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Student Debt

We Owe You Nothing!

A new landmark student debt strike is drawing attention to the desperate need for action on a student debt crisis that’s enriching a few at the expense of an entire generation.

Blogging Our Great Divide
March 11, 2015

by Josh Hoxie

The small group of debtors with loans from the now defunct for-profit Corinthian College — the “Corinthian 15” — have a simple message for the Department of Education: We owe you nothing.

The 15 students declared in late February that they won’t be paying back their student debt and, with that move, sparked a media frenzy as journalists, pundits, and policy makers rushed to make sense of this unprecedented act of defiance.

Organized by the Debt Collective, a volunteer-run offshoot of Occupy Wall Street, the Corinthian 15 opened their letter to the Department of Education calling themselves “the first generation made poor by the business of education.”

Support for the strikers has so far come from a number of prominent activists, including Barbara Ehrenreich, Bill McKibben, Frances Fox Piven, and Sarita Gupta. The strikers have also received explicit support from Congresswoman Maxine Waters (D-Calif.), the ranking member of the powerful House Financial Services Committee.

The potential for serious negative personal consequences makes the strikers’ defiance, as the Washington Post notes, particularly “startling.” Unlike other forms of debt, student debt is not discharged during bankruptcy. Loan servicers can garnish the strikers’ wages, tax refunds, and disability payments — and essentially destroy their credit.

Yet the strikers’ resolve remains strong in the face of these consequences. As striker Mallory Heiny, age 21, puts it: “The repercussions are intimidating, but without dissonance there will be no change.”

The driving idea behind the Corinthian 15 student protest — that students with debt from Corinthian College and similar schools like Everest College should have their debt forgiven — has become increasingly realistic.

A group of thirteen Senate Democrats led by Senator Elizabeth Warren has called on the Department of Education to forgive such loans, and the Consumer Financial Protection Bureau announced it would forgive $480 million in similar student loans in February.

The strike highlights perhaps the most egregious aspect of the country’s student debt problem: the recklessness of for-profit colleges that provide very low-quality education for high tuition. These colleges only exist because they can collect billions from federal student aid programs.

Overall, over 40 million Americans are now struggling to pay off an average of $27,000 in student debt. Over seven million have gone into default, a figure steadily rising.

In a move to address growing concerns about student debt, President Obama announced the creation of a Student Aid Bill of Rights during a speech at Georgia Tech Tuesday. The plan leverages the President’s executive authority to create a central online portal for student debt repayment and aims to help debtors better understand and pay their loans.

The President’s announcement comes in the wake of a recent announcement that the Department of Education will be cutting ties with five private loan servicers for misleading consumers.

But more comprehensive action on student debt will require congressional action, something hard to imagine in the short term. Most effective would be to simply make public universities tuition-free, a move that could cost a mere $15 billion more than what’s currently being spent on higher education.

President Obama’s new Student Aid Bill of Rights does rate as a welcome development and has received praise as a step in the right direction from the United States Student Association as well as the American Association of State Colleges and Universities. We need, as the Corinthian 15 make clear, many more steps — and more activism will certainly speed them.

Josh Hoxie tracks the debate over the estate tax and other grand divide-related concerns for the Institute for Policy Studies Program on Inequality and the Common Good.

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Student Debt,
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