Category Archives: student debt

On Continuing Not To Be Dead

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Instead of doing that consumerist frenzy holiday shopping thing, why not have an Occupy weekend in NYC? There are important and fun events all weekend on student activism, recovering from Sandy and what’s next for Strike Debt. Still not dead, folks.

Book Block!

Book Block!

On Friday, support the excellent occupation by Cooper Union students by participating in the book block: a parade of books as shields. Make your own from 12-1pm on Friday December 14 at Cooper Square (7 East 7th St) and then join in the discussions on the future of student activism from 1-3pm and who knows what might happen next.

Saturday Dec. 15

This is important. Here’s a call from the Occupy Sandy people taking on mutual aid in Staten Island with people from the local community:

SI

On Saturday we, the residents of affected areas of Staten Island, will come together and make our voices heard as part of a citywide day of action.  We invite you to come hear our stories and go on a tour of our neighborhood, a tour of destruction. We will open our community and our homes to show the world what is really happening in Staten Island. Hurricane Sandy was a disaster, but the lack of government response is shaping up to be another kind of catastrophe. We deserve better and we demand answers and action.

Go! and take your friend the journalist/blogger/film maker to publicize this to the max. Houses in NYC are getting devastated by black mold, just like people were in New Orleans after Katrina. You have to demolish all the walls to get rid of it. FEMA and co are offering nothing but loans. The obvious hope is to create more upscale housing and offices on these sites, although they will equally obviously flood next time as well.

Sunday Dec 16

Winter Jubilee

Not tired yet are you? Good. So go to the Strike Debt Winter Jubilee. This is not another debt abolition event, it’s an introduction to what Strike Debt does, and hopes to do in the future, as well as a seasonal secular celebration of a year of being undead. See you there!

Privatized Austerity: Why Silence=Debt

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The new report on debt from the Federal Reserve Bank of New York presents the case for a decline in household debt. Which is true, if you exclude bankruptcy, foreclosure, and student debt all of which are up. And forget trying to get a new mortgage at those nice low rates you hear about: the banks aren’t lending at all. What we’ve got here is a privatized austerity that’s affecting individual lives every bit as much as its nation-state implemented partner in Europe. In this privatized form, debt-driven austerity presents less of a political target. Silence=Debt. Which is why we strike debt.

Let’s look at the Fed’s own numbers. With student loans, the news is all bad, explaining in part why, of all debt topics, attention continues to be centered on student loans:

• Outstanding educational debt stood at $914 billion as of June 30, 2012 [previous Fed figures had it at $870 bn]

• Since the peak in household debt in 2008Q3, student loan debt has increased by $303 billion, while other forms of debt fell a combined $1.6 trillion.

• Student loan delinquency rates increased for the second consecutive quarter; The percent of student loan balances 90 or more days delinquent increased to 8.9% from 8.7% during the second quarter of 2012.

Note that the delinquency rate here is across all student loans, including those currently in deferral. The Fed itself has reported that 27% of loans not in deferral are in some stage of default. The increase in student debt is a direct consequence of the impossibility of declaring bankruptcy or defaulting on these loans.

So we need to be careful about the assumption that the numerical decline in bank reported debt means that people’s situations are improving. To the contrary, as bankruptcy and default increase, banks move debt off their balance sheets, making their situation appear better. For the debtor, the situation is in fact worse.

Here we can see that more people are being pursued by debt collectors for larger sums than ever:

This chart suggests that about 14% of consumers are in collection and the amounts are climbing steeply to an average of $1550.

As we might expect from this, bankruptcies are up, while foreclosures are running back at 2011 rates, despite the 5 million people who have already lost their homes

So how can total household debt be lower? Here’s the giveaway detail. Foreclosures and bankruptcies allow banks to remove that debt from their balance sheets. The people concerned are now invisible, statistically unaccountable and therefore (it is hoped), politically neutralized. Here’s the Fed’s visualization of that for mortages:

The red section of the bars refers to “charge-offs” meaning defaulted or foreclosed loans. The more these increase, the lower total mortgage debt becomes as you can see here, as represented by the black line.

