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By Annie Wood
April 14, 2015
Caption : In a dramatic and strategic move, over 100 ex-students of Corinthian Colleges are refusing to pay their student loans.     

Federal law states that if your college or university closes, you don’t have to pay tuition. Students and former students who attended failed schools are legally eligible to have their student loans discharged or forgiven. Further, the Higher Education Act requires the cancellation of debt for students and former students when a school has committed fraud against its students.

Plenty of organizers and advocates for affordability and accessibility in higher education agree that students at Corinthian and other for-profits shouldn’t have to pay for getting a low-quality, expensive education that doesn’t further their careers or socioeconomic status.

In February, 15 former students of Corinthian College Inc.’s Heald, WyoTech, and Everest college chains declared they refuse to pay their debt. This group originally called themselves the “Corinthian 15” and have been organized by the protest group Debt Collective, an offshoot of the Occupy Wall Street movement. Now, nearly 90 other former students have signed on, sending a clear message to Corinthian, Corinthian’s private lending company, the Department of Education, and others: “We owe you nothing.”

Many players have mishandled for-profit college giant Corinthian’s downfall, bringing the original Corinthian 15, and now Corinthian 100, to this point of no return — rather, the point of no repayments. As Corinthian’s financial woes surfaced this summer along with murmurs of bankruptcy, the Department of Education stepped in.

Originally, the Department of Education had put Corinthian’s federal aid dollars on hold, but when Corinthian said they would not be able to continue to operate for 21 days, the Department released $16 million to Corinthian Colleges, with the understanding that the company would create a plan, likely involving closing and selling its campuses. The federal aid allowed this help, in the interest of keeping Corinthian’s some 72,000 students from becoming suddenly school-less.

Meanwhile, Corinthian continued to recruit students to its Everest campuses and programs, though executives knew there were looming sales or closures of campuses. As if that weren’t shady enough, prospective, current, and former students were kept in the dark about the company’s financial troubles and what their academic and financial fates might be.

The Department of Education had a big stake in not having a mass closure of campuses, which would likely result in mass debt forgiveness, as Corinthian students were taking out $1.4 billion in federal student loans. Corinthian relied on federal funds to operate, as it is legal for for-profits to make 90 percent of their revenue from federal taxpayer dollars in the form of grants and federal loans.

The company found it in its best interest to report falsified federal loan default rates. In fact, a 2012 Senate report about for-profit colleges found Corinthian to be one of the worst of the industry; according to the report, students of Corinthian-owned colleges had a higher student loan default rate than any other publicly traded company.

Aside from a well-documented messy handling of the company by a federal agency, students have found their degrees to be incredibly expensive and essentially useless or damaging to their job hunt.  There are now over 100 Corinthian students on strike from paying their debt, and their stories share several common threads: low-quality instruction, the complete run-around from financial aid advisors, and an inability to secure work upon graduation. Most students referenced the intentionally misleading practices of Corinthian representatives with regard to cost and program details.

“At the time I was a 18-year-old single mother, I just dropped out of school to support my son and I wanted a way out of my financial slump,” said debt striker Liz Diaz, who attended Everest College in Skokie, IL. “[I] explained my situation to the Everest admissions [representative] and they told me that me having no diploma nor a GED would not be a problem, that they would do everything to help me obtain [a degree] and wanted me to succeed.”

Some former students, like Diaz, were kept from graduation because of financial aid misunderstandings. “Once I entered my ninth and final month of my course I got called in to the person that was in charge of the Massage Therapy courses office and was told I could not graduate nor get my certificate of completion of the course because I had no high school diploma or GED… I was highly upset because I worked my butt off, even completed the unpaid internship.”

Demond Bivins, a former student of Everest Online who holds over $26,000 in debt, mentioned the disconnect between the instruction and the skills demanded by the actual jobs they were supposedly being trained for. “Halfway through [my] second or third semester I realized that most of the courses that [I’d taken] and that I was currently taking [weren’t] really related to what I truly wanted to learn, or thought I would learn to become a web designer.”

It has become increasingly clear through testimony and investigations that Corinthian students were lured, misled, and kept on the hook largely because of the promise of high “career” placements. What is both laughable and sad is that Corinthian Colleges was justifying their career placement record by defining a “career” as any work lasting a minimum of one day, according to a lawsuit from the Consumer Financial Protection Bureau (CFPB).

