Alan Collinge is on a mission. It’s a mission that has left him demoralized and destitute, yet more determined than ever.
For a decade now, Mr. Collinge has been fighting to make it easier for borrowers, himself included, to wipe out their student-loan debt. He has collected thousands of stories from financially distressed debtors, appeared in numerous documentaries and news reports, published a book, and been named a “hero” by CNN.
As he sees it, there is only one solution to spiraling student debt and rising defaults: restoring standard bankruptcy protections to all student loans, federal and private. All other efforts to ease the burden of repayment are just Band-Aids on a broken system.
Supporters credit Mr. Collinge, who turned 45 this month, with giving voice to underrepresented borrowers and removing some of the stigma of student-loan default. Donors to his organization, Student Loan Justice, say he gives them hope. One former Congressional aide marveled at his “raw passion and dedication.”
But his uncompromising nature — and his tendency to lash out at those who fall short of his standards — has also earned him a reputation as a loose cannon. His expletive-laced emails and personal, public attacks on lenders as well as borrowers’-rights groups have alienated would-be allies, and, some say, undermined his credibility as an advocate.
Frustrated by the lack of progress on his goals, he packed his bags last month and moved from Tacoma, Wash., to Washington, D.C., to lobby for the only bankruptcy-reform bill that he says “doesn’t suck": HR 449, dubbed the “Discharge Student Loans in Bankruptcy Act” and introduced by Rep. John K. Delaney, Democrat of Maryland. The bill has only three co-sponsors, all Democrats, and Mr. Collinge acknowledges it’s not likely to get far in a Republican-controlled Congress.
Still, in an interview over coffee last month, he said he’d rather be in Washington, where the action is, than “sitting in Tacoma, watching C-Span and tearing my hair out.”
His plan is to roam the halls of Congress, “knocking on doors.” When he gets a meeting with a lawmaker, or a member of his or her staff, he’ll have representatives of Student Loan Justice follow up with their personal stories — a “one-two punch, inside and outside the Beltway,” as he puts it.
But first he has to find a place to live. For now, he’s spending most of his time hostel-hopping and pleading for donations.
“Fund raising,” he said with a grimace. “Disgusting, shameless fund raising.”
A Voice for Defaulters
For someone who serves as a megaphone for defaulted borrowers, Mr. Collinge is surprisingly reticent about his own repayment struggles. “My own personal story isn’t something I like to trot out there,” he says.
He’ll confirm the facts that have been published elsewhere: He graduated from the University of Southern California in 1999, with undergraduate and graduate degrees in aerospace engineering and $38,000 in debt. He got a job working as a scientist at Caltech but left after three years, hoping to secure a higher-paying position in the defense industry. When he failed to find one, he became delinquent on his loans.
Mr. Collinge said he tried to negotiate with his lender and guarantor, but they refused to compromise. He defaulted in 2001, and he has no idea how much he owes now — “probably a quarter of a million dollars at this point.”
But there’s one fact he wants to make crystal clear: “I will not pay them one damn dime until I get some justice.”
In 2005, Mr. Collinge — then working as a programmer at Northrop Grumman — began digging into problems with federal student lending. He concluded the system had become predatory, a “scam” in which the government and banks were making millions while borrowers struggled under virtually inescapable debt. Convinced that he’d “stumbled on a large, unreported problem,” he created a bare-bones website, StudentLoanJustice.org, and began soliciting testimonials.
It didn’t take long for the horror stories to start pouring in, from borrowers who had defaulted after accidents left them unable to work, borrowers who had suffered mental breakdowns after being hounded by debt collectors, borrowers who had attempted suicide to escape their debt (and the families of those who succeeded). They spoke of hopelessness, despair, and anger — at colleges that peddled worthless degrees, at lenders that wouldn’t compromise, and, above all, at a system that makes it easier for a borrower to get out from under a gambling debt than a student loan.
It was the personal stories, Mr. Collinge said, that “pretty much locked it in for me.”
Mr. Collinge began sharing those stories with the news media. In December 2005, he was featured in a Fortune article that criticized the student-loan giant Sallie Mae for “socking students with interest rates of up to 28 percent.” The following May, he appeared in a 60 Minutes investigation of the lender. Documentary appearances and other media mentions followed, and in 2008, CNNMoney selected him as one of seven “financial heroes,” putting him in a category with Warren Buffett and Sheila Bair, who was then chair of the Federal Deposit Insurance Corporation. The following year, he published a book, The Student Loan Scam.