Notice also that the blue bars depict new loans and mortgages that are actually paid off by the homeowners. This number has now declined to irrelevance. If we assume that some folks are in the course of time managing to pay off their 30-year loans, then the amount of new mortgage lending is very low indeed. That would accord with the anecdotal sense that, despite notionally low interest rates, mortgages are now impossible to get. The federal funds set aside to help underwater mortgage-holders have been little used, not because people don’t want them, but because banks put so many obstacles in the way of refinancing.

Unlike European austerity that is visibly punishing the 99% to recoup the excesses of the one per cent, this silent austerity has come with relatively little political consequence. A Wall Streeter whose entire enterprise rests on forcing companies into debt and then cashing out, leaving them to pay off the debt, is at 50% for the presidency. He’s only doing to companies what the banks are doing to all of us.

Strike back. Strike Debt Assembly at 1.30, followed by Life After Debt: A Gathering of Debt Refusal at 4pm, this Sunday in East River State Park in Williamsburg.

What’s (Higher) Education For, Anyway?

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Another day, another rash of student debt horror stories. At the end of this op-ed, another suicide in which student debt was a key factor. NYU, where I teach, recently received permission from New York City Council to begin a massive expansion that will cost over $4 billion by most estimates. Although no budget has been published, 60% of this cost is estimated to be coming from student tuition, which is to say, debt. It’s time to start countervisualizing against the debt factory.

US universities were built up as bulwarks of knowledge and propaganda during the Cold War. After the Soviet Union launched Sputnik, the first satellite, in 1957, this effort moved into high gear. It was widely held that “It is upon education that the fate of our way of life depends,” to quote one widely discussed essay of that time.

The G.I. Bill brought huge numbers of veterans into the university system. Some 50% of University of California students in the 1950s were veterans. Think tanks produced endless papers like Higher Education for American Democracy (meaning as opposed to Soviet Communism). All this culminated in the National Defense Education Act of 1958, which stated:

an educational emergency exists and requires action by the federal government. Assistance will come from Washington to help develop as rapidly as possible those skills essential to the national security.

All this is simply to say that we should not be attempting to restore this lost university of the military-industrial complex but instead seeking to abolish the debt-financed university and reconstruct another form of higher education.

This university will not be skills-based in the sense of vocational training. Even by the logic of capitalism, this doesn’t work. For example, when I was undergrad director in the Art department, I had a stream of students wanting to know how to become animators. The answer was simple: acquire good traditional art practice in a four-year degree. The studios want people who know what they’re doing visually but they train them in software, which changes too fast for universities to keep up.

Looking towards a possible future in which we don’t live to work, and we don’t work to repay loans, we would do well to think about how to inculcate a breadth of historical, cultural, critical and scientific vision as part of learning. Current university practice encourages and rewards intense specification, producing humanities scholarship that is so tightly focused that even other humanities faculty don’t read it, let alone assign it to students. Scientific journals come “bundled” so that the majority no-one wants to read have to be subscribed to as well as the few popular ones.

If the global social movements should have taught us anything, it is the need for a shared and extended understanding. Learning takes place best in non-hierarchical small groups and having so-called “smart” classrooms full of technology may be as much an impediment to that learning as a help. At the same time, there’s a place for the large audience teach-in (lecture) because, of course, some people know more than others. The question is always how to enable the learner to make use of that knowledge for themselves.

All this is the fine print. The real question is still the one that panicked people in 1957: what future do we want to make? David Graeber has recently lamented the collapse of the Jetsons/Star Trek vision of the future. Bifo has published a book called After the Future that takes the Sex Pistols’s mantra “No Future” as a diagnosis.

Perhaps we need to go back to the future. In the Central and Western Pacific, there has been a resurgence of traditional navigation, using the stars and waves to set a course, in handmade boats. Voyages of 1500 miles are routine.

The Canoe House, Guam

The people who sail and steer these boats take a considerable personal pride in the accomplishment, as well they should. It also offers a sustainable and zero-emission means of transport. In islands where climate-changed sea-level rise is already a daily reality, this is not just anachronism, it offers ways to resolve how to continue island life. It’s the direct opposite of the jet-pack vision and it’s not practical for everyone of course. Nor did the Sputnik lead to a viable space-flight system, it now turns out.

