Organizing for Debt Cancellation Can Be a Gateway to Systemic Change

On a sunny and cool September Saturday in 2011, hundreds of activists and protestors took to Zuccotti Park in New York City's Financial District. They set up tents, mutual aid stations, and more, occupying the space to protest inequality and corporate corruption. Occupy Wall Street brought the terms "the 99%" and "the 1%" into the mainstream American consciousness. When police raided Zuccotti Park in the middle of the night that November, the movement's flagship occupation came to an end. But what it sparked lives on today.

Many of the activists and organizers at the forefront of today's debt cancellation and forgiveness movement got their start at Occupy, either in that first New York demonstration or subsequent actions across the country. Natalia Abrams, who started Occupy Colleges, went on to found the Student Debt Crisis Center. Andrew Ross, an activist and social and cultural analysis professor at New York University, and Hannah Appel, an economic anthropologist at the University of California, Los Angeles, went on to start Strike Debt, a nationwide debt resistance movement. From Strike Debt, the Debt Collective--a debtors union primarily focused on student debt, carceral debt, and tenant debt--was born. A decade later, their efforts saw a small but significant victory when the White House announced federal student loan forgiveness in August.

In the years following Occupy, Strike Debt and the Debt Collective's efforts included producing The Debt Resistors' Operations Manual and launching a Rolling Jubilee that has bought $32 million of debt from secondary markets and canceled it. "It's a drop in the ocean, obviously," Ross says. In the U.S., 45 million current and former students hold $1.6 trillion in federal student debt, which accounts for 92% of all U.S. student debt. "But it was a proof of concept that people could actually take relief for themselves through mutual aid."

Canceling debt wasn't all the jubilee did. It also highlighted the insidious nature of the debt market, the ready availability of solutions, and the depth of a problem that's been centuries in the making.

The Advent of Student Debt

The cost of attending U.S. college and universities remained relatively stable until the 1960s and '70s. When Ronald Reagan became governor of California in 1967, he swiftly proposed that the University of California system charge tuition for the first time, while also cutting state funding for the schools by 10%, signaling the beginning of the end of state support for universities. Across the U.S., state appropriations for public universities dropped 29% from their peak in 1988 to 2013. In 2018, overall state funding for two- and four-year public colleges was $6.6 billion less than it was in 2008.

The Debt Collective and other entities working in the debt cancellation and forgiveness space are questioning the very foundations of our society, culture, economy, and the racial capital system that underpins them--and they're achieving victories.

Reagan came into office just as Black and Brown students began finally gaining access to higher education in the 1970s and '80s. It's then that the national education ethos seemed to pivot from viewing higher education as a public good to considering it a private investment. Jalil Bishop, an assistant professor at Villanova University who studies racism across institutions and markets, doesn't think the timing was a coincidence. Instead, he calls the phenomenon "racial capitalism."

Because communities of color "have been cut off from ever privately accumulating the wealth to pay for higher education," Bishop says, those communities had to "rely on student loans in a way that communities who have always had access to privately accumulated wealth, through homeownership and businesses they've inherited, [did not need] to rely on student loans." This lack of intergenerational wealth has led to entire families being saddled with student debt, in the form of Parent PLUS loans, in order to finance their children's higher education.

Those racial disparities are reflected in many forms of debt. Black and African American graduates owe an average of $25,000 more in student loan debt than their white counterparts, according to the Education Data Initiative, and are most likely to struggle financially in repaying that debt. The National Consumer Law Center also reports that 27.9% of Black households carry medical debt, compared with 17.2% of white households. Americans as a whole hold at least $195 billion in medical debt.

Because communities of color are disproportionately burdened by student, medical, and carceral debt, all of which are compounded by the growing racial wealth divide, they stand to gain substantially from debt cancellation and forgiveness, not only financially, but psychologically, too.

During the COVID-19 pandemic, when student loan repayments were put on pause, Bishop set out to uncover the mental toll of looming debt that feels impossible to pay off. He found that Black borrowers across income levels were suffering psychologically. "They were feeling like they once again found themselves in a debt trap, shackled to some type of arrangement that they couldn't escape and, to them, it really reflected other types of racial traps they had heard about in history. They felt like this was their subprime moment."

Borrowing Everywhere

Thanks to the rise of both financialization and securitization, after the early 1970s, it became more profitable for banks to invest in consumer debt, rather than their focus on the steel and railroad industries of previous decades, for example. Today, consumers can borrow for just about everything, from small purchases made with credit cards to large, durable goods, like cars, homes, and associated maintenance programs, the sellers of which often offer their own financing.

Debt has become a central element of the U.S. criminal justice system, too, largely in the form of fines and fees that total an estimated $26.7 billion in carceral debt held by those currently and formerly incarcerated. "If you look at any one household, there are numerous kinds of debt--medical debt, housing debt, credit card debt, auto debt--flowing through the household. They're all interdependent in a way," Ross says, since the ability to pay one debt impacts the others. As the debt market grew, so did myriad scams and predatory practices that fed off it, including for-profit colleges, like Corinthian College, which used deceptive marketing tactics and often left former students and graduates with worthless degrees and mountains of debt.

Corinthian students made up a significant portion of the Debt Collective's first Rolling Jubilee in 2014. But single-handedly erasing debt isn't Debt Collective's goal, explains Hannah Appel, one of the Debt Collective's founders. "We cannot crowdsource away everybody's debt," she says. "The endgame here is to put the potential power, the potential collective leverage of debt, into the hands of debtors to actually change the systems that indebted us in the first place."

It's through collective action, organizing, and legal pressure that the Debt Collective and other entities working in the debt cancellation and forgiveness space are questioning the very foundations of our society, culture, economy, and the racial capital system that underpins them--and they're achieving victories. In the summer of 2022, the U.S. Department of Education announced it would cancel $5.8 billion of debt owed by 560,000 Corinthian borrowers.

Technology is also playing a big role in debt cancellation efforts. The Debt Collective offers a suite of online tools that help debtors navigate the often complex legal process of disputing debt. Rather than navigating complicated processes alone, the Defense to Repayment app, for example, has borrowers answer questions to create state-specific legal arguments for debt disputes. Appel says an estimated 75,000 people used the app in the first eight months after its launch in February 2014.

Bigger Goals

The Debt Collective is far from alone in striving to eliminate debt. Groups like the Appleseed Network and The Fines and Fees Justice Center are working to oppose and reform the cost of criminal fines and fees and the debt associated with them. There are also RIP Medical Debt, Dream Defenders, Young Invincibles, Living With Conviction, and more organizations that are all, at least in part, organizing to address debt.

Their efforts are strategically intended to contribute to systemic reforms and goals, like abolishing student, medical, and carceral debt, and reforming the primary sources of that debt. Those efforts include supporting a single-payer health care system and tuition-free higher education--objectives that are "a lot closer than you might think," explains Andre Perry, a senior fellow at The Brookings Institution. "Community colleges in a lot of states are already there because Pell Grants generally cover their tuition," he says.

Bishop agrees. "Money is being spent right now to uphold a student loan industry where it's very clear that students don't win ... and it's possible for us to reallocate that," he says. "There is a need to ask questions around endowment sizes and our colleges being responsible with their funding."

Berea College in Kentucky, for example, hasn't charged tuition since 1892. Berea's students are largely from the surrounding Appalachia area, but many also come from across the U.S., and even from other countries. The college has aligned its admissions process with the needs basis outlined in the Pell Grant program. All of the college's students "bring some amount of the Pell Grant with them to help offset some of their costs," explains Luke Hodson, Berea's associate vice president of admissions. "Sometimes it may be [put] toward tuition costs, but most often it's toward covering some of their housing and meal expenses."

As Berea's provost Scott Steele notes, the college relies on student labor to supplement a lean staff. "Students work for the college on the grounds, as teaching assistants and in the financial aid office, the admissions office, the food service office," he says. To meet the college's annual operating expenses, returns from Berea's endowment constitute 74% of its funding, while 17% comes from federal and state aid and 9% comes from annual donations from supporters.

Ultimately, the debt cancellation movement is about grappling with questions of fairness and equality, both socioculturally and under the law.

When it comes to spending that money, Steele adds, "we're focused on the things that we think are bringing real value to the college experience and the education of our students, but we would not consider ourselves extravagant." Rather than building bigger and better stadiums and residence halls to attract tuition-paying students, Berea instead maintains the facilities it does have while funneling money toward services like its writing and student success centers.

"Not every college is willing to function that way or can function that way," Hodson says, noting that other institutions spend a lot of money to attract and enroll students. "I think we're starting to see that [cost] starting to outpace what the buyer, the student or family, are willing to really pay for."

Steele often fields calls from other institutions interested in replicating Berea's model, but he admits it's a hard transition to make. "It's very difficult to start from zero," he says. "I think other institutions could do something similar if they had the startup costs [covered], but it's really difficult to begin the model from scratch."

From Organizing to Systemic Change

Just like Berea's model can't immediately be replicated elsewhere, neither can many of the initiatives like the Debt Collective's Tenant Power Toolkit, which is focused on California, where tenant rights and consumer protection laws are stronger than most elsewhere in the country. However, the Debt Collective is also working with student law interns to replicate its California-centric services elsewhere.

It's fighting the law with the law on both a state-by-state and federal level that Eileen Connor, a lawyer and the president and director of the Project on Predatory Student Lending, believes is key to securing systemic change. "The fact is that a good number of our clients have defaulted on their student loans," she says. "They are having the law applied against them. They're having their Earned Income Tax Credits seized, they're having their wages garnished, and they're having their credit ruined, all through legal means. ... You have to meet the law where it is."

The leap from organizing to systemic change is a long game, but in the meantime, incremental changes can point us in that direction. On the carceral debt front, Helen Ho, a research director at The People Lab at Harvard's Kennedy School, suggests instituting fines and fees that are proportional to income, as other countries do. "On lower levels, there's things that individuals and nonprofits can do, which is setting up a clinic for ability-to-pay hearings. ... And perhaps you can combine that with advocacy to build something bigger, like folks are doing with bail funds."

Bishop and Perry advocate for the expansion of the Pell Grant program, which is currently included in several legislative proposals in Congress. Connor agrees, adding that whatever the solutions are, some experimentation will be required. "There has to be tighter controls on which institutions even get access to that money," she says. "I think there [could be] some partnership with states where there's a system that's closer to Medicare and Medicaid, where there's federal money, but it's administered by states. Maybe we should have a slightly different tax structure where, if there's public investment in higher education, it comes back to the public in the form of taxation on individuals as they succeed because of that initial public investment."

Ultimately, the debt cancellation movement is about grappling with questions of fairness and equality, both socioculturally and under the law, and mitigating some of the generational effects of racialized capitalism. Debt relief and the organizing behind it can also play a key role in recasting our modern conception of education and other forms of advancement as an individual endeavor.

As Connor puts it, "I think it's under-theorized and under-quantified how there are benefits [to education and training] that are not individual, but collective"--how, when one person gets an education, it doesn't just benefit them, but also the whole community around them. It's this collective approach that gives Bishop "so much hope." This, he says, is "because we have borrowers and everyday people and community members who are really leading a movement that, in real time, is rewriting national policy in a way that we don't always get to see around key issues."