Manuel Balce Ceneta/AP Photo
A group of the original debt strikers, including Latonya Suggs, Ann Bowers, and Nathan Hornes, third, fourth, and fifth from left, respectively, pose for a photo in Washington, March 30, 2015.
For seven years, a collection of 15 “debt strikers” from the defunct for-profit education chain Corinthian Colleges have refused to pay back their student loans, after being duped into enrolling in schools that lied to them about the value of their degrees. The Corinthian 15 would eventually be joined by thousands of debtors from across the country, helping to spur a movement around the way America finances higher education.
Now, they have finally won what they asked for from the beginning.
The U.S. Education Department will announce tomorrow that it will grant blanket, automatic debt cancellation to all students of Corinthian Colleges, which disbanded in 2015 after a host of state and federal investigations into its misleading marketing and job placement claims. The department will also refund all borrowers with outstanding balances on their loans for payments they made.
This will affect all borrowers who attended Corinthian schools and took out loans from 1995 to 2015, and is expected to lead to $5.8 billion in discharges to 560,000 borrowers. That’s on top of the 100,000 Corinthian debtors who have already received full or partial relief. Vice President Kamala Harris, who as California attorney general was the first to file suit against Corinthian for illegal conduct against students, will make the announcement tomorrow.
No action will need to be taken by borrowers. They will receive letters explaining that they will receive a discharge, which will be completed over the ensuing months.
“It’s actually going to happen, I can’t believe it,” said Ann Bowers, one of the original Corinthian 15. Bowers and her fellow debt strikers brought the first wave of attention to what is now a $1.7 trillion student debt crisis, and paved the way for what could be announced any day, an unprecedented mass cancellation of $10,000 or more on tens of millions of loans. “If the 15 of us had not gone on strike that would have not even been a possibility,” Bowers said. “They would have kept milking students for whatever they could get if we had not taken that stand.”
But on a press call, activists said they were not satisfied with blanket debt relief for just Corinthian students. Students at other for-profit colleges found to have been defrauded, like ITT Tech and the Art Institutes, are still waiting for their relief. And debt strikers want the same automated process, which doesn’t require anyone to fill out a form, to apply to all federal debt relief. “I am happy that Corinthian debt got set aside, but there is so much more work to do,” said Latonya Suggs, another of the original Corinthian 15. “The battle is not over.”
CORINTHIAN WAS FOUND to have aggressively pitched students on enrollment, offering loans that were up to ten times the comparable cost of a community college degree. Job placement statistics were fudged, instructors included disbarred lawyers, students were given college credit for “externships” at fast-food restaurants, several final exams were “open book,” and some involved playing board games. After graduating, students were sent off with credentials that actively harmed their career prospects; they spoke of being laughed at in job interviews.
This will affect all borrowers who attended Corinthian schools and took out loans from 1995 to 2015, and is expected to lead to $5.8 billion in discharges to 560,000 borrowers.
The campuses, struggling under the weight of investigation, were initially bailed out through Education Department bridge funding that facilitated a sale. But eventually, in 2015, all Corinthian campuses shut down. Ann Bowers was completing her business marketing degree at the time, and the closure left her with $40,000 in debt and no options to transfer credits. “The government bailed out the school repeatedly, the school committed fraud and we’re being punished,” she said.
Bowers quickly connected with other students on Facebook. The group was contacted by the Debt Collective, a group of organizers led by Ann Larson and Laura Hanna, who came out of Occupy Wall Street and saw in the student debt crisis teachable examples of an economy rigged against ordinary people. Previously, through a sister organization called Rolling Jubilee, the Debt Collective bought $3.5 million in private “Genesis” loans that Corinthian pushed on its students, and forgave them. This gave the group access to thousands of contacts of Corinthian students, which it used to organize.
A meeting with the original 15 students in San Francisco laid out the impossible choices for Corinthian debtors: They couldn’t discharge the loans in bankruptcy, and they couldn’t file a class action lawsuit, because the college included an arbitration clause in the enrollment agreement. With no ability to transfer credits, continuing their education would mean starting all over again. Defaults were as high as 25 percent, and led to wage garnishment, credit report downgrades, and other hardships.
To that point, Corinthian students were only entitled to partial forgiveness of the Genesis loans, through a settlement with the Consumer Financial Protection Bureau. While the dollar figure of that relief was put at $480 million, most of the loans were in default and considered uncollectible, and the real value was just a fraction of that. The private loans did not extend to billions of dollars in federal loans that nearly all Corinthian students took out.
