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What if everyone simply stopped paying their student debt?

People owe so much money in student debt, they actually have an incredible amount of power over the banks that own the debt. The Debt Collective wants to help them use that power.

What if everyone simply stopped paying their student debt?
[Source Images: ambassador806/iStock, Jajmo/iStock, Nosyrevy/iStock]

If you went to college in the United States, you probably have student debt; in the class of 2018, 65% of graduates did, with an average debt of $29,200. And it probably feels like a very personal burden. But a growing movement of debtors looks at it differently: Collectively, graduates owe $1.6 trillion. If you look at debt more broadly, U.S. households owe $14.15 trillion, including medical debt, credit card debt, and housing debt. But for debtors that work together, the sheer scale of their debt isn’t a liability, it actually gives them power. What if everyone just decided to stop paying their loans?

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“Being a debtor is all about isolation. It’s all about shame. It’s all about feeling like you made the wrong financial choices. You’re hounded by debt collectors, you get these bills in the mail. But together—let’s just take student debt alone as an example—we have $1.6 trillion of leverage,” says Hannah Appel, a UCLA professor and one of the founders of the Debt Collective, a movement that grew out of Occupy Wall Street.

If you’re part of a collective that owes $14.15 trillion, you all own the banks—along with the federal, state, and municipal governments.”

In a recent article in Boston Review, Appel cites a quote that has been variously attributed to the oil baron J. Paul Getty and the economist John Maynard Keynes, along these lines: If you owe the bank $100, the bank owns you. But if you owe the bank $100 million, you own the bank. “Millions of debtors, isolated, are owned by the banks,” she writes. “But, as Getty shows us, if you’re part of a collective that owes $14.15 trillion, you all own the banks—along with the federal, state, and municipal governments that have themselves become predatory lenders in the age of neoliberalism.”

It’s an extension of the basic concept behind labor unions at a time when workers need power beyond their own workplace. “Of course, we’re still in industrial capitalism in certain ways,” she tells Fast Company. “But we are also in a moment typified by financial capitalism. So people are not only making ends meet through wages. In fact, of course, we are often not making ends meet through wages, and what has stepped in over the last 20, 30 years to compensate for the stagnating or falling wages is what its proponents like to call the ‘democratization of credit.’ Which really means just a lot of fucking debt. You have astronomical amounts of student debt, astronomical amounts of medical debt, astronomical amounts of debt for people in the criminal punishment system.”

A debtors’ union isn’t meant to replace traditional unions, but could work alongside them. In the recent strike at General Motors, for example, Appel suggests that people who owed loans on cars—lending is now a significant part of GM’s business—could have stopped paying in solidarity. “It’s another form of worker power that we now have access to,” she says. “And I do call it power intentionally, because we’re often told to think about it as disempowerment. But that’s the provocation of a debtors union: What if it was a form of collective power?”

The group’s first pilot union, organized in 2014, was made up of people who held debt from for-profit colleges. It grew out of another project called Rolling Jubilee, in which activists became certified as debt collectors and started buying debt on secondary markets. If you can’t pay a hospital bill, for example, the hospital will eventually sell the right to collect the debt on secondary markets for pennies on the dollar; in this case, activists crowdsourced money to buy those rights and then canceled the debts, erasing more than $30 million. Most student debt isn’t sold on secondary markets, but the activists happened to find debt from Corinthian Colleges, a for-profit college that later filed for bankruptcy after it was investigated for fraud.

The activists connected with former students who were tens of thousands of dollars in debt and unable to get good jobs because a degree from the college was worthless on the job market. A small group, called the Corinthian 15, worked together to launch a debt strike saying that they would stop paying their loans. 200 other people later joined the strike because they were already in default.

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Because of the serious financial risks of defaulting on loans—including damage to credit ratings, garnishment of wages, and the potential that the loan holder might take them to court—many of the former students didn’t want to simply just stop paying, so the group put a legal tool online that people could use to claim that their loans from for-profit schools were unjust. Tens of thousands of people have used that tool, called Defense to Repayment, which is now on the Department of Education website. In total, the debt strike has won more than $1.5 billion in debt discharge.

It’s another form of worker power that we now have access to.”

In February, the group launched a national student debt strike. But although it’s organizing by various types of debt, it wants to tackle household debt generally. The numbers of people on a particular strike, and tactics involved, would differ depending on the type of debt. “We are interested in all types of debt, and in fact, we very reluctantly organize debt type by debt type,” says Appel. “We are much more interested in building broad debtor power to make broad demands.” Those demands include policy changes; when Bernie Sanders, Pramila Jayapal, and Ilhan Omar launched a bill last year to eliminate college tuition and debt, Debt Collective strikers joined them in the announcement on Capitol Hill. But policy change is only one of the group’s goals, Appel says.

“It’s also about building generalizable power to eventually reshape the entire way that we fund is the things that matter to us,” she says. “And we don’t fund the things that matter to us—so that we don’t fund the carceral system, for example. It’s also an abolition demand, and it’s also a demand about who do we actually owe: Is it true that all of us owe Bank of America? Or is it true that we owe forms of redress to indigenous people in this country, or that we owe forms of reparations to African American people in this country? What about climate debt, and what debt do we owe future generations? How can we build the power to make those the social relations that define our world? We are saying that a debtors’ union is one of those ways.”

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About the author

Adele Peters is a staff writer at Fast Company who focuses on solutions to some of the world's largest problems, from climate change to homelessness. Previously, she worked with GOOD, BioLite, and the Sustainable Products and Solutions program at UC Berkeley, and contributed to the second edition of the bestselling book "Worldchanging: A User's Guide for the 21st Century."

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