I don’t mean that we should all start teaching canoes or canoeing, although there is a great course at Michigan like that. I think we need to start deciding what kind of future we can imagine, what kind of future we want and how we might get there from here. A learning practice that embraced that kind of countervisuality to the military-industrial complex might even be worth working for.

The Debt Vultures

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From three corners of the debt square–education, housing and health–come stories to answer two repeated questions about Strike Debt: is this the right theme for OWS? And is this in any way different to standard issue capitalism? In short, yes and yes. And I think they might serve as an answer as to what to call predatory debt: I’m going for vulture debt. Because a group of vultures is known as a committee (true).

First, education. Student debt has been questioned by some as an elitist preoccupation or as too easily eliding with right-wing attacks on higher education. Today, a US Senate report of all things exposes for-profit higher education institutions, so beloved by the right-wing, as predatory loan garnishing machines. They exist solely to generate money with instruction as an afterthought:

Among the 30 companies, an average of 22.4 percent of revenue went to marketing and recruiting, 19.4 percent to profits and 17.7 percent to instruction. Their chief executive officers were paid an average of $7.3 million

80% of their revenues come from Federal grants on average. Here’s one specific example of why this is vulture debt:

The Apollo Group, which operates the University of Phoenix, the largest for-profit college, got $1.2 billion in Pell grants in 2010-11, up from $24 million a decade earlier. Apollo got $210 million more in benefits under the Post-9/11 G.I. Bill. And yet two-thirds of Apollo’s associate-degree students leave before earning their degree.

The more you read, the worse it gets. These “colleges” are more expensive than not-for-profit institutions, yet graduate far fewer of their students. In terms of debt:

Students at for-profit colleges make up 13 percent of the nation’s college enrollment, but account for about 47 percent of the defaults on loans. About 96 percent of students at for-profit schools take out loans, compared with about 13 percent at community colleges and 48 percent at four-year public universities.

These institutions are the right-wing solution to higher education: supposedly vocationally-oriented market-driven education, rather than the supposedly wasteful liberal arts schools. They are nothing but debt vultures.

Housing. I noted recently that student debt is getting noticeably worse for older people. Now it seems that foreclosures are biting the over-50s hard:

one and a half million Americans over the age of 50… lost their houses to foreclosure between 2007 and 2011. Of those, the highest foreclosure rate was for homeowners over 75.

In this report from the AARP it emerges that these are prime loans, not the marginal sub-primes so often discussed. Seniors are being affected by declining pensions, collapsed property values, rising medical costs, shrinking investment values and (although not mentioned in the report) the need to support children and grand-children. People who have been making payments since the 1960s are now being evicted. Whose interest does this really serve? How much is enough? For a vulture, that question makes no sense.

Finally, and most repellent, medical debt. Please don’t be eating while you read this. The major medical debt collector Accretive has been banned from Minnesota and fined $2.5 million. Why? Well, it did things like this:

Carol Wall, a 53-year-old Minnesota resident, said “a woman with a computer cart” told her she owed $300 as she was “vaginally hemorrhaging large amounts of blood” at an Accretive-affiliated emergency room.

The repellent company has issued the usual generic statement claiming such cases were  exceptions, and so on, and so on. Even the New York Times didn’t buy that:

Accretive Health contracts with some of the largest hospital systems in the country to help them recoup money on unpaid bills that have piled up during the financial crisis and the economic downturn.

In other words, this is how medical debt works: the system knows people can’t pay and has a mechanism to deal with it. Here the debt vultures are literally preying on the weak, requiring patients to pay before they can even see doctors, against all rules and regulations.

So: is debt a proper subject for OWS? I’d say that predatory, criminal enterprises that place profit before people and are fundamentally incapable of saying “enough is enough” are the prime target of Occupy. Further, the unique quality of the movement is to bring together issues that are deliberately kept apart so that we can see how things really are. The minor “fixes” that pass for policy from the political parties are helping almost nobody–this is statistically as well as morally true. From student debt to housing and medical debt, the debt vultures have shown that this is a fight to the death. Only social movements like Occupy can help.

