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What Happens if You Refuse to Pay Off Your Student Debt?

Fifteen former students of the for-profit Corinthian college chain are launching a debt strike to allow other debtors to do just that. 

Michelle Chen

February 23, 2015

Andrew Bossi, CC BY-NC-SA 2.0)

Every day, people who struggled to finance their educational advancement slip deeper into a financial mudslide on a mountain of student debt. For borrowers who collectively hold this burden of about $1 trillion nationwide, the student loan has become a ball and chain that restrains them from starting their careers, or even paying rent, as their wages are sucked into a financial vortex. But what if you just decided to not write that check this month? A small group of people have chosen to do just that, hoping to start a movement to break out of the debt cycle—or at least to bang against the walls of student-debtor’s prison.

The debt strike, which launched Monday as part of the Debt Collective campaign, is led by the Corinthian Fifteen, former students of Everest College—part of the scandal-ridden for-profit Corinthian college chain. They’re undertaking financial civil disobedience against the private lending industry, demanding cancellation of federal student debts and voicing dissatisfaction with piecemeal debt relief programs. The actual financial impact of their campaign is negligible, but for the former students, this collective action is a way for them to reassert their economic sovereignty:

We paid dearly for degrees that have led to unemployment or to jobs that don’t pay a living wage. We can’t and won’t pay any longer. Repayment plans presented as a helping hand simply aren’t good enough. The wrong done to us is deeper than that.

Ann Bowers of Florida was drawn in by Corinthian’s Trojan Horse marketing, which convinced her that she could readily obtain an online degree to help restart her career in marketing, after years of being out of the workforce due to disability. But in exchange for a bloated federal loan burden of some $40,000, she received an anemic education—with coursework that was more like high school than college and classmates struggling with even the basics.

“It just didn’t feel like it was challenging enough and the other students were getting on through without even having proper grammar,” she tells The Nation. “That just didn’t seem very scholarly to me.”

Bowers withdrew after three years, as Corinthian’s financial troubles were intensifying, she says. “And now I find myself sitting in worse shape than I’ve ever been in my life, because I tried to do better and [do] something good for myself and my family…. And I don’t want to see this happen to future generations. It’s sad.”

While fifteen debt resisters will not upend the private loan system or the financial markets they fuel, their defiance aims to expose structural problems driving the financialization of higher education. Since their debt crisis is exacerbated by Corinthian’s apparent massive cheating of students, they’re sparking a national conversation on the real value—and true cost—of college.

And who pays that cost? According to Pew Research Center, “a record 37% of young households had outstanding student loans in 2010, up from 22% in 2001 and 16% in 1989,” and these households face a median student debt of $13,000. Under demoralizing financial pressure, “Young households that borrowed for college are…less likely to say their education has paid off.”

The for-profit Corinthian, which has received $1.4 billion in annual revenue from federal grants and loans, has been accused by regulatory officials of running a glorified diploma mill through about 100 campuses. Known for targeting federally supported veteran students, including those already financially challenged before plunging into unsustainable debt burdens, the company appears to be hurtling toward bankruptcy. But even as the company seeks a phased shutdown of operations, it’s unclear if former students will be able to transfer their credit or receive compensation. Those who dropped out before graduating may face even worse financial burdens. According to Pew, “Non-college educated households with outstanding student debt…lag behind their fellow student debtors who graduated from college, and they also trail young adults without a college degree who are free of student debt.”

The debt strike aims to complement the Rolling Jubilee, a symbolic battle for debt “abolition.” According to the campaigners, since 2012, the effort has “abolished more than $30 million of medical and educational debt,” affecting thousands of people. For Corinthian students specifically, the Jubilee says it has “helped successfully pressure a debt buyer into retiring over $13 million of private tuition debt from Everest College.”

This private debt, unlike the more common federal loans, carries far greater financial risks and burdensome rate structures, similar to credit-card debt. At about $150 billion of total student debt, private debt burdens are particularly pernicious because the loans often go to students who attend for-profit schools. As a response to this pattern, the Jubilee is, like the debt strike, symbolic, but it does help reframe the moral argument around debt and social responsibility.

The Debt Collective’s manifesto declares:

Every month, we are forced into debt for basic necessities. We have no choice but to enter into contracts under unfair terms. We have little power to bargain or negotiate.

Creditors are holding us hostage. When we can’t meet the terms of the contract, we are harassed, we have our wages garnished, and some of us are even imprisoned.

The goal of the Debt Collective is to fight back and transform the way we finance basic necessities, such as education, health care, and housing.

Pushing back against a trillion-dollar boulder, the Corinthian activists are taking on a Sisyphean challenge to the debt system. The company offers a compelling moral parable, linking the evils of the for-profit higher-education industry and the financial villains preying on misguided college dreams.

For many who don’t have wealth or access to community college, Bowers says, “you pretty much have to be lucky or go into a world of debt to get an education. I think that is wrong. So I’m hoping we can bring about change, where everyone would have access to education if they desire.… Other countries have free higher education—and we’re America.”

And for the strikers, what could be more American than setting out to do the impossible?

 

Michelle ChenTwitterMichelle Chen is a contributing writer for The Nation.


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