The Illegitimacy of Student Loan Debt

Ultimately, the student debt strike is not about "illegitimate" vs. "legitimate" debt, but the illegitimacy of student loan debt as such.
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This past week Strike Debt, an offshoot of Occupy Wall Street that has focused its energy and resources on debt relief and resistance, announced a student debt strike by the Corinthian 15, a group of former students of the for-profit Corinthian Colleges, Inc.

The for-profit chain, which focuses primarily on career-oriented education, has been the subject of numerous state and federal investigations regarding predatory lending practices and, under the supervision of the Department of Education, is currently selling off or shutting down completely many of its campuses, including many associated with its Everest College brand. Once the largest for-profit post-secondary education company in North America, Corinthian Colleges, Inc., has now dwindled to about half of its former size.

That, of course, leaves many former and current students in the lurch, holding degrees and credits from institutions with questionable reputations, if those institutions still even exist at all. Many former and current students have formally and informally alleged that the employment prospects promised by Corinthian Colleges-owned institutions simply don't match up with the low-wage reality they face upon graduation, if they even graduate. A 2010 report put the graduation rate at for-profit colleges at 22 percent, which sharply contrasts with the 55 percent graduation rate at public institutions and the 65 percent rate at private non-profit colleges and universities. This, despite the fact that enrollment at for-profit educational institutions has increased by well over 200 percent since the late 1990s.

All of that is even more of a problem, since students at for-profits, such as those run by Corinthian Colleges, Inc., hold on average almost twice the amount of student loan debt as students from private non-profits and almost three times as much as students from public universities. Not without reason, then, have critics maintained that the for-profit postsecondary education industry is built on the backs of lower-income individuals, who sign up with the hope of economic opportunity but often leave in even worse shape.

The Corinthian 15 have decided enough is enough. Citing Corinthian Colleges, Inc.'s predatory practices and false promises, the group of students has publicly announced that they intend to stop paying back their student loans. The strike, of course, carries a great deal of personal, financial and legal risk, and Strike Debt has formed a Debt Collective to collect donations to fund, among other things, necessary legal aid. Although the strike is small, only a very tiny fraction of the millions who carry student loan debt, the group hopes that their action will galvanize others to act in solidarity.

Numerous media outlets have picked up the story, and the Corinthian 15 would seem to have the support of politicians such as Elizabeth Warren, who has called for financial relief for students who have been "ripped off" by for-profits. Despite the attention and, it appears, good will toward the borrowers, on the whole the debt strike has largely been discussed in terms of the distinction between so-called illegitimate student loan debt and legitimate student loan debt.

The Corinthian 15, the narrative goes, fell victim to a bad actor, a predatory company that preyed on the good intentions students and their relative lack of opportunity. Corinthian Colleges, Inc.'s history of abuse, in this respect, grants the debt strike some amount of legitimacy, and brings to light broader issues with the for-profit education market.

That narrative is true, as far as it goes, but it leaves intact the student loan system itself, and gives a pass to the almost universal reliance on it among non-profit colleges and universities as well. In other words, it doesn't challenge the fact that the entire postsecondary education system in the United States is, in one way or another, financed by debt, which now clocks in at well over a trillion dollars among all individual borrowers. While real wages for most lower- and middle-class families remain stagnant despite the so-called economic recovery as the cost of higher education continues to rise, the $30,000 or so of debt that the average student now graduates with only looks to increase.

By focusing solely on the abusive practices of Corinthian Colleges, Inc., the media miss the fact that the system itself is abusive. Corinthian Colleges, Inc. is certainly a particularly egregious offender, but in terms of degree, not the only of its kind. Higher education in the United States is, for most, an education that indebts: it may promise opportunity, but that opportunity remains the possession of the federal government and the army of student loan servicors and providers.

Ultimately, the student debt strike is not about "illegitimate" vs. "legitimate" debt, but the illegitimacy of student loan debt as such. That is why the various calls for lower interest rates and more generous refinancing options, although an improvement, ultimately miss the point and do nothing of any real substance in the long run. The larger issue is, rather, education as a basic right, a right that should not be bought and sold. Strike Debt gets this point, which is why it understands solidarity with the Corinthian 15 as a "fight for quality, tuition-free education."

Calls for tuition-free education isn't something many that politicians, administrators and investors want to hear, precisely because the current system we have in place is so profitable for all involved -- except, that is, for students. But that's why it needs to be heard. It's far past time to say "no" to debt-financed higher education, and "yes" to tuition-free education for all.

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