Is this a different form of capitalism? Technically, the switch to debt as the dominant aspect of the money form is different. Certainly, rapacious capitalism is far from new, as a quick glance at Engels’s 1845 classic The Condition of the Working Class in England will show. However, the present delusions about the virtues of the rich have become so attenuated that it is considered daring  to suggest that government or society have any role in wealth creation whatsoever. The idea that government should mitigate the impoverishing effects of capitalism for any except the capitalists themselves is now “socialism.” When neo-liberalism emerged, Stuart Hall and others called it “Thatcherism” and were widely castigated for saying that capitalism had changed. But it had. And it continues to do so.

Debt servitude is predatory and relentless. It has shifted the target of neo-liberal expropriation from Heavily Indebted Poor Countries to Heavily Indebted Poor People. Fanon suggested that fascism was the application of colonial techniques to colonizing nations. We can say today that neo-liberalism is the application of neo-colonial techniques to all populations. No longer is there a “wages of colonization” (to adapt Du Bois’s concept of the “wages of whiteness”) in which being a citizen of the neo-colonial powers protects you. We are all targets now.

Certain scavenger species can eat themselves to death, unable to stop. The debt vultures are one such species. We have to stop them before it’s too late.

 

Student Debt: Confused? You won’t be, after this episode.

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No wonder people get confused about student debt: a new Federal Reserve report shows student debt worsening. A group of universities jump into spending small fortunes creating Massively Open Online Courses (MOOC), which are free. The New York City Council clears the way for NYU to build a $4-6 billion expansion, financed entirely by debt. Confused? You won’t be after this episode.

Soap!

First, the Fed, who are doing a good job of trying to alert lawmakers to the personal debt crisis, not that anyone is paying attention. They use a somewhat different and conservative methodology to arrive at a total amount of student debt but nonetheless their figures show a rise of $30 billion in the last quarter to $902 billion. So student debt is rising at nearly $100 billion a year. Average student debt is now over $24,000. There are over 37 million people with student debt.

What’s freaking out folks at places like the Wall Street Journal is that it turns out that this debt doesn’t go away. 5 million of the endebted are in their 50s and their average debt is $23,000, only $1000 off the overall average. Student debtors know why: compound interest, penalties and other fees make it almost impossible to reduce the principal. For people with children of their own, a second wave of student debt is now breaking. With home equity radically diminished (the presumed source for many to pay college bills), the fastest rising category of Federal education loans is to parents.

Delinquencies in borrowers over 40 are notably up in the past quarter, running as high as 11.9% for forty-somethings but not falling below 9% for any age group over 30. For many middle-aged people–and I know whereof I speak here–debt management is all about redistribution, moving credit card balances, taking loans on home equity or retirement accounts, refinancing mortgages and so on. Only the merry-go-round stopped in or around 2008 and it’s not going to be moving again any time soon.

The reason student debt continues to get worse while other categories of debt “improve” is very simple. You can declare bankruptcy, get foreclosed or default on other debt. Student debt never goes away. There is no bankruptcy or other means of legal adjustment. So while credit card companies have written off 10% of 2008-level debt as irrecoverable, and 5 million homes have been foreclosed, student debt remains. The Fed did not update its December estimate of defaulters excluding those currently in deferral: but it’s safe to assume from the overall increase in default that the 2011 rate of 27% is closer to 30% now.

Meanwhile, universities are responding in two ways: fantasy and insanity. The fantasy is that if you are not a university with a huge endowment, creating free MOOCs will somehow make you more competitive. Everyone knows that Stanford’s Artificial Intelligence MOOC attracted 160,000 people. No word on how many completed the course, still less of anyone inventing a robot or any of the other fantasy outcomes that people associate with A. I. All this has been great publicity for Stanford, which gets to appear civic-minded at relatively low-cost.  With a $16.5 billion endowment for their 18,000 students,  it’s not as if Stanford is broke or looking for new people to apply. For places like that, keeping the rabble out is a price worth paying.

Now a new consortium called Coursera has set up shop using faculty from a range of institutions. There is already a Great Lectures market for CDs and the like that might be in trouble but for state funded or less affluent private institutions, the upside to the “brand” and other publicity generated by the expensive creation of online content is less clear. A MOOC can be fun, you might learn some skills, but it’s really not equivalent to college.

