By several measures, the “debt strike” staged by former students of the troubled Corinthian Colleges Inc. is already a success.
The debtors, who are refusing to pay back their federal student loans because they say they were defrauded by the company, have earned widespread attention from the news media, met with top officials at the U.S. Education Department, and exposed a little-known government rule that allows for loan forgiveness.
But the true measure of success for the strike’s organizers is whether the protest will have implications beyond Corinthian.
The social activists who are helping the former students would like to see graduates from other institutions, for-profit or not, sign on to the cause, joining a broader movement for student-debt relief. While the for-profit sector has had examples of deceptive student recruiting and marketing, the activists say other parts of higher education are not blameless for the crushing burden of student debt, which now tops $1.2 trillion.
“A lot of people want to silo the for-profit sector and say it’s a totally different animal than public higher ed,” said Ann Larson, an organizer with the Debt Collective, one of the groups behind the strike. “I don’t think that’s true. Public higher ed is being defunded at the federal and state level, and it’s increasingly privatizing. The difference between the two sectors is closing.”
For Andrew Ross, a sociologist at New York University who has publicly supported the debt strike, the Corinthian case legitimizes the idea that students can seek relief from creditors by organizing. The long-term goal of the Debt Collective, he says, is the creation of a “debtors’ union” in which people with similar types of debt and similar creditors can pool their resources and political voices.
“This nation’s economy is tilted toward protecting and guaranteeing the rights of creditors,” he says. “It’s time we heard about the rights of borrowers.”
Seeking Relief
So far, at least 100 former Corinthian students have publicly announced that they will refuse to repay their loans. Hundreds more have joined them in asking the Education Department for relief.
Corinthian, which operated more than 100 campuses across North America, faces several federal and state lawsuits that accuse the company of, among other things, duping students with false advertising and practicing predatory lending. Corinthian has disputed these charges, saying it did not engage in deceptive recruiting or overload students with debt.
Last year most of its operations were sold to ECMC Group, a nonprofit organization. Working with the Education Department and the Consumer Financial Protection Bureau, ECMC has said it will provide at least $480 million in debt relief to current and former Corinthian students.
But that relief applies to private loans the students took out from Corinthian itself. The activists want the government to discharge the federal student debt for all Corinthian students.
Jessica King is one of the people on strike. She enrolled at Everest College, a subsidiary of Corinthian, in 2007 and received a certificate in medical assisting. Ms. King says the certificate has been worthless on the job market, and she now tends bar and waits tables for a living. In debt for $33,000 for her studies, she says her credit is ruined.
“I can’t get any loans in my name. I can’t get a bank account in my name. I can’t do anything until this is resolved,” she says.
Last month she joined a group of former Corinthian students who met with Education Department officials to make their case, delivering more than 250 requests for debt relief. Denise Horn, a spokeswoman for the Education Department, said it would review each claim.
While the Corinthian case may seem unique, the specific regulation the activists are using to press their case to the department could have wider applications. They are zeroing in on an obscure section of the Higher Education Act that has rarely, if ever, been tested. The “defense to repayment” section seems to allow debt to be discharged if students can show their institutions violated state law.
Supporters of the students say that if they are successful in persuading the department to forgive the loans, either through defense to repayment or some other statutory means, it could potentially open the door to moral arguments, rather than strictly legal ones, for debt discharge.
What about the undergraduate who felt misled about the terms of his or her student loans or the student who thought a college overpromised on the market value of a degree?
Loan forgiveness could have implications for graduate education, too. What about the Ph.D. recipient who was not given placement data that would have showed the unlikelihood of landing a tenure-track job?
“There’s a lot of false stirring up of hope in the higher-education establishment,” says Frances Fox Piven, a political-science and sociology professor at the City University of New York Graduate Center who supports the debt strike. “Institutions are holding out the promise to students that a college education and particularly a graduate education will give them a decent life.”
Limits to the Movement
But just how far the strike’s reach will extend is up for debate.
Adam S. Minsky, a lawyer in Boston who specializes in representing student borrowers, has already received calls from debtors who attended other for-profit colleges wondering if they, too, should use the defense-to-repayment provision. If the Education Department accepts the Corinthian students’ arguments, he says, it could increase that interest, but probably in a limited way.
“Outside the for-profit sector, in the more traditional college setting, I think it’s harder to say,” Mr. Minsky says. “I’m always wary of floodgate arguments, so I don’t necessarily think this is going to open the floodgates.”
With the legal path unclear, a broader debt strike or other collective action to put pressure on the government to discharge loans would also be risky.
Ben Miller, a senior policy analyst with New America, said students who carried out such a protest in other sectors of higher education might not enjoy the level of public support that the Corinthian students have received.
“There’s a difference between ‘my program didn’t work out for me, and I want to be helped’ versus there was widespread fraud and misrepresentation,” Mr. Miller says. “I don’t think we’ll ever get to a place where that first case generates much sympathy. With a situation like the second one, there’s a greater desire to do something.”
But if a broader movement is the goal, Mr. Miller said, the strike organizers found the right college to “start defining the boundaries and what’s acceptable in the debt-forgiveness space” given the allegations against Corinthian.
Indeed, without the Corinthian case, it’s unclear what traction student-debt activists would have gained in recent years.
The Debt Collective grew out of the Occupy Wall Street movement, which in 2011 created a debtors’ pledge. It stated that signers would stop repaying their student loans once one million signatures were collected.
Mr. Ross, of New York University, who is the author of the 2014 book Creditocracy and the Case for Debt Refusal and who helped draft the pledge, says it fell far short of its goal because it was hastily conceived and overly ambitious.
But today, he says, the time is ripe for activism against student debt because students are talking more freely about the issue than they were even three or four years ago.
Speaking of the Corinthian strikers, Mr. Ross says: “I hope that other student debtors take some courage from the example of these very brave 100 students who stood up for their rights.”
Vimal Patel covers graduate education. Follow him on Twitter @vimalpatel232, or write to him at vimal.patel@chronicle.com.