“He was the first person to give a voice to financially distressed borrowers, to give them a chance to tell their own stories,” said Stephen Burd, a senior policy analyst at New America (and a former Chronicle reporter). “He deserves a lot of credit for that.”
Mr. Burd, a longtime critic of lenders and for-profit colleges, said Mr. Collinge “helped expose the harsh tactics that a lot of the student-loan collection agencies were using.”
“He always used to talk about a shark tank that one of the collection agencies had in its lobby,” he recalled.
Mona McCormack, a 52-year-old high-school teacher in Missouri who defaulted a decade ago, said Mr. Collinge provides borrowers like her with “a voice that we desperately need.”
“Right now, lenders have all the power, and borrowers have no recourse,” she said.
A Moral Hazard?
It wasn’t always so difficult for struggling borrowers to get relief from their student loans. Thirty years ago, educational debt was completely dischargeable through bankruptcy. But in 1976, spurred by a series of news articles about young doctors and lawyers who had used bankruptcy to escape their loan obligations, Congress passed a law that made it harder for borrowers to erase their federal student loans.
But there was little evidence, even then, that hordes of borrowers were abusing the system. While default rates in the 1970s were much higher than they are today, less than 1 percent of all educational loans made at the time were discharged through bankruptcy, according to a General Accounting Office report published in 1976.
Private loans remained dischargeable until 2005, when Congress, at the urging of Sallie Mae and other for-profit lenders, added language to bankruptcy-reform legislation that matched the restrictions on federal loans.
These days, borrowers can erase their debt only if they can convince a bankruptcy judge that repaying their debt would “impose an undue hardship” on them or their dependents — a difficult standard to meet. Few borrowers even try.
Mr. Collinge and his supporters say restoring bankruptcy protections would provide relief to borrowers who find themselves in severe financial distress, while discouraging banks and the government from making loans to students who are likely to default. They argue that it is unfair to treat student loans more harshly than other forms of unsecured consumer debt.
But skeptics say that doing so for federal loans would shift all the risk onto taxpayers, increasing the government’s cost of lending. “You can’t have a loan program that makes loans to everybody, regardless of their credit history and earnings, and then, on the back end, say you can discharge it in bankruptcy,” said Jason DeLisle, director of the Federal Education Budget Project at New America. “There’s a big moral hazard there.”
In Congress some influential Democrats support restoring bankruptcy protections for private loans. But federal loans are a tougher sell, largely because they have no underwriting standards and carry more borrower protections.
Channeling Anger
If Mr. Collinge is channeling the anger that many defaulters feel, some say he takes it too far. He has sent threatening emails to lenders, accusing them of wrecking borrowers’ lives and warning that they will pay for their greed. He created a “Who Did It” section of his website (a page he has since scrubbed) that blamed industry executives and lobbyists for the “student-loan scam” and supplied their contact information. One loan-industry lobbyist said he received death threats after his email and phone number appeared on the site.
Mark Kantrowitz, a student-loan expert who often refers defaulters to Mr. Collinge for advice, said such personal attacks have sometimes obscured Mr. Collinge’s message, shifting attention from his arguments to his anger.
“It’s an emotional issue for him, it’s a personal one, and sometimes he reacts,” Mr. Kantrowitz said. “He would be more effective if he kept to his facts.”
But Mr. Collinge’s penchant for profanity and his take-no-prisoners approach don’t seem to trouble longtime donors, many of whom share his sense of outrage.
“I think it’s authentic,” said Mark Anthony Ford, a nurse at a veterans’ home in Virginia who defaulted on his loans after racking up medical debt from a car accident. “People should be pissed off.”
Ms. McCormack, the Missouri teacher who now owes $38,000 on an $8,500 loan she took out in the 1980s, said she sometimes questions Mr. Collinge’s tactics but understands his frustration. “I am a pretty calm person, but when you start talking to me about student loans, I get pretty irate,” she said. “You feel so helpless, and so downtrodden, and it’s just so unfair.”
Mr. Collinge said he doesn’t even regret the time he drunk-dialed Sallie Mae’s chief executive at his home at 3 a.m. (He does stress, though, that he placed that call before he formed Student Loan Justice.) Asked about an email in which he called one loan lobbyist “evil” and “a piece of shit,” he said he stands by his remarks.
