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Amid Talks With C.F.P.B., Student Debt Strikers Take Aim at Arne Duncan

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A burgeoning student debt strike that has the attention of the nation’s primary financial consumer watchdog is taking aim at the administration’s top education official.

Ninety graduates of Corinthian Colleges are set to meet with regulators at the Consumer Financial Protection Bureau on Tuesday, where they will discuss their movement against the disgraced for-profit college–one that includes a demand for the Secretary of Education Arne Duncan.

Although the CFPB has its own predatory lending investigation underway into Corinthians, the graduates are using their bureau-granted platform to ask Duncan to use his authority to wipe out their debt.

Laura Hanna, an organizer with Debt Collective, an activist group focused on student loan relief, said the graduates, “have been defrauded under the agency’s watch for decades,” and demanded the department “discharge these debts” right away.

Debt Collective is this week unveiling a new legal strategy in an effort to force the department to recognize “Defense to Repayment” claims–appeals based on legal protections that allow student loan repayments to be nullified if a creditor school was found in violation of consumer protection laws. Students are also pointing to loan agreements which they say call for the cancellation of debts if Corinthian was found to have engaged in fraud.

The for-profit college, which has received billions in federal aid, has been the subject of numerous state and federal investigations for deceptive marketing practices.

Last November, the school was on the verge of collapse before it was bailed out by the Department of Education. The Obama administration stepped in to broker a deal that saw Corinthians’ 56 campuses sold to a debt collection company known as the ECMC group.

Since then, activists have seen a double standard in the Obama administration’s higher education policy; one that preceded a rapid increase in the number of Corinthian debt strikers. One month ago, the faction had just 15 former students. Now 90 are partaking in the civil disobedience. This week, more than one hundred current and former Corinthian students will stage a demonstration by submitting Defense to Repayment claims on the steps of the Education Department.

“Rather than relieving these defrauded students’ debts, the Department has chosen to bail out the company while sinking students in a lifetime of debt for degrees that many experts have called worthless,” the Debt Collective noted in its statement released on Monday.

The students’ plight has not gone unnoticed on Capitol Hill. Last December, 13 Democratic Senators led by Elizabeth Warren (D-Mass.) wrote a litter to Secretary Duncan calling on him to “immediately discharge federal student loans incurred by borrowers who have claims against Corinthian Colleges.”

“If colleges fail to hold up their end of the bargain—if they break the law in ways that bear on their students’ educational experience or finances—students should not literally be stuck paying the price,” the Senators wrote.

They added that “legal tools” allowing the department to wipe out bogus student debt “are of little value” unless actually used.

The Senators have yet to receive a response from the department, which has so far continued to to urge Corinthian graduates to continue paying back their loans–a line that has only fueled the public outcry.

“The Department of Education has become little more than a debt collector,” graduate Ann Bowers said.

Through its refusal to cancel Corinthian debt, Bowers said the Department doesn’t appear concerned with students’ welfare.

“If they really thought their job was protecting students they would have done it already,” she remarked.

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