Reviews | What the Corinthian Colleges case tells us about student loan forgiveness

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Astra Taylor is the author of numerous books and co-founder of the Debt Collective, the nation’s first debtors’ union.

With Wednesdays announcement that he will erase $5.8 billion in federal student loans owed by approximately 560,000 former students at Corinthian Colleges Inc., the now defunct chain of for-profit colleges the Biden administration changed many lives. People’s debt ratios and credit ratings will improve; wage and tax garnishments will cease.

But relief is long overdue. Had this been granted eight years ago, when former Corinthian students began to organize, they could have avoided immense financial and emotional hardship. Instead, they had to fight for justice. As the administration considers broader elimination of student debt, the Corinthian decision offers two lessons: whatever portion of debt the government decides to cancel should be offered automatically, without a onerous application process. , and it should do it now.

I had the honor of organizing alongside these former students as co-founder of the Collective debt, a union of debtors. From the time Barack Obama was still in the Oval Office, I saw with my own eyes how they pushed multiple administrations for what they deserved, after borrowing to pay for degrees in what turned out to be a predatory institution.

Corinthian was a particularly appalling case. By 2014, journalists and officials, including then-California Attorney General Kamala D. Harris, exposed the company’s fraudulent practices: charging exorbitant tuition fees; inflate job placement statistics; and targeting vulnerable communities with high pressure marketing techniques. An internal document described Corinthian’s target demographic as “isolated” people with “low self-esteem” who are “unable to see and plan well for the future”.

That year, the Consumer Financial Protection Bureau sued the company for allegedly running an “illegal predatory lending scheme”. The legal arguments were strong, but instead of protecting students, Obama officials facilitated the sale of Corinthian to a debt collection agencya decision which prevented the students from obtaining the cancellation of the loan which they would have if the school had closed.

Maybe that was the end of the story. But the students fought back.

In May 2014, Nathan Hornes knew something was wrong at Corinthian’s Everest College when his business management classes sometimes involved playing the board game. Monopoly and little else. His apprehensions grew when, at his graduation ceremony, a Corinthian employee told students they could only participate if they signed a form that waived their right to sue if they couldn’t find a place. ‘use. Soon after, Nathan applied for a job at Wells Fargo, a investor in Corinthian. He did not understand. He went back to working in fast food, now with $68,000 in debt.

Instead of a professional career, Nathan found a calling. The Collectif Dette came into contact with him when he was trying to mobilize his comrades. We have joined forces. A class action lawsuit was on the table; the Corinthian students had given up their rights to sue the company. But students could hold the Department of Education accountable as the regulator and issuer of their federal loans. Debt Collective organizers have learned of a largely untested provision of the Higher Education Act called “defense of the borrower to repaymentwhich allows student borrowers to receive loan relief when their school violates state law. We’ve partnered with creative lawyers and created a mobile-friendly website so people can easily submit claims.

Along with this strategy, we planned the nation’s first student debt strike. Nathan and 14 others called themselves the 15 Corinthians and publicly declared their refusal to repay their loans on the grounds that they had been defrauded. The demand was simple: the Ministry of Education should eliminate all Corinthian debts at once, without demands or delays. Other advocates and officials agreed, including a group of senators led by Elizabeth Warren (D-Mass.). In the end, over 12,000 people used our website to submit complaints.

The ministry credited the movement with pushing it to create its own borrower defense app. But it also came with a onerous, one-to-one bureaucratic process, effectively requiring every borrower to prove fraud, despite tons of evidence. Corinthian students had to do all of this while balancing jobs, caring for children, and setting aside time at local libraries to print out required forms.

Some borrowers saw relief – then Donald Trump captured the presidency. The Predatory Student Loans Project filed several lawsuits against the Department of Education, arguing that Corinth’s failure to forgive student loan debt was illegal. Under pressure, Education Secretary Betsy DeVos approved waivers for the small number of requests granted by the previous administration. Next to her signature, she writes: “With extreme displeasure.”

Public servants must learn from these mistakes. Require borrowers to apply individually for cancellation guarantees for the most vulnerable struggle to access the relief they are entitled to, putting them at risk if an adversarial president takes office. Any cancellation must be prompt and automatic.

When we launched the Corinthian Debt Strike, total student debt was $1.2 trillion. Now it exceeds $1.75 trillion. The fate of working-class students attending so-called traditional institutions is not always so different from that of the victims of predatory, for-profit colleges; they too are trapped in debt. But along with the increase in student debt, the popularity of its massive write-off has increased dramatically. Today a majority of likely voters are in favor of canceling student debt, even those who don’t have student debt themselves.

Still, it’s easy to forget how quixotic the idea seemed at first. In 2019, a former political adviser to Warren said Corinthian activists were making “people more comfortable with the argument that sometimes debt just has to be wiped out”. If President Biden honors his campaign promise and announces some measure of blanket student debt cancellation in the coming weeks – as it should be – a brave group of for-profit debtors will deserve a round of thanks.

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