Given that employers are not impressed at the moment by a B.A., what use would a set of MOOC “credits” be? The answer might be this: if MOOCs can supply a skill-set that allows a person to do what they want. For many young people, though, the purpose of college is to find out what it is that they truly want, rather than the limited range of options presented in grade school or locally.

Yesterday NYU persuaded New York City Council’s Land Use Committee that the place more young people want to do that discovery is New York. Its massive expansion scheme was approved 19-1, making it a foregone conclusion that the Council will approve it. Legal challenges may succeed in turning this back but it’s still not clear what NYU is thinking. Why undertake this massive new building when only 18% of it is for academic purposes and it will be paid for by debt? Meaning student tuition fees for the most part presumably, although no budget has been supplied. The answer is the same as the thinking behind the MOOC: college is a mercantilist system in which there are limited resources and schools must aggressively compete for them.

This is a Business School role-playing game and has no educational content at all. And that business-think is so manifestly not working–see above, see the economy, see unemployment– that to begin vast new projects without proper funding based just on that is a threat to the entire enterprise. So are you still confused? I am.

There’s A Debt Strike Going On

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There’s a wildcat strike against debt going on. The numbers are remarkable. By definition, a wildcat strike can’t be organized and, in this case, can’t really say speak its own name. That’s why OWS has a Strike Debt campaign: to articulate the crisis, to end people’s shame at being in debt and to encourage them–us–to speak out. Send us your story to strikedebtresearch[at]gmail. No contact details will be released.

Numbers

27 percent of student loans are in default and that number is rising.

$1.2 trillion of mortgage debt is underwater (debt exceeds value of property) or about one-third of all properties.

5 million homes have been foreclosed and 5 million more are under threat of foreclosure, meaning that owners are in default or behind on payments. 300,000 people had a foreclosure notification added to their credit report in the first quarter of this year.  27% of mortgages are seriously delinquent–ironically, a slight improvement. 300,000 more people went bankrupt.

The average credit card debt per household has fallen from $17, 936 in 2009 to $14,336 now: because of mass default. In 2010, credit card companies had to write off fully 10% of all debt.

Numbers Don’t Tell the Whole Story

So although we see delinquent debt totals falling, it’s not just because people are striving to pay it back but because it has been written off or put into foreclosure. Adding all this up, the Federal Reserve Bank of New York estimates:

As of March 31, 9.3% of outstanding debt was in some stage of delinquency, compared to 9.8% on December 31, 2011. About $1.06 trillion of consumer debt is currently delinquent, with $796 billion seriously delinquent (at least 90 days late or “severely derogatory”).

Student debt is more indicative in this regard. Using their own calculation on student debt, which has it at $904 billion, the Fed indicate how serious the student debt issue has become relative to other debt:

Since the peak in household debt in 2008Q3, student loan debt has increased by $293 billion, while other forms of debt fell a combined $1.53 trillion.

That decline in other debt includes write-offs, bankruptcies and foreclosures, options that are not available for student loans. In this sense, student debt provides the clearest picture of what’s happening, precisely because it cannot be manipulated off the books like other debt.

Lenders know this and have cut back credit. Mortgage originations for the first quarter of 2012 were down 17.4% from even 2011, let alone 2007. Try and get a credit card with an interest rate under 15% once the “grace” period expires. The average credit card rate is now 16.94%. This is usury in a time when bank interest rates are at all-time lows, on average 3.25%. That’s a 500% mark-up, even before you get to fees, memberships and so on.

The Morality Question

All this data is public knowledge. What we need to make public is that people are clearly making the choice to refuse repayment of debts. While the PR machine of the debt industry has long asserted that debt refusal is immoral, the ongoing debtors revolt proposes that it is compulsory endebtedness that it is immoral.

What I mean to suggest is this: lenders are actively deceitful. Playing by the rules as presented to us as consumers leads to massive shortfalls. Students were told to contract debt as a means of getting high-paying jobs that are not available, homeowners were encouraged to borrow and refinance as much as they could because house prices never went down. These are people trying to play by the rules, only to discover that the game is fixed.

For corporate persons, as the Supreme Court has it, this kind of utter imbalance has been rectified by debt forgiveness, restructuring and other finagling. Miss a payment on a credit card or a student loan and you get hit with a penalty fee, