Student Debt in a Global Context: Neoliberalism and Crisis

Debt is a permanent feature of most of our lives. Yet the socialization of risk debt represents isolates individuals, locking us in the private misery of our dealings with banks and creditors. Medical debt, student debt, consumer debt, foreclosures -- these social forms mark so many personal failings and moral obligations, we are told. Debt, in other words, not only insures our continued servitude to the corporate pursuit of dwindling private profits. It also serves to alienate us from one another, and foreclose the possibility of collective resistance. Debtors’ Assemblies, then, are a first step in fighting back to reclaim our stolen futures. Please join us Wednesday, October 24th from 5-6 in front of California Hall for the first in a series of weekly Debtors’ Assemblies to learn more about the many forms of debt and discuss ways to resist debt’s claim upon our lives. Robert Meister will speak briefly at the beginning of the first assembly.

Make It Greek (Remarks on Sproul Plaza)

The following statement was given by Professor Joshua Clover during the rally at UC Berkeley campus on March 1. From there, approximately 200-250 people marched down Telegraph to Oscar Grant Plaza in downtown Oakland where they converged with students from Laney College for another rally. Later in the day, a small group broke off to begin a 99-mile march to Sacramento.



I was asked to speak about banks and education and I will get to it swiftly without any fancy language. We are here in part to begin a march. It is a march on the seat of government, against intolerable austerity programs that are being imposed by force. This has become a familiar, almost a common event of late. The most dramatic such recent episodes that we have seen have been in Greece, in Athens, a place from whence we draw our farthest histories of education. But we must also draw our nearest histories of the political. Our history of the present also comes from Athens.

In Greece right now, intolerable austerity is being imposed by the economic state and its armed wing, immiserating the people so as to pay an unpayable debt to a global array of financial institutions. There is, in short, a collusion between the state and the banks. The people are being increasingly indebted to the banks even as they cannot afford food and shelter, and this is being done through the militarized mediation of the state.

This is precisely what is happening here as well. Rather than the sublimely dispiriting rain of facts and figures, I want to sketch the process, the mechanism, in five easy steps.

1. The banks have a bunch of money sitting around with no profitable route for investment, because the real economy is in its death throes.
2. The public university wants to raise its price of admission much faster than any increase in people’s ability to pay. Over the last four decades tuition has increased 650 percentage points more than inflation — this is the so-called “rip-off index” — and it’s only accelerating.
3. Economic collapse means that young people are effectively compelled into higher education to compete on the job market — even though they don’t have enough money to keep up with the rip-off index.
4. Did I mention those banks really need new suckers for their loans, especially once the mortgage market blows up?
5. The university and bank thus enter into an alliance through which the bank makes staggering profits from the university’s huge fee hikes.

So I will make the most obvious point: banks don’t make it easier for people to go to school, they make it harder, by enabling massive fee increases. Banks make school more expensive.

But that’s only part of it, of course — the front end, you might say. They get you coming and going. Not only do banks drive up costs, they now on the back end own a trillion dollars worth of the future lives of students. That’s what debt is — they own your hours, period. And that decides your life for you. They know what you’ll do next summer. And the one after that. And the twenty years after that.

If the university’s purpose is to help people move from necessity to freedom — be it political, intellectual, or economic freedom — their collusion with the banks actually and obviously makes you less free. So: the university and you: more expensive, and less free. This is the outcome of the university’s lying down with capital. It preserves itself by selling your and your families’ lives to the bank — by enabling financial profits. As in Greece, so in California: this is the state now.

But here’s the thing I want to say before I go. This problem I have just described is not a false problem. It is not some free decision made by misguided people who can be convinced to see the light and change direction. It is a consequence of objective conditions of the economy and the political situation. Whether we accept that the money finally isn’t out there and isn’t coming back — or whether we accept that one cannot ascend to the seat of government without being irrevocably beholden and committed to this program of exploitation and profit — either way, I do not believe that the situation I have just described can be in any way changed via demands for redistributing the present budget, by demanding a kinder and gentler capitalism.

And this carries me back, as we so often find ourselves carried back, to Greece, to Athens. I say to you today, those of you burning with anger and love and desperation who will commence the long march to the seat of government and those who will stay here, burning just the same, I say to you, MAKE IT GREEK. MAKE IT GREEK. In Greece they have understood, just a few moments faster than we have, that the money isn’t coming back. That the banks and the state are not going to release the people from beneath the boot-heel of austerity. That debt to the banks will be carved from the hides of students, of those who labor, and of those who cannot find jobs. That there is no rescue within this system, within the shock doctrine of austerity capitalism.

So when they march on the seat of government, they do not do so to issue entreaties for a better deal. They do not march to petition for redress of grievances. They do not march to seek out an idealistic equality that simply is not and cannot be a feature of this disaster that is capitalism. They march to burn it down. They march to burn it down. Along the way they pause at banks — in memory of the fact that every revolution has featured, among its earliest acts, the destruction of debt records, because debt is the financial form of unfreedom. And they burn down the banks.

And I say they are not mistaken. I say that their analysis of the real situation is lucid. Inarguable. Perhaps even obvious. Let us enter this history, let us illuminate it, let us make it present. I say: we are all Athenians: MAKE IT GREEK, BURN IT DOWN.

On the coming general higher education strike

On November 10th at 1am, the following proposal was adopted by the Occupy Cal general assembly:

After a mass rally and march of over 3,000 people, and repeated police assaults on the encampment, the Occupy Cal general assembly decided on the night of November 9th -- with over 500 votes, 95% of the assembly -- to organize and call for a strike and day of action on Tuesday, November 15 in all sectors of higher education. We will strike in opposition to the cuts to public education, university privatization, and the indebting of our generation.

We also call for simultaneous solidarity actions in workplaces and k-12 schools. We will organize through daily, 5pm strike planning meetings at our encampments, followed by general assemblies.

The following is meant as an analysis of the context, aims, and possible effects of the general higher education strike and day of action.

What occurred yesterday on campuses around the state, including at UC Berkeley, made real the antagonistic relations that shape the lives of students and academic workers. When university administrators and police repeatedly brutalized assembled workers, students, and debtors at large, such relations -- of exploitation and precarity -- were cast into sharp relief.

We did not back down, nor did we shy from an encounter with the forces that manage our lives and profit from our indebtedness. We held our ground when the police attacked our assemblies and encampments; then, after securing a space for assembly, we decided collectively to counter the Regents and the financial industry -- those responsible for privatizing our educational commons and resegregating our schools -- with one of our most effective tactics: our refusal to work and to attend classes.

We know that our relatively local acts of resistance and refusal will only have transformative force if they are embedded in a larger political disruption, a strike and day of action across all sectors of higher education, tied to sympathy strikes and actions in workplaces and schools. This is why we have called for a general higher education strike -- a strike throughout an entire economic sector and sphere of public life.

We understand that a fully realized general higher education strike is not likely to materialize next Tuesday. And yet, we take inspiration from last week's general strike in Oakland, and believe that a relatively generalized work stoppage and walkout is possible. By pushing for widespread mobilizations next Tuesday, we will build support for the convergences of the 16th and will further expand and strengthen our bonds of solidarity and mutual care.

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For an account of how the Regents and financial industry profits off our indebtedness, see the recent pamphlet from Reclamations: "Generation of Debt."

Pictures from Debtors' Prison Flash Mob

In solidarity with the #OccupyColleges walkouts taking place today across the country.

Generation of Debt: Reclamations Pamphlet on Student Debt

The Reclamations Journal folks have just released an educational and agitational pamphlet on student debt. Below are some passages from the text, but it's really worth reading the whole thing -- I don't think I've read another single compilation or text that so effectively outlines the devastating current realities of student debt, how these realities are centrally related to broader economic conditions and crises, and what can be done to resist student debt and its effects...

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Generally speaking, debt is a collective phenomenon suffered individually. Our monthly loan statements are like nineteenth century serialized novels—mass reading material, anticipated by all but read alone. When experienced in this way, by dispersed individuals, debt appears to be merely a fact of life; a kind of required reading material. It can be nearly impossible then to imagine how our personalized loan statements or individual defaults could be fought in a way that forges bonds between us. How loans could produce more than isolating shame, anxiety, and loss. Or how, in a word, we could collectivize struggles against indebtedness and unemployment, and in doing so open the horizon of our futures.

-- Amanda Armstrong, Insolvent Futures / Bonds of Struggle

Today, student debt is an exceptionally punishing kind to have. Not only is it inescapable through bankruptcy, but student loans have no expiration date and collectors can garnish wages, social security payments, and even unemployment benefits. When a borrower defaults and the guaranty agency collects from the federal government, the agency gets a cut of whatever it’s able to recover from then on (even though they have already been compensated for the losses), giving agencies a financial incentive to dog former students to the grave.

When the housing bubble collapsed, the results (relatively good for most investors, bad for the government, worse for homeowners) were predictable but not foreordained. With the student-loan bubble, the resolution is much the same, and it’s decided in advance.

-- Malcolm Harris, Bad Education

Federal student loans originate in the National Defense Education Act of 1958. These loans were, on the advice of noted neoliberal architect Milton Friedman, direct federal loans to students that by-passed institutional control: through this, Friedman intended to direct more federal dollars to private institutions as a means to discipline and eventually privatize public education (Federal Education Budget Project). While a necessary first step, the design flaw in this program was that any direct federal loan showed up as a loss on government balance sheets even though the loan would no doubt be repaid in the future – with interest. To get around this, the government instead began guaranteeing loans to students by private financial houses: in essence privatizing an enormous chunk of federal largesse.3 With the dramatic decrease in federal funding to institutions themselves in favor of loans and grants – as mandated by HEA - the stage was set for institutional competition and the explosive growth of college tuition as the market would now determine education’s worth.

-- Mark Paschal, A Framework for Student Debt

Building a student loan debt abolition movement also requires that we reframe the question of the debt itself. A first step must be a political house cleaning to dispel the smell of sanctity and rationality surrounding debt repayment regardless of the conditions in which it has been contracted and the ability of the debtor to do so. Most important, however, from the viewpoint of building a movement is to redefine student loans and debts as involving wage and work issues that go to the heart of the power relation between workers and capital. Student debt does not arise from the sphere
of consumption (it is not like a credit card loan or even a mortgage). To treat student loans as consumer loans (i.e., deferred payment in exchange for immediate consumption of a desired commodity) is to misrepresent their content, making invisible their class dimension and the potential allies in the struggle against them.