Mr. Collinge has also attacked more-measured consumer groups, accusing them of giving “lip service” to bankruptcy reform while settling for “faux Beltway solutions,” such as income-based repayment, which aims to make monthly payments more manageable. In a comment on one New America blog post, he called out four consumer advocates by name, writing that “all you people have blood on your hands.”
“The American people will soon see the damage you people have wrought,” he wrote. “And you will be held personally accountable.”
Mr. Burd, who moderated that discussion, said such comments have alienated would-be collaborators, making it more difficult for Mr. Collinge to achieve his goals.
“He doesn’t always know who his friends are, and he can be really vicious in attacking them if they don’t do exactly what he wants,” he said.
Several student and consumer advocates declined to comment on the record for this article, citing Mr. Collinge’s volatile nature. Some advised against writing about him, warning that it could reinforce negative stereotypes about defaulters.
While the groups share Mr. Collinge’s concerns about default, they differ from him in both style and substance. As one advocate put it: “We’re more moderate, and he’s more radical.”
Mr. Collinge Goes to Washington
When Mr. Collinge started Student Loan Justice, 10 years ago this month, he had $10,000 in the bank, a home with equity, a car, and a retirement plan. These days he has none of those, and he lives off donations from his group’s members, many of whom are scraping by themselves. When we met for coffee last month, he was down to $2 and posting frequent Facebook appeals for donations. A few weeks earlier, he said he had slept under a bridge one night.
Mr. Collinge estimated that his group was up to 30,000 members, though he readily acknowledged that his inclusion criteria are “loose.” If you send him an email, or join his Facebook group, you’re in. Of those, maybe 500 donate, mostly in small amounts, he said.
Ms. McCormack said she chips in $10 pretty regularly, $20 when she can swing it. Mr. Ford, who doesn’t even own a car, said he gives $15 a month. He kicked in an additional $50 this month to help Mr. Collinge get established in Washington.
Mr. Ford, a onetime union organizer who has long been involved with political causes, said he’d been impressed with how much Mr. Collinge had accomplished “on a shoestring budget.”
Mr. Collinge, he said, is “making people more aware” of the unfairness of the system. “The corporations were able to get rid of their debt — they got a bailout,” he said. “But the average worker is still shouldering the burden of their student debt.”
Still, he’s not very optimistic that Mr. Collinge will be able to persuade the Republican-led Congress to restore bankruptcy protections for student loans. He’s rooting for an Elizabeth Warren-Bernie Sanders ticket in the next presidential election.
But Mr. Collinge argues that bankruptcy reform should be a conservative cause. After all, the U.S. Constitution talks about “uniform laws” of bankruptcy, and the Tea Party is big on restoring constitutional values. Mr. Collinge said he plans to focus his initial lobbying on conservatives like Sen. Rand Paul and Sen. Marco Rubio before pivoting to liberal sympathizers like Senators Warren and Sanders.
Last month he scored an appearance on Newsmax, the conservative cable-news outlet. In the interview, he argued that the removal of “fundamental free-market protections,” coupled with President Obama’s move to “nationalize” student lending five years ago, had turned the U.S. Department of Education into “an out-of-control beast” with no skin in the game. Restoring those protections, he said, would make the government a more prudent lender and would ultimately force colleges to lower tuition.
In many ways, things are better for struggling debtors now than they were a decade ago. The federal income-based repayment plans are more generous, loan forgiveness is more broadly available, and there’s a new federal watchdog looking out for borrowers: the Consumer Financial Protection Bureau. But those changes haven’t solved the student-debt problem. Default rates are twice as high as they were when Mr. Collinge started Student Loan Justice, and student debt now tops a trillion dollars.
To Mr. Collinge, recent efforts to ease loan repayment are merely a distraction from the structural problems in student lending. He called President Obama’s Pay as You Earn repayment plan “absolute crap,” and said the president’s recent “Student Aid Bill of Rights” was “unimpressive to the point of being insulting.”
Mr. Kantrowitz said Mr. Collinge doesn’t appreciate that the government works incrementally, that it takes time to bring about major change. “He thinks the government should turn on a dime and fix things,” he said.
Still, he believes Mr. Collinge is “in it for the long haul.”
Mr. Collinge, for his part, said he’d remain in Washington “for as long as the money lasts.”
“If I have to run this out of a homeless shelter,” he said, “I will.”
Kelly Field is a senior reporter covering federal higher-education policy. Contact her at kelly.field@chronicle.com. Or follow her on Twitter @kfieldCHE.