The Corinthian 15 realized that their only real choice was to not pay, and to fight for debt forgiveness. They had a legal means to do that. Under the Higher Education Act of 1965, all students defrauded by their schools are supposed to have the option to cite “borrower defense to repayment” as a means to receive full debt discharges. This was a legal obligation on the Education Department that it was required to fulfill.
When the debt strike began, the department didn’t even have a formal process for borrower defense; a write-up in the Federal Register from June 2015 points out that, from 1995 to 2015, “the Department received 5 claims for borrower defense.” After the debt strike began, 1,000 claims were filed in a matter of months, something the Education Department attributed to “a building debt activism movement as well as the notoriety of Corinthian’s collapse.” Caught flat-footed, the department had to build a claims process from scratch.
“The debtors themselves, they made borrower defense a thing,” said Astra Taylor, who was among the activists who formed the Debt Collective to help establish the debt strike. The Debt Collective gave legal advice to strikers and built its own web-based application to help them contest their loans. (The Education Department would largely copy the form in 2017.) “We were both the militant economic disobedience prong and the radical legal strategist prong,” Taylor said. “We were thinking, ‘This is bullshit, people have this right, we’re going to politicize your ineptitude.’”
The debt strike rapidly grabbed attention, with profiles in major media and an episode of CBS’s The Good Wife modeled after the issue. But despite striking during Barack Obama’s administration, the Corinthian borrowers were not met with immediate action, as the Education Department dragged its feet in creating the means to offer relief.
Strikers did have the benefit of one insider: Rohit Chopra, then the student loan ombudsman for the Consumer Financial Protection Bureau, who met with the Corinthian 15, offered them advice, and elevated their story. Chopra, in an interview with the Prospect a few months ago, cited the Corinthian debt strike as the biggest factor in changing the conversation in Washington around student loans. “It was such an important moment,” he said. “Both the regulators and the public saw there were a set of companies exploiting the systems to take student loan funds as profit and really damage people’s lives, seemingly permanently.”
Eventually, the Education Department created a negotiated rulemaking to build a process for borrower defense to repayment. Ann Bowers was the first student ever represented at those negotiations. “I said, this is so wrong, there should always be a student there when you’re making rules that they have to follow.”
The first borrower defense process was clunky, and it forced students to prove their specific injury to qualify for a loan discharge, essentially rerunning an investigation that federal officials already had undertaken when it charged Corinthian. Few debtors made it through the gauntlet, especially after the Trump administration entered office, and Education Secretary Betsy DeVos, whose agency was filled with expats from the for-profit college industry, rewrote the borrower defense rule to make it nearly impossible to achieve full relief.
The Biden administration and Education Secretary Miguel Cardona rewrote that rule early in their tenure, freeing up an additional $1 billion in forgiveness for those who made successful borrower defense claims. But it wasn’t blanket relief, and debt strikers saw it as only a first step, while demanding more.
Today’s announcement takes it a step further, saying that anyone with a loan from a Corinthian college can simply have it canceled automatically. A senior administration official explained on a press call that “we’ve reached a determination that every borrower who attended Corinthian was subject to illegal conduct … we have determined that these Corinthian borrowers as a group are eligible for borrower defense.”
Nathan Hornes, who rang up more than $60,000 in loans at a Corinthian campus in California, said on a press call, “This is such a monumental moment for all of us. This has been a long time coming, something we’ve wanted forever.”
The automated nature of the relief is what student debt activists have been fighting for with respect to mass cancellation of student loans. Currently, the administration has favored an income cap, which would require students to verify income in some way, inviting a “train wreck” according to many. Thomas Gokey, an organizer with the Debt Collective, explained that he has been working with a borrower who defaulted who was supposed to get debt relief nine months ago but never had the default erased from her financial reports. “The last eight years have shown why these auto discharges are needed,” Gokey said. “They’ve made us fight for every penny and that’s not going to change.”
Others highlight student loan servicer abuses, which have hampered borrowers from getting timely information and relief for their loans. “The more this can be done automatically the better, we already know the litany of ways they have messed this up,” said Deanne Loonin, a lawyer with the Project on Predatory Student Lending who was a pioneer in borrower defense.
“I feel a huge emotional relief that this journey that we had people go on had such enormous success,” said Astra Taylor. “Not just financial relief, but it did set the stage for broader debt cancellation.”
But while members of the Corinthian 15 and their allies are grateful that they will finally get the relief they asked for over the past seven years, they are determined to keep going. “We’re looking for more,” said Ann Bowers. “I was taught when I was a child, education is the shortest route to success. This doesn’t feel like success!”
