As many of you might have heard, there is a growing “debt strike,” where graduates of the collapsed for-profit college chain, Corinthian Colleges, are refusing to repay their federal student loan debt. They are calling on the U.S. Department of Education to voluntarily waive their federal student loans. I’ve recently discussed the debt strike with The Washington Post, Vice, and Inside Higher Ed.
Here’s the background. 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 no viable career prospects. This has left thousands of Corinthian graduates with useless degrees and massive amounts of student loan debt. While a recent settlement with the Consumer Financial Protection Bureau will provide some relief to borrowers who took on predatory private student loans, many more are still left with crippling federal student loan debt.
Activists supporting the growing debt strikers, who are refusing to repay their federal student loans despite the very real and ominous debt collection weapons of the federal government, are invoking an obscure and little-known clause in the Higher Education Act and federal student loan contracts called “Defense To Repayment” (DTR).Read More