One of the largest for-profit college networks in the country, Corinthian Colleges, recently collapsed under pressure from multiple state and federal lawsuits alleging that the company defrauded tens of thousands of students: first by luring them to enroll with unrealistic promises of gainful employment, then saddling them with predatory debt and a sub-par education, and finally leaving them out to dry with dim or no viable career prospects. Corinthian was essentially forced to shut down.
This has left thousands of Corinthian graduates with unfinished or useless degrees, and an obscene amount of student loan debt. While a recent settlement with the Consumer Financial Protection Bureau will provide some debt relief to borrowers who took on predatory private student loans, many more are still left with crippling federal student loan debt. Activists, and even the Massachusetts state attorney general and other high-level officials, are calling on the U.S. Dept. of Education to forgive this debt on the basis that it should never have allowed Corinthian to benefit from federal aid to begin with.
Recently, student activists have called for a “debt strike,” whereby Corinthian graduates will refuse to repay their federal student loans to protest both Corinthian’s practices and the U.S. Dept. of Education’s complicity in what essentially has been a huge scam.
I was recently asked to give my opinion about this debt strike in an interview with Inside Higher Ed. As the article indicates, I am torn.
My heart is with the activists. Sometimes, you have to shake things up in order to make some change. These students were completely taken advantage of, and if this debt strike gains momentum and calls more attention to the wider problem of federal funding of predatory for-profit colleges, while also providing some relief for the victims of such schemes, I am all for it.
At the same time, my activist heart works in conjunction with my attorney brain. And the fact is that the federal government has enormous powers to ruin people’s lives when you default on federal student loans. Not only does federal default wreck your credit, but the federal government can tack on outrageous penalties, garnish your wages, intercept your tax refund, offset federal benefits (even Social Security), and pursue you for life- all without ever needing to take you to court.
So I support the debt strikers. And I hope they make a difference. I just want everyone who is participating to be aware of the consequences. Because they aren’t pretty.