OCCUPY STUDENT DEBT

1. Organize locally
2. Register to vote
3. Form concrete questions about the unfolding tragedy of the College Debt Crisis and put it forward to those who are running for office
4. Write to your senators and let them know what concerns you!
5. Talk to people and educate them about the College Debt Crisis

College Debt and Credit History

As a first step toward alleviating the burden of debt on the individual debtors, credit history must be uncoupled from the delinquencies and default due to their inability to pay college debt. Such a measure will immediately help those individuals who are otherwise qualified to hold a particular job but cannot do so because of their credit history; it will also prevent some of the more qualified individuals from being cut-off from their most productive employment. Once gainfully employed these individuals will provide a combined upward push on the economy both as producers and consumers. The alternative is huge numbers of young people taking up sub-optimal jobs and unable to meet their debt obligations with momentous social, political and economic consequences.

Personal Debt vs. Corporate Debt

I wonder how many people have heard of strategic bankruptcy; for those who haven’t, this means that a company while fully capable of paying claims against it chooses to declare bankruptcy and and avoid meeting its obligations. Examples of so gaming the system by various companies abound, but we will bring up the couple of cases that come up when we google it to emphasize the point we are making:
-Johns Manville, a major asbestos producer, in 1982 filed for Chapter 11 protection toavoid paying people who suffered injury from exposure to its products;
-American Airlines filed for bankruptcy in November with the single objective of cuttingcosts by “unloading” its debts and breaking its unions. This, mind you, is a company with US$4bln in the bank…
Without dwelling on the finer points of this dirty yet legal trick, it is obvious that a company that declares strategic bankruptcy reaps significant economic benefits with questionable gain to the society at large.

What a striking difference between the treatment of large corporations and common people, between those who have billions of dollars to buy our government wholesale and impose their will on the 99% and the very same 99% trying to make ends meet in their day to day lives. So while a corporation can wipe out its obligations through bankruptcy, people who are truly in need do not have such a recourse. Such recourse would be most needed and most helpful both to individuals and to the economy because there are genuine cases where the ultimate solution is required. With the economy on its last legs, many people are pushed down and aside, unable despite all their efforts to meet their obligations and finding themselves in a mousetrap without an exit.
Lastly, the exclusion of bankruptcy discharge ignores a fundamental fact of financial risk taking; every loan has risk priced into it, hence the interest rate charged on the outstanding amount. Bankruptcy would distribute the risk of lending also to the lender and the guarantor, not just the debtor. This is fair in every other financial transaction except college debts for much the same reason as “strategic bankruptcy”.

The time is for our society to reevaluate not only outstanding college debts but also its core values is now. Is this society going to take the beating lying down or is it going to push back hard is no longer a rhetorical question, it is a question of our country’s future and of our lives.

Only through political organization can we make our presence felt!