Student debt is a work issue in at least three ways:

i. Schoolwork is work; it is the source of an enormous amount of new knowledge, wealth and social creativity presumably benefiting “society” but in reality providing a source of capital accumulation. Thus, paying for education is, for students, paying twice, with their work and with the money they provide.

ii. A certificate, diploma, or degree of some sort is now being posed as indispensable condition for obtaining employment. Thus the decision to take on a debt cannot be treated as an individual choice similar to the choosing to buy a particular brand of soap. Paying for one’s education then is a toll imposed on workers in exchange for the
possibility, not even the certainty, of employment. In this sense, it is a collective wage-cut.

iii. Student debt is a work-discipline issue because it represents a way of mortgaging many workers’ future, of deciding which jobs and wages they will seek and their ability to resist exploitation and/or to fight for better conditions (Williams).

-- George Caffentzis, The Student Loan Debt Abolition Movement in the US

Generation of Debt Final

Update on Chilean Education Protests

No Limit for Student Debt

Two weeks ago, Congress passed an all-cuts deficit reduction bill, which was ostensibly tied to an increase in the federal debt ceiling. While much of the commentary about this bill, including in the left-liberal press, suggested that the 1.7 trillion in cuts was a result of Republican intransigence and Executive fecklessness, in truth, the austerity was driven much more by the bond rating agencies, who were threatening to downgrade US debt unless our federal representatives carried out an initial round of fiscal austerity. The agencies got their cuts, but S&P went ahead with the downgrade anyway. The other two agencies -- Moody's and Fitch -- are holding their fire for now.

If nothing else, this debt ceiling & debt rating debacle should crystallize for a transnational public the fact that the bond rating agencies determine the parameters of our politics -- a lesson that those of us fighting UC privatization have come to learn over the past couple years. What finance capital wants -- whether that be fee hikes or fiscal austerity -- it gets.

Buried in the debt ceiling bill was a measure to essentially end subsidized loans for graduate students. Under the previous federal loan regime, graduate students were not responsible for paying interest on their loans while they were still in school (and struggling to pay the rent). Starting next summer though, we'll be paying that interest. According to the sage coalition, the shift from subsidized to unsubsidized loans will increase the total loan burden of a six-year grad student by over 25%. And, given the current state of the academic job market, this is another few thousand dollars in debt that we'll have little chance of paying off.



Nevertheless, as the journalistic reports on this measure invariably pointed out, 'there was a bit of good news' hidden in the cuts to subsidized loans. Some of the money saved by the federal government on loans to grad students will go to pay for Pell Grants, which otherwise would have suffered further cuts. So it could have been worse. And yet, it's important to remember that Pell Grants are being funded because of effective lobbying efforts by for-profit colleges, much more so than because of a shared commitment on the part of our political class to educational equity. For-profit colleges receive massive amounts of Pell Grant funding, despite abysmal dropout and placement rates for their students. And they have one of the best-funded federal lobbying efforts of any industry. As Bloomberg reported in April:

For-profit colleges, led by Apollo Group Inc. (APOL)’s University of Phoenix, will be disproportionately hurt by cuts in the $30 billion Pell Grant program for low- income students. Pell Grant aid to for-profit-college students grew almost eightfold in the past decade to $7.5 billion in 2009-2010, and now accounts for 25 percent of the funds, according to the U.S. Education Department.

While there is much more to say about for-profit schools, it's important initially to note that these schools are the apotheosis and inevitable outcome of educational privatization. In California, for example, recent tuition hikes at the UCs and CSUs, coupled with class cuts at Community Colleges, are all compelling low income students and students of color to turn toward for-profit colleges, despite the fact that these schools rarely offer the educational experience that they advertise. In other words, regressive reforms at one node of the educational system reverberate throughout this system, affecting all students.

While the UC student movement has not yet adequately recognized how our fight is linked with fights taking place elsewhere in the educational system -- something on the agenda for the coming year -- the UC Regents are quite aware of these interconnections. After voting for the 32% fee increase in the fall of 2009, Regent Richard Blum directed his investment firm to buy stocks in for-profit schools. From an article in Reclamations 2:

As student fees continue to skyrocket, it is well to keep in mind that Blum is a part owner of a pair of for-profit education companies. Blum Capital Partners owns the largest stake in Career Education Corporation, the world's second largest private “diploma mill” corporation, which runs more than one hundred for-profit schools across the country, while also making tens of millions of dollars in sub-prime loans to its students. Blum Capital also owns a 19 per cent stake in ITT Educational Services, Inc., another for-profit school that makes millions off student loan debt. Blum, the UC Board of Regents' resident siphoner-in-chief of public funds, purchased more than 220,000 new shares in the firm soon after the UC Regents approved the University of California's latest fee increase this past November.

This is why we fight the Regents.