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Economic Disobedience: Student Debt Strike Expands as 100 Refuse to Pay Back Predatory College Loans

Web ExclusiveApril 02, 2015
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Image Credit: occupy.com

More than 100 former students of the for-profit Corinthian Colleges system have joined what they say is the nation’s first student debt strike. The students have refused to pay back loans they took out to attend Corinthian, which has been sued by the federal government for its predatory lending. The campaign began in February when 15 students announced the debt strike. Some of the students met with officials from the Department of Education earlier this week. We speak with Andrew Ross, sociology professor at New York University. He is author of the book, “Creditocracy: And the Case for Debt Refusal,” and a member of Strike Debt, a spinoff of Occupy Wall Street, which has been working with the former Corinthian students.

Watch related segment: Students Launch Historic Debt Strike, Refusing to Pay Back Predatory College Loans

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Transcript
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Nermeen Shaikh.

NERMEEN SHAIKH: Over a hundred former students of the for-profit Corinthian Colleges system have joined what they say is the nation’s first student debt strike. The students have refused to pay back loans they took out to attend Corinthian, which has been sued by the federal government for its predatory lending. The campaign began in February when 15 students announced the debt strike. Some of the students met with officials from the Department of Education earlier this week.

AMY GOODMAN: We’re joined now by Andrew Ross, sociology professor at New York University, NYU. He’s author of Creditocracy: And the Case for Debt Refusal. He’s a member of Strike Debt, which is a spinoff of Occupy Wall Street, which has been working with the former Corinthian students.

Tell us what happened, what has developed this week, and who these students are.

ANDREW ROSS: OK. So, one of Strike Debt’s projects is also Rolling Jubilee, which buys up distressed debt and then abolishes it. And one of the things we did was find Corinthian College debt, which was sold very cheaply on the secondary debt market.

AMY GOODMAN: And what is Corinthian?

ANDREW ROSS: Corinthian is one of the nation’s largest for-profit college systems. And it’s in severe trouble. It went bankrupt. And the federal government has been in two minds about what to do about it. One wing of the government is trying to keep it alive and make sure its investors are rewarded. And the other arm of government, Consumer Financial Protection Bureau, has been trying to shut it down. So, two arms of the government at odds with one another over this huge system.

The students were caught in the crossfire. They were scammed from beginning to end. They incurred a lot of debt under fraudulent circumstances, and they have a very strong case to have their debts discharged by the Department of Education.

So, we formed a pilot debtors’ union called The Debt Collective, which will nurture and cultivate debt strikes like this. And this is the first student debt strike in U.S. history. And we think there’s a very good chance that these student debtors will have their debts discharged by the Department of Education, which will be—

AMY GOODMAN: Explain what happened this week, what this meeting was all about.

ANDREW ROSS: Oh, well, the Consumer Financial Protection Bureau actually invited the strikers to come and testify at a meeting. Our hearing was in Washington, D.C., yesterday. And many—

AMY GOODMAN: That was on Wednesday.

ANDREW ROSS: On Wednesday. Top-ranking members of—or officials in the Department of Education also showed up to listen to the strikers. The strikers made their case, and they are promised a response within the next 30 days or so. And so, things went very well from the point of view of the strikers. We think there’s a very strong legal case, and an even stronger moral case, for their debts to be discharged.

NERMEEN SHAIKH: You said the students were scammed from beginning to end. Who were they scammed by? The college? The federal government? Who?

ANDREW ROSS: They were scammed by college admissions officers who target particular segments of the population to try and recruit.

NERMEEN SHAIKH: What segments?

ANDREW ROSS: They’re low-income. They’re often single parents. They are—in their own words, they’re people with low self-esteem who are uncertain about their future. So, they have a very particular market segment that they go out to target. And in addition, they’re often students who they know will max out on federal loans very quickly, so that they will have to take the private loans that are offered internally within the Corinthian system.

AMY GOODMAN: I wanted to go to one of the student strikers. In February, we spoke with a Corinthian debt striker, Latonya Suggs, in Cincinnati, Ohio. She’s $63,000 in debt after completing a two-year program in criminal justice at Everest College, which is a subsidiary of the for-profit Corinthian Colleges system.

LATONYA SUGGS: I did attend college, Everest, to better my future. I attended Everest to get a better job, land a better career, a better opportunity and what we call the American dream. And they lied to me about everything. There was no career placement after I graduated. They didn’t help me with interviewing, anything like that. They were just basically preying on me to get my money. And I don’t feel that I got a quality education out of attending Everest.

AMY GOODMAN: That’s Latonya Suggs, a Corinthian student, $63,000 in debt after completing a two-year program. So, on Wednesday, the Consumer Financial Protection board holds this meeting, and you’re saying two wings of the U.S. government are fighting each other here. Who was present at the hearing?

ANDREW ROSS: Well, they’re at odds with—I’m not sure if they’re fighting with each other, but they’re—from the outside, they seem to be at odds with one another, because the Consumer Financial Protection Bureau is suing the college system, and the Department of Education is still issuing federal loans, encouraging students to enroll in the system and protecting the investors.

AMY GOODMAN: How did you buy up the debt?

ANDREW ROSS: Oh, well, the Rolling Jubilee buys up debt through a debt buyer on the secondary debt market. It’s a very murky marketplace. And instead of collecting on the debt, we simply abolish it and write to the debtors telling them they’re off the hook. We’re almost finished with that project at this point. It was a short-term project. But we wiped out almost $30 million worth of debt.

AMY GOODMAN: But surely, these students, like Latonya, she’s not off the hook, is she?

ANDREW ROSS: I don’t think any of the 100—maybe one or two of the 100 had their debts abolished, but these would have been mostly private debts. We can’t really tell, when we buy a portfolio of debt on the secondary debt market, who it belongs to. So we can’t, you know, target particular individuals and buy these debts.

NERMEEN SHAIKH: So, does the debt strike apply only to the private debt taken from Corinthian College or also to the federal loans, or both?

ANDREW ROSS: It’s only to the federal loans. They’re only striking federal debt. And the Department of Education does have the power and is somewhat obliged to respond to this. It does have the power to discharge debts that were incurred under fraudulent circumstances. And that’s the basis of the claim here. But if this strike is successful, and we think there’s a good chance it will be, then the path will be clear for other groups of student debtors to follow.

AMY GOODMAN: Let me ask you about your group, Strike Debt, a spinoff of Occupy. You wrote the book, Creditocracy: And the Case for Debt Refusal. Explain what that is.

ANDREW ROSS: Well, we think there are all sorts of moral cases for engaging in economic disobedience, especially in the form of debt refusal. When governments will not provide debt relief to their citizenry, when they will not protect their citizenry from economic harm, then we believe that it is—it’s justifiable, and it may in fact be a defense of popular democracy to take debt relief for ourselves. And that’s the basic principle. This has happened at the level of sovereign debt. That’s nation states in the South. We think it should be applied at the level of household debt now. And we decided—we decided to begin with student debt because we feel that student debtors are at the point of organizing, self-organizing, and we think the case against the Department of Education, which has turned higher education in this country into a vehicle for profit, is a very strong case.

AMY GOODMAN: Well, we want to thank you very much for being with us, Andrew Ross, sociology professor at New York University, author of Creditocracy: And the Case for Debt Refusal, member of Strike Debt, a spinoff of Occupy Wall Street, which has been working with the former Corinthian students. And we’ll continue to follow this case. This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Nermeen Shaikh.

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