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Major Debt

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Back in 2005, when the advocacy group Project on Student Debt took off, the phenomenon was so underreported that the founders had trouble deciding on a name.1 “There wasn’t the term ‘student debt’,” claims Lauren Asher, one of the initiative’s founders.

Fast-forward just a few years, and thanks largely to the vocal efforts of organizers with Occupy and global student resistance spanning across continents, the struggles of today’s debt-ridden college generation have become a pressing political flashpoint demanding urgent resolution.

Massive walkouts late last year at colleges in the New York and University of California systems helped ignite the student debt issue with real potency.2 Students, the mainstream media finally noticed, are outraged enough to take drastic steps in resisting the collective burden of rippling debt and defaults.3 Taking cues from student protestors worldwide, American college students have become increasingly adversarial against the unreasonable financial demands placed upon them by university administrators and debt collectors. California students recently attained at least a temporary success, turning out young voters in record numbers to raise taxes on the state’s wealthiest and freeze tuition hikes at public universities.4

Around the same time as last year’s walkouts, Occupy Wall Street’s Education and Empowerment working group staged a large event at Liberty Plaza organized around a “debt refusal pledge” that ushered in the vibrant Occupy Student Debt Campaign (OSDC).5 In his speech via People’s Mic, Andrew Ross, a Strike Debt organizer and professor at New York University, emphasized the core principle animating students’ resistance worldwide, one deeply antithetical to today’s extreme neoliberal ideology driving the privatization of basic social goods like education, healthcare, and housing.

“Since the first days of the Occupy Wall Street movement, the agony of student debt has been a constant refrain,” Ross said. “We’ve heard truly harrowing personal testimony about the suffering and humiliation of people who believe that their debt will be unpayable in their lifetime… Education is not like buying a car or a flatscreen TV. Education is a right and a public good.”6

The debt refusal pledge, still open for signatures on the OSDC website, reads as a succinct, aspirational statement of student protestors’ core beliefs:

As members of the most indebted generations in history, we pledge to stop making student loan payments after one million of us have signed this pledge.

Student loan debt, soon to top $1 trillion, is poisoning the pursuit of higher education. With chronic underemployment likely for decades to come, we will carry an intolerable burden into the future. The time has come to refuse this debt load. Debt distorts our educational priorities and severely limits our life options.

Education is not a commodity and it should not be a vehicle for generating debt, or profit for banks. Education at all levels –pre- K through Ph.D. — is a right and a public good.

  • We believe the federal government should cover the cost of tuition at public colleges and universities.
  • We believe that any student loan should be interest-free.
  • We believe that private and for-profit colleges and universities, which are largely financed through student debt, should open their books.
  • We believe that the current student debt load should be written off.

In acknowledgment of these beliefs, I am signing the Debtors’ Pledge of Refusal.

That these fundamental beliefs are controversial in today’s political atmosphere is a stunning symptom of the extent to which the religion of market economics has consumed our daily lives. The widespread indebtedness and underemployment of college graduates in the U.S., if anything, should be viewed as a staggering failure of the market to provide a secure, viable future for the country’s youth.

A report released by the New York Federal Reserve Bank early this year underlines the extent of the crisis.7 Cumulative student debt in this country, the report found, stands at $870 billion, easily surpassing the figures for credit card and automobile loans, with 27% of borrowers in repayment past due and 21% with delinquent loans. Some 37 million Americans currently hold an average of $23,500 student debt, defaults on which have risen for the fifth straight year such that 218 American colleges now have default rates over 30%.8 For poor and young households, student loan payments are harsher still, devouring roughly a quarter of all income.9 Yet while financial ruin looms for the significant number of students overwhelmed by their debt burdens, hedge fund investors who profit by betting against student loans are eager to collect the windfall, predicting default rates as high as 40% for current graduates.10 This is already the reality at the growing number of two-year for-profit universities, where 96% of students take on debt and 40% are in default within fifteen years.11

Recent graduates are at the same time facing the worst job market since statistics were first logged in 1948. As of last summer, less than half of those actively seeking employment in the labor market aged 16-24 had paying jobs, and nearly half of those gainfully employed worked in the hospitality and retail industries, notorious for their low-paying and insecure job positions.12 Youth of this so-called “lost generation,” journalist Gary Lapon observes, can expect “a future of working low-paying jobs they are overqualified for in order to pay back loans for degrees that mean little at a time when the fastest-growing industries don’t require workers with a college education.”13

Underpinning the explosion in student debt has been steep tuition increases across U.S. universities. Since 1978, average tuition rates have increased over 900%, 650 percentage points above inflation — as compared to the massive bubble in housing prices that increased only fifty points above the Consumer Price Index during that same period.11

Analysts have moreover pointed out that the unfettered growth in college tuition has gone plenty of places, none of them concerned with improving instructional quality. Mark Bosquet, author of How the University Works (2008) points out:

If you’re enrolled in four college classes right now, you have a pretty good chance that one of the four will be taught by someone who has earned a doctorate and whose teaching, scholarship, and service to the profession has undergone the intensive peer scrutiny associated with the tenure system. In your other three classes, however, you are likely to be taught by someone who has started a degree but not finished it; was hired by a manager, not professional peers; may never publish in the field she is teaching; got into the pool of persons being considered for the job because she was willing to work for wages around the official poverty line (often under the delusion that she could ‘work her way into’ a tenurable position); and does not plan to be working at your institution three years from now.

As Bosquet explains at length, cuts to tenure-track positions have made academic labor increasingly precarious. Graduate students super-burdened with debt can easily be forced into sub-minimum wage labor, while the newfound wealth of cheap student labor pushes recent PhDs into insecure adjunct positions with depressed wages. Increased debt and tuition thus function counterintuitively to de-professionalize and degrade the quality of academic instruction.

Coupling this trend is a rise in the pay-scale of university administrators and the burgeoning college managerial class — a wholesale “corporatization” of the university. At current rates, the Department of Education estimates that by 2014 college administrators will outnumber instructors at four-year nonprofit U.S. universities.11

Malcolm Harris has sketched the broader ramifications of this trend:

Formerly, administrators were more or less teachers with added responsibilities; nowadays, they function more like standard corporate managers—and they’re paid like them too. Once a few entrepreneurial schools made this switch, market pressures compelled the rest to follow the high-revenue model, which leads directly to high salaries for in-demand administrators. Even at nonprofit schools, top-level administrators and financial managers pull down six- and seven-figure salaries, more on par with their industry counterparts than with their fellow faculty members. […] When you hire corporate managers, you get managed like a corporation, and the race for tuition dollars and grants from government and private partnerships has become the driving objective of the contemporary university administration. The goal for large state universities and elite private colleges alike has ceased to be (if it ever was) building well-educated citizens; now they hardly even bother to prepare students to assume their places among the ruling class. Instead we have… “Digitize the curriculum! Build the best pool/golf course/stadium in the state! Bring more souls to God! Win the all-conference championship!” These expensive projects are all part of another cycle: corporate universities must be competitive in recruiting students who may become rich alumni, so they have to spend on attractive extras, which means they need more revenue, so they need more students paying higher tuition… And if a humanities program can’t demonstrate its economic utility to its institution (which can’t afford to haul “dead weight”) and students (who understand the need for marketable degrees), then it faces cuts, the neoliberal management technique par excellence. Students apparently have received the message loud and clear, as business has quickly become the nation’s most popular major… As the near-ubiquitous unpaid internship for credit (in which students pay tuition in order to work for free) replaces class time, the bourgeois trade school supplants the academy.

This dystopian future of a totally privatized university with indentured servitude as the price of entry is not one we as students in the academy have willfully chosen. Countervailing efforts, while still young, are building with immense promise.

As just a single, domestic snapshot, activists with Strike Debt have provided a framework for systemic analysis and long-term direct action against unjust debt, which they hope will underpin the movement for decades. Organizers have researched and compiled “The Debt Resistors’ Operations Manual,” combining educational material with guides for replicable direct actions. Studying the Savings & Loans crisis of the 1980s, organizers learned that debt can be bought on secondary markets for pennies on the dollar and eventually abolished, leading to the nascent “Rolling Jubilee” campaign where debt in default will be bought and abolished through mutual aid. As many activists have noted, the Rolling Jubilee promises to “spark” the largely silent issue of debt resistance but does not yet offer a full solution.14

What this all points to is a need for the radical reorientation of political priorities. Campaigns by student organizers across the country and the world have pushed their beholden political representatives and public education officials to resist the myopic tide of austerity. Gone, they insist, is the time for technocratic policy fixes. The well-publicized executive order President Obama issued last year on the heels of deep cuts to Pell Grants and government subsidies for graduate tuition has been widely observed to provide only marginal relief for less than one-fifth of the country’s debt-burdened students.15

As Ross and others have remarked, the political establishment must come to the understanding that education is a public, not private good, with benefits that accrue to the community at large. Depriving people of their right to an education through unaffordable tuition hikes and dissuading them from further studies by virtue of enormous debt burdens is a road to total social collapse. And we must avoid this future at all costs.

Student debt is just one of many kinds of odious, unjust debt — like that incurred for healthcare, housing, and other basic needs — that lay neoliberal mythology bare. As Richard Dienst notes, “The rulers can no longer pretend that debt is something we freely choose as a matter of rational self-interest. Instead, people are forced to take on debts in order to have any chance of having what counts as a good life in this society.”16

For many Americans, this sort of indentured servitude is not an acceptable bargain. And the numbers in vocal resistance are quickly growing.

Prashanth Kamalakanthan is a junior at Duke University, where he is studying political science, environmental policy, and film. Prashanth is chair and co-founder of Duke Students for a Democratic Society (SDS), a student activism group, and an avid documentary film enthusiast.

  1. Jodi S. Cohen and Vikki Ortiz Healy, “Student debt looms large for a generation,” Chicago Tribune30 October 2011. []
  2. Amanda M. Fairbanks and Saki Knafo, “College Sympathizers Of Occupy Wall Street Walk Out Of Class In Support,” Huffington Post, 5 October 2011. []
  3. Cryn Johannsen, “Washington Post: ‘Forgive Us Our Student Loan Debt?’ No Thanks!,” Hypervocal, 28 November 2011. []
  4. California Cancels Tuition Hike After Voters OK Tax Increase,” Democracy Now!, 8 November 2012. []
  5. Occupy Student Debt Campaign website []
  6. Sarah Jaffe, “OWS Education Activists Launch Student Debt Refusal Pledge,” AlterNet, 21 November 2011. []
  7. Meta Brown, Andrew Haughwout, Donghoon Lee, Maricar Mabutas, and Wilbert van der Klaauw, “Grading Student Loans,” Federal Reserve Bank of New York, 5 March 2012. []
  8. Blake Ellis, “Student loan default rates jump,” CNN Money, 3 October 2012. []
  9. Richard Fry, “A Record One-in-Five Households Now Owe Student Loan Debt,” Pew Research Center, 26 September 2012. []
  10. Matt Wirz, “What Hedge Funds Can Teach College Students,” Wall Street Journal, 12 November 2011. []
  11. Malcolm Harris, “Bad Education,” n+1, 25 April 2011. [] [] []
  12. “Employment and Unemployment Among Youth Summary,” Bureau of Labor Statistics, 21 August 2012. []
  13. Gary Lapon, “Graduating into never-ending debt,” Socialist Worker, 19 March 2012. []
  14. Andrew Ross and Astra Taylor, “Rolling Jubilee is a Spark — Not the Solution,” The Nation27 November 2012. []
  15. Gary Lapon, “Drowning in student debt,” Socialist Worker, 7 November 2011. []
  16. Richard Dienst, “Six Ways of Being in Debt,” Occupy Student Debt Campaign, 21 August 2012. []