Economy

Inside The Historic Meeting Between Student Debt Strikers And Their Government Antagonists

CREDIT: AP

Sarah Dieffenbacher and other members of the "Corinthian 100" student loan debt strike movement met with federal education officials on Tuesday in Washington, D.C.

Just months after seemingly closing off their best route out of crushing debt, federal officials have now committed to working with a group of current and former Corinthian Colleges students who are protesting the now-bankrupt company’s conduct by refusing to repay their student loans.

The first-ever meeting between government officials and a rapidly growing group of students who are on strike from student loan payments did not produce any grand resolution to the conflict at hand. But Tuesday’s meeting did set the stage for some conciliation between the two sides, with Department of Education officials committing to another meeting in the next 30 days and providing a small but significant piece of clarity about how the students can go about pursuing a full discharge of the loans they took out to attend sham classes at for-profit Corinthian Colleges. Some surprise guests in the meeting also indicated that the Department of Education now finds itself under pressure from the White House to provide these students an offramp from their life-ruining debts.

In the hotel prior to the meeting, strikers and organizers expressed a mix of nerves, anger, and excitement. Strike organizer Ann Larson praised the Consumer Financial Protection Bureau’s decision “to make sure that the Department of Education has to look these students in the eye and explain to them why they’re left with unpayable debt for attending a fraudulent college.”

In addition to the chance to tell Department of Education officials their stories, the meeting calls attention to a strange deficiency with the government’s system for redressing grievances like these for indebted college students. Student loan debts are almost impossible to get rid of – they cannot be discharged in bankruptcy court, and the government will come after your Social Security check or your survivors should you still owe on loans in old age or after death – but there is supposed to be an emergency release valve for students who were wronged by their schools.

That valve has a firm basis in federal law — the Higher Education Act mandates a system for erasing debts if students can prove their school lied to them or broke state laws — and a lawyerly-sounding name (“defense to repayment”). But it doesn’t seem to have any real rules or procedures. When strikers went looking for a form to fill out to apply for defense to repayment, they found none.

“We had to do their job for them because there was no dispute form that was set up,” strike organizer Laura Hanna told ThinkProgress. “We had to create artisanal forms for that. ‘Here, here’s an example of what you could use,’ based on working with different lawyers and constructing something that made sense.” Officials told Hanna that they were not sure how many successful defense to repayment filings there have been in Department history, and promised to find out and have more information for the strikers soon.

The group handed a box of 257 defense to repayment forms to Undersecretary Ted Mitchell, who accepted them and gave the strikers a mailing address in San Francisco where future petitions could be sent. They had not been able to get even that basic level of procedural detail from the Department prior to Tuesday, and it was one small form of progress to come out of the meeting.

“The Department appreciates the opportunity to hear from representatives of the Debt Collective,” spokeswoman Denise Horn said in a statement following the meeting. Horn defended the Department’s handling of Corinthian in recent months, pointing out improvements it has been promised by the company that bought half of Corinthian’s schools, and pledged that “we will review every claim to borrower’s defense and continue to investigate Corinthian to help students as much as possible.”

Consumer Financial Protection Bureau student loan expert Rohit Chopra, who invited the strikers to Washington in the first place, applauded the meeting as an “opportunity to hear directly from student loan borrowers” whose “dreams of higher education have been turned into stories of financial despair.” Chopra’s statement encouraged the strikers’ organizing and outreach efforts to similarly situated students. “We continue to urge struggling borrowers to submit complaints with federal agencies to aid regulators in holding accountable those who break the law,” he said.

After starting the day at a hotel room in the shadow of hyper-expensive George Washington University, the strikers held their post-meeting debrief with reporters across the street from AFL-CIO headquarters. The pair of landmarks provide fitting bookends to the day, as the group is seeking to use communal pressure tactics pioneered by the labor movement decades ago to force a similar reckoning with intimidating institutions that benefit from the status quo and hold tremendous power to punish upstarts.

“I actually felt pretty satisfied,” Hanna said. “We had direct responses to some of our questions even though there were not specific answers. The fact that we did schedule another meeting within 30 days, the fact that they did take [the forms]… That gives us a little bit of positioning, ability to continue to move and build, which we will do of course.”

The group’s growth is just beginning. Around 800 more students have reached out to the strike organizers in hopes of joining, Larson said. “The only reason the strike isn’t larger is that we haven’t gotten to everyone.”

Tuesday’s meeting included a mix of original “Corinthian 15” strikers and more recent joiners. “It was nice knowing there are a lot of other people out there going through the same thing, and now there’s a voice, a collective voice that’s starting to grow louder,” said Michael Adorno, one of the most recent strikers to join up. “I definitely wanted to be a part of that.”

The broad understanding that Corinthian operated in unacceptable ways is driving the movement’s growth. “Everybody knows that this college was fraudulent,” Larson said. “It was a diploma mill. The goal was to get students in, sign them up for as many loans as possible, and then send them off in a worse situation than they were in before.”

But the Department of Education decided to keep Corinthian students in debt despite having been in charge of the investigation that uncovered Corinthian’s abuses. That decision seemed like it would be difficult to challenge just a few months ago, but since then, a variety of federal and state officials have applied some inside pressure that complements the outside game the strikers are playing.

Sen. Elizabeth Warren (D-MA) and a dozen colleagues publicly criticized the failure to provide a concrete system for defense to repayment applications and called for a full discharge of Corinthian victims’ loan debts. The Attorneys General of Massachusetts and California have taken similar steps to press for the consequences of Corinthian’s actions to be shifted off of students’ shoulders. And more recently, President Obama has instructed a long list of different executive agencies to research defense to repayment and other protections for student loan borrowers.

That White House order, which requires the working group to report back with policy recommendations by the beginning of October, instructed the Department of Education to collaborate with other agencies including the Treasury Department, who surprised the strikers on Tuesday by showing up at the meeting to listen in.

With the first meeting behind her, another on the horizon, and hundreds more would-be strikers seeking the organization’s help, Hanna underscored the magnitude of what the group is doing. “If coordinating this meeting was a lot of work, it’s also a lot of emotional work in the sense that people are suffering. Some of these people are going to be on the street in the next couple of weeks,” she said, some weariness from the long day seeping into her voice. “They need to have their voices heard, and they haven’t been listened to. By the end of the meeting there were multiple strikers who were literally weeping.”