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Refusing to Pay

November 21, 2011

For two months, the Occupy protests have focused attention on student loan debt. Today, a group that started with the Occupy movement will propose a solution: stop paying.

Under the campaign -- which grew from the original Occupy Wall Street protest and is now known, inevitably, as Occupy Student Debt -- borrowers will pledge to stop repaying their student loans once 1 million people vow to do so as well. The campaign is calling for several reforms of higher education, including free public colleges, no-interest loans, greater transparency at private and for-profit colleges and complete forgiveness of all existing student debt.

Most experts, even those who agree with the movement's aims, would describe these goals as unattainable. The theory behind the campaign is that if 1 million students refuse to pay, they would face minimal consequences due to safety in numbers. But many experts on student finance worry about the impact on anyone who stops paying: student loans cannot be discharged in bankruptcy; lenders -- especially the federal government -- will go to great lengths to go after debt; and some borrowers currently frustrated by their debt may not realize the impact of non-payment on future financial goals.
 
Still, Occupy Student Debt, with its concrete plan of action and list of goals, represents an intriguing evolution of the Occupy movement -- and one that could reach beyond those protesting.

The debt campaign, like the initial occupation, will be launched today at Zuccotti Park in Lower Manhattan. But after the announcement, the campaign’s organizers are planning a march with the New York City All-Student Assembly to a meeting of the board of the City University of New York. Tuesday will see a similar event at New York University, followed by other events around the city, said Andrew Ross, a professor of social and cultural analysis at NYU who has been a key organizer of the effort.

Ross said that the campaign's aims -- consistent with Occupy philosophy -- should be considered goals, not demands. "We respect the no-demand ethos of the movement for good reason,” he said.

As well as the borrowers’ pledge to stop paying once 1 million debtors sign on, the campaign has a pledge for supporters, and a special version for faculty members that acknowledges the role student debt plays in their continued employment. “The situation is our current students go into debt in order to help pay for our salary and they’re in debt for several decades,” Ross said.

Whether the campaign will come close enough to 1 million signatures to seem a risk -- for borrowers or for the government -- is unclear. Hundreds of thousands have signed petitions calling for total student debt forgiveness. The Education Department’s cohort default rates, released in September, showed that more than 300,000 students who entered repayment in 2009 had already defaulted.

Should the campaign get that far, one million defaulting borrowers would be a dramatic statistic, said Terry Hartle, senior vice president for government and public affairs with the American Council on Education.

But defaulting on student loans -- especially federal loans -- is different from defaulting on a mortgage or car loan. The loans can’t be discharged in bankruptcy. The federal government will garnish wages, dock tax returns and take borrowers to court to ensure that the money is eventually repaid, and in the meantime, borrowers’ credit scores are ruined.

“The federal government will wreck the borrower’s economic life to get the money back,” Hartle said. “In light of the economic environment and the amount students have borrowed, the frustration is very understandable. But the biggest short-term impact would be on the individuals, not on anyone else.”

Some borrowers are willing to take the risk. Pamela Brown, a Ph.D student in sociology at the New School, has taken on debt for her graduate degree, although she hopes to go into public service and take advantage of a program that forgives borrowers’ loans after 10 years. Her loans are currently deferred because she is still enrolled in college. But if the need arises, she is willing to default in protest, she said.

“Even if the majority says, ‘Hey, that’s not for me,  I don’t want to take a risk like that,’ there are enough people, I think, out there who feel that their situation is dire enough to take that chance in an effort to change things,” said Brown, who is one of the organizers of Occupy Student Debt. “For me, it’s an issue of justice.”

Brown, who has studied in graduate programs at the New School and Columbia University, said the ready availability of loans makes it easier for colleges to change requirements and force many students to stay an extra semester.

“Schools take action to increase the amount of debt that students end up with, and they do that because they’ll profit from it,” Brown said. “The only way they are able to get away with that is because it’s not real money, in a sense.”

Still, some who have previously supported the Occupy movement’s focus on student loans say they doubt refusing to pay is a good strategy. “I think it’s wonderful for there to be a national movement around the burden of student loans, and I’m hoping it’ll get a lot of publicity,” said Anya Kamenetz, the author of Generation Debt. Still, she said, she hesitates to endorse the mass-default movement, which she said is too risky without bankruptcy protection.

Other symbolic moves, like using the power of a mass movement to negotiate for better loan terms, or even organizing borrowers to skip a single payment to indicate they are serious without getting into trouble, could have the same force, Kamenetz said.

The hope is that the signatures create enough momentum for change that borrowers are not forced to decide whether they will default, Brown said.

The debt campaign also hopes to capitalize on the energy and emotion that Occupy movements have stirred up and translate it into action: the next stage of an ever-evolving movement.

“There’s a fairly profound depth of sentiment, I think, around the country about how intolerable the student debt burden is,” Ross said. “In the best of times, for a lot of people it’s immoral. In the worst of times, and we may not be yet in the worst of times, we feel it’s beyond toleration.”

 

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