The movement to cease repayments on former Corinthian students’ loans has been strategic and organized. Laura Hanna, an organizer with Debt Collective said that the process to find and inform strikers was very well-planned. “After we made our initial announcement [seeking strikers] we had a flood of interest. We set up a system to intake and walk through people’s financial decisions and look at their credit. The people who step up are taking a risk and they understand the repercussions.”

The Debt Collective has helped unify the hardworking former Corinthian students with strong messaging. In the original Corinthian 15 statement, the Debt Collective indicated the group’s cohesion and the common bad experiences many have had with Corinthian across the country: “Who are we? We are the first generation made poor by the business of education. We are people living paycheck to paycheck, single mothers, and young people just starting out. We wanted an education because we were driven to learn and achieve a better life for ourselves and our families.”

The goals of the debt strike movement are multifaceted. For the strikers, it has provided a platform to share their stories and to become connected with others with similar challenges. “I’m so glad that I joined the movement because one, I feel like my voice should be heard and two, I want others who experience the same experiences as I did should come out and speak about it. The 100-plus strikers do communicate on a daily basis which is great and [they] offer great support,” said Diaz about participating as a striker.

The strikers and Debt Collective have made major moves to gain legitimacy in the eyes of major players in higher education and policymakers and to gain tangible wins. Though the Department of Education and CFPB forgave $480 million in private loans held by former Corinthian students in February, borrowers still owe their federal student loans, totaling hundreds of millions of dollars more. Currently, the Department of Education expects those loans to be repaid in full.

Two weeks ago, 14 Corinthian student debt strikers and representatives from the Debt Collective met with Department of Education officials to demand action. Department spokeswoman Denise Horn said the department is taking a “series of actions to hold Corinthian accountable,” in addition to the CFPB’s separate legal action against the company. However, for strikers like Latonya Suggs, the federal government’s action thus far has not been enough.

“Not only did the school fail me, but the Department of Education failed me. It is their responsibility to make sure that these schools provide a quality education at an affordable cost,” said Suggs in a statement on Debt Collective’s website.

In addition to asking the Department of Education to declare these loans unenforceable, the group is also looking to the Treasury Department to use discretionary measures to write down ex-Corinthian students’ debts. Their clear proposal sent to officials provides options and instructions for debt relief and calls for communication between the Education Department and former students.

The debt strike movement spearheaded by the Debt Collective goes beyond just the 100 former students who refuse to pay. About 400 members of Debt Collective have also signed on board a legal strategy the group is calling “defense to repayment,” citing Corinthian’s fraud under state law. The goal is to not only forgive the debt of the 100 activists, but also to provide relief to hundreds of other students who are still on the hook for expensive, lousy, nearly-meaningless degrees.

Strikers and organizers alike have acknowledged, despite a multi-faceted legal approach, that this fight will not be quick.

“I understand there’s no overnight decisions any of these entities can make, it has to go through the bureaucratic process,” said striker Michael Adorno. “Hopefully they’ll make the right decision to give a lot of us the chance to go back to school and get a degree that means something.”

Debt strikers have been informed of the financial risk they’re placing themselves in as activists in the fight to dissolve their debt. For many, their student debt-related financial struggles began before the strike.

“In 2012, I got a letter from [Corinthian] stating that due to lack of payment they were going to start garnishing my wages from my paychecks… I currently have no job, I have almost $10,000 debt,” said Diaz. “Most of all, I’m back to square one struggling to get by.”

The action to refuse to repay their student loans is dramatic, and though it comes with repercussions at least in the short-term, from garnished wages to slipping credit scores, the Corinthian debt strikers remain hopeful about the approach and their activism.

Whatever happens with the Corinthian activists will set a precedent: The debt strike of the Corinthian 100 isn’t just about this particular company’s particularly bad practices. It’s about a lack of transparency and failure of accountability at many levels, including the federal government, which is supposed protect students from scams and ensure access to quality education. Because of systematic failures and the protection of the for-profit college industry that prioritizes shareholders over students, thousands of Americans are saddled with meaningless degrees and life-altering debt. Corinthian students aren’t standing for it anymore.

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