better regulated or abolished entirely — compounded with poverty wages, form the perfect storm for keeping people overworked, exhausted and imprisoned in a largely inescapable cycle of debt and repayment.

A recent study by the American Psychological Association found that people dealing with debt are more likely to face health issues brought on by stress, anxiety and depression. According to the same study, 64 percent of graduate students report that their debt inhibits them from performing at their best. Even more disturbing, 1 in 15 borrowers with high principals has considered suicide. Debt is debilitating for the old and young alike, obstructing the young from the reasonably free development of their abilities and the old from the enjoyment of their “golden years.”

Perhaps the most jaw-dropping and obvious example of debt being used as a tool of oppression in the United States is when the state of California cut public funding to the University of California higher education system and increased tuition rates all to quell ever-growing student uprisings in the 1960’s. During a campaign speech in 1966, former President Ronald Reagan, then running for governor of California, admonished protestors of the Vietnam War and the newly enacted university fees by labeling them as “a small minority of beatniks, radicals and filthy speech advocates.” 

Not long after being elected governor of California, he oversaw the increasing privatization of the schooling system beginning in 1969 with the institution of tuition and a 10 percent cut in state funding, in addition to firing the president of the university system, who had been supporting the students’ protests. Instituting tuition, cutting state funding and thereby shifting the burden of financing higher education to the individual, all served Reagan’s goals of political disempowerment and social control. Moreover, as Black and brown students demanded access to public higher education in the wake of the civil rights, Black power and Chicanx movements of the 1960s and 1970s, debt-financed college hit their families particularly hard. To this day, student debt affects Black and brown families disproportionately to their white counterparts.

In the last stimulus package, Congress recently had an opportunity to raise the minimum wage to a meager $15 per hour, lifting the wages of 32 million people in the United States, offsetting the need to use credit cards to purchase the necessities of life. When wages do not meet costs of living, we are forced to take on more debt to make ends meet. When our society demands that its citizens have a college degree in order to secure decent jobs but without the means to pay for it, we are forced to take out predatory loans. The failure to cancel student debt, the failure to reasonably regulate interest rates, and the failure to raise the minimum wage leads to only one conclusion: Those in power have something to gain by keeping us in debt. That something is our labor, our time, our wellbeing and our freedom.

Let’s be clear. The cancellation of student debt, the reasonable regulation of interest rates, the raising of the minimum wage represents a stark choice. It is the choice between the oppressor and the oppressed. It is a choice between servitude and freedom. It is the choice between an exploitative society and a decent one. 

Amy Czulada is a research analyst for a labor union and a member of the Debt Collective. Follow her and the organization on Twitter at @aczulada1 and @Strikedebt.