Debt relief has always been a central political question in U.S. politics—one that has motivated constitutional and legislative development since quite literally the founding. From Shay’s Rebellion to Occupy Wall Street, the consequences of overindebtedness have also fueled critical periods of voter mobilization. Today, student debt relief has emerged as a salient new issue on the federal policy agenda. And momentum for medical debt relief is growing in cities and states around the country. How can we understand the unfolding politics of these new forms of debt relief in the United States? (And are they really so new?) In The Political Development of American Debt Relief, Emily Zackin and Chloe Thurston articulate a persuasive account of how America’s primary debt relief policy regime—bankruptcy—evolved over time. They emphasize how bankruptcy was shaped by considerations about deservingness, racialized politics, dynamics of federalism, and lessons learned from repeated policy failures. Each of these themes can also help illuminate the politics of a new wave of debt relief policy in the American political economy.
Who deserves debt relief?
The politics of deservingness shape debates over who should and should not receive assistance from the government. While deservingness has been especially consequential in the context of welfare policy, where opponents have long trafficked in the language of “abuse” and “welfare queens,” Zackin and Thurston argue that notions of deservingness have also been critical in the development of American debt relief policy.
One of the most powerful factors driving opinions about whether people deserve government assistance is the perception that someone needs help because of their own (poor) choices or because of something outside of their control. In the case of bankruptcy, Zackin and Thurston describe how 19th century farmers were able to successfully frame their need for more debtor-friendly laws by persuading the public and policymakers that the latter was true. Their misfortunes, they argued, stemmed from a rash of unpredictable economic downturns akin to natural disasters. Simply put, farmers’ indebtedness was either the fault of natural processes or of government economic mismanagement—in either case, farmers themselves had not acted irresponsibly.
By comparison, consumer debtors of the 20th century were much more susceptible to the argument that their indebtedness was their own fault—either the consequence of making poor choices or living beyond their means. Indeed, when President George W. Bush signed BAPCPA, the landmark 2005 bankruptcy law that reversed a century-long trend of increasingly debtor-friendly procedures, he justified retrenchment on the grounds that “America is a nation of personal responsibility where people are expected to meet their obligations.”
Do these same dynamics of deservingness shape emerging debates over debt relief beyond the bankruptcy context? Evidence suggests they do. Politicians on both sides of the aisle have argued against debt cancellation for students whom they perceive as undeserving because of the educational choices those students made. For example, President Biden himself once scoffed at the notion of wide-scale student loan cancellation, saying, “The idea that you go to Penn and you’re paying a total of 70,000 bucks a year and the public should pay for that? I don’t agree.” Setting aside, for a moment, the reality that Ivy League graduates represent less than one percent of federal student debtors, and only 12 percent attended highly-selective private institutions, these tropes are still resonant.
A recent study I conducted with my co-author Serena Laws on perceptions of deservingness in the student loan context finds that borrowers who are perceived to have made choices that increased their debt—like attending an Ivy League school or pursuing an expensive graduate degree—are generally viewed as somewhat less deserving of federal debt cancellation compared to students who chose less expensive educational pathways. In our ongoing work, we find that this same logic extends to other types of debt relief. For example, people in our study are much more likely to support medical debt relief compared with government intervention in other credit contracts because they do not believe medical debt is the fault of the debtor. Instead, participants in our study attribute debt to medical conditions outside of people’s control, and occasionally even point to the government’s failure to provide adequate health insurance. By comparison, people with debt stemming from criminal or civil legal encounters (LFOs) are viewed as much less deserving of federal assistance because the accumulated debt is perceived as resulting from their own bad choices. As one respondent in our study explained their assessment, “I thought about whether the debt was beyond someone’s control, because I think having something like medical debt is understandable, but having crime debt or credit card debt might not be.”
These examples indicate that the success of emerging efforts for new types of debt relief, much like past debates over bankruptcy provision, may depend in part on who the public believes is responsible for people’s indebtedness in the first place. Efforts to relieve medical debt, for example, are incredibly popular even across partisan lines, and they may ultimately be more politically palatable than similar efforts to expunge LFOs, unless people can be convinced that debtors in the latter instance were not solely to blame for their predicament.
Are the politics of debt relief racialized?
Ideas about personal responsibility are not the only driver of people’s perceptions about who deserves debt relief. As Zackin and Thurston compellingly demonstrate, racism and racialized group identity played a critical role in debates over who warranted bankruptcy protection. Debtor-friendly bankruptcy laws were devised initially to assist White settler colonialists in the West and subsequently White southern property owners (and former enslavers) in the South whose economic fortunes had plummeted after the Civil War. The need for such laws was sometimes justified by deservingness arguments that directly pitted White debtors against enslaved or formerly enslaved Black Americans. This racist logic continues to shape bankruptcy proceedings today. Studies consistently show that Black filers are far more likely to be channeled into the less-generous Chapter 13 bankruptcy than are their White counterparts, even when controlling for similarities in their financial situations.
Beyond the notion that only White landowners deserved more generous bankruptcy protections, Zackin and Thurston illuminate how the political development of both state and federal bankruptcy statutes after the Civil War worked to cement the economic and political power of White landowners in the South at the expense of facilitating land ownership for recently emancipated Black farmers. The same was true for White settlers of the West in relation to Indigenous Americans. The result, Zackin and Thurston suggest, is that bankruptcy laws with expansive property exemptions that proliferated in the postbellum United States helped to pave the way for today’s expansive Black-White racial wealth gap.
To what extent do similar racialized patterns manifest in current debates over debt relief? As access to credit (and its resulting debt) has proliferated beyond landed White men, a much more racially diverse cohort of borrowers stands to benefit from new efforts at debt relief. This is especially true because borrowers of color bear the consequences of predatory inclusion—gaining access to credit under disproportionately costly lending terms that can impose greater harms than benefits. Black Americans are more likely to be burdened by student loan debt, medical debt, rental debt, and legal financial obligations (LFOs), to name a few. As a result, debt relief policies that would address these areas have the potential to help ameliorate the Black-White racial wealth gap. In this sense, the modern movement for debt relief, while built on a similar foundation of racial capitalism that underpinned the development of bankruptcy, is positioned to benefit borrowers of color to a greater degree than the 19th century movement for bankruptcy protections.
As Zackin and Thurston note in their conclusion, the racialized dynamics of the current movement for debt relief also differ in another critical way: supporters are mobilizing around debt relief as a tool to ameliorate rather than enshrine racial injustice. While politicians in the 19th century used enslaved Black Americans as a foil to promote bankruptcy protections for White farmers, many proponents of debt relief today voice their support in terms of racial justice. For example, when President Biden announced his administration’s ultimately ill-fated student debt cancellation plan in 2022, he spoke of debt relief as a key part of a broader racial justice effort, explaining, “The burden of student loan debt is especially heavy for Black and Hispanic borrowers...This relief helps to narrow the racial wealth gap and advance racial equity.”
This is a stark messaging contrast from the political development of bankruptcy, and it raises the question of whether framing relief as a method to combat systematic racial inequality will have positive or negative effects on public opinion. Scholars have long demonstrated that racist stereotypes can negatively affect support for social policy benefits, particularly in the case of welfare. But with proponents of debt relief embracing racial justice as a feature and not a bug of current efforts, how are the public poised to respond?
In our ongoing research, we find that individual Black borrowers are, on average, perceived as slightly more deserving of debt relief than their White counterparts. This marks a stark difference from racist attitudinal evaluations of Black social policy recipients in other domains. For some respondents in our study, these evaluations are driven by a recognition of systemic racial injustice. For example, one explained, “Blacks have suffered systemic racism for centuries, and I believe that loan forgiveness is one way to attempt to achieve equity.” But before we declare that racism is no longer dampening perceptions of deservingness for Black borrowers seeking government relief, it is important to note that racialized arguments for debt relief are less effective at driving support when articulated at the group level. While people may say that individual Black borrowers are more deserving of debt relief, we find that messages framing support for student debt cancellation as a way to help reduce the racial wealth gap or policy designs that target benefits to Black borrowers (e.g., debt relief for HBCU students) actually diminish some people’s support for debt relief—especially among self-identified Republicans.
While much work remains to understand the racialized dynamics of the current movement, racialized identity clearly remains a key facet of the politics of debt relief in the United States—even if it manifests in slightly different ways from the political development of bankruptcy.
Are the states pivotal in shaping debt relief?
The narrative Zackin and Thurston weave about the development of bankruptcy emphasizes another central policymaking actor: states. They describe how, particularly in the 19th century, the geographic concentration of White farmers in certain regions made debt relief a critical electoral issue in some states. State legislators could secure support from this highly-engaged constituency by offering increasingly debtor-friendly policies, even if they would later be overturned as unconstitutional incursions on private contracts. And these policy innovations would eventually trickle up into federal bankruptcy legislation that offered generous protections for debtors.
The importance of states as sites of bankruptcy innovation diminished in the 20th century as the courts and Congress preempted state law for consumer financial regulations, creating a more uniform national credit market. By removing the geographic concentration of debtor interests at a time when the power of creditors was growing at the national level, states took a back seat to the national government in dictating bankruptcy law.
So, do states matter in the current movement for debt relief? The answer to that question depends on what type of debt is under consideration. For some issues, like student loans, the locus of policymaking power sits with the federal government. About 90 percent of outstanding student loan debt is held by the federal government, and student borrowers are scattered across the country. As a result, student debtors do not form obvious state-level electoral constituencies (although they are politically meaningful to national parties). While Republican-led states have played a role in challenging federal efforts to address student debt burdens, state legislators do not have the same powers or political incentives to be policy innovators on behalf of student borrowers as they did in the case of 19th century bankruptcy.
On the other hand, most of the policy innovation for medical and LFO debt relief has emerged from state (and even local) governments—in part because of the geographic contiguity of these debtors. For example, North Carolina recently rolled out a plan that could wipe out a decade of medical debt for almost two million low- and middle-income residents in the state. And in Oregon, Governor Tina Kotek issued a 2023 executive order to expunge traffic-related debt for about 10,000 people, allowing them to get their driver’s license suspension lifted. These are only two of many examples of states taking the lead on innovative debt relief solutions.
While federal funds for COVID-19 pandemic relief have been leveraged to help state and local governments enact some of their medical debt relief measures, these policy innovations are still largely emanating from the states, who are serving as “laboratories of democracy” on debt relief. In the case of medical debt in particular, private actors also play a critical financial role. For example, Cook County, IL, became the first local government of many to partner with RIP Medical Debt, a non-profit that raises private funds to help expunge medical debts.
As with state bankruptcy efforts in the 19th century, there are reasons to believe that state-level measures may eventually translate to federal debt relief policies. For example, Vice President Kamala Harris, as the Democratic presidential nominee, signaled her intent to pursue federal medical debt relief should she be elected. The main question, as Zackin and Thurston raise, is whether a sufficiently powerful movement of debtors will emerge to push for these measures. While groups like the Debt Collective have made significant strides in pushing both for targeted local and national debt relief across a range of domains, and policymakers are certainly mindful of the potential electoral benefits of providing debt relief, it seems too early to say that a robust constituent movement for debt relief has emerged on par with that of 19th century farmers.
Do failed debt relief policies matter for future policymaking?
One final interesting parallel between the political development of bankruptcy and current efforts to pursue debt relief is the role that policy losses play. Zackin and Thurston convincingly argue that bankruptcy’s political path was pushed forward not only by durable policy wins, but also by state and federal efforts that were often short-lived. Almost all of the initial policies proposed to expand debtor-friendly bankruptcy proceedings were deemed unconstitutional by the courts, who argued they interfered with the supremacy of the contracts clause. Despite these losses, however, each subsequent effort to enshrine bankruptcy protections tended to build on the designs of the previous overturned law rather than eschewing those attempts. Over time, provisions that were initially deemed unconstitutional eventually changed how both Congress and the Courts interpreted constitutionality. Thus, even failed policies contributed to a path-dependent process that shaped the substance of eventually successful bankruptcy laws.
The Biden administration’s ambitious efforts to provide student debt relief have largely been stymied by the courts. Through executive action, the President has attempted to cancel up to $20,000 of student debt, create new income-based repayment options, and waive some forms of accrued interest, but each of these plans has been overturned or temporarily staid by conservative judges in response to a wave of Republican-led lawsuits. At the same time, the Biden administration has made progress in reducing student debt through more robust enforcement of existing plans like Public Service Loan Forgiveness (PSLF). While only 7,000 borrowers had received loan cancellation through this program prior to his election, the Biden administration has discharged almost $70 billion in debt for more than 900,000 borrowers through PSLF since 2022.
While it remains to be seen whether the failed attempts to alleviate student loan debt will provide a foundation upon which future success can build, evidence suggests that the public has not lost its appetite for debt relief in the face of failed efforts. This is especially important because it signals that the same voter thirst for reform that motivated continued attempts at bankruptcy policymaking exists for current debt relief measures. Not only do a sizeable majority of Americans still favor student debt relief—including majorities of most major groups except self-identified Republicans, but recent research suggests that student debt relief is an important electoral issue for a majority of Democrats and even Independent voters.
Moreover, concerns that elected officials like Biden might face backlash for debt relief efforts that fail seem overstated. Recent research finds that most voters place greater blame on the courts and conservative legislators for student loan cancellation failure than they assign to President Biden—especially when information about the court’s role in overturning policies is highlighted. This is important because it lays the foundation for policymakers to continue pursuing debt relief without fear of electoral backlash when the judiciary overturns their efforts.
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While the current moment feels novel in many ways, with debt relief efforts proliferating well beyond the traditional mechanism of bankruptcy, Zackin and Thurston’s excellent treatise on The Political Development of American Debt Relief still offers incredibly salient lessons for scholars, policymakers, and advocates. Moreover, their contention that debt relief ought to be thought of as part of the larger social welfare regime in the United States resonates with many of the issues policymakers are currently tackling. From medical debt to student loan debt to rental debt, policymakers have long embraced private credit to avoid enacting more politically contentious public benefits programs. Simultaneously, they have adopted weak consumer financial protections to ensure that access to credit is broad, with significant consequences for borrowers. The result is an economic system that runs on debt. But when debt becomes overly burdensome, debt relief policies are a necessary corrective. The politics of debt relief policy remains, therefore, a fundamental feature of the American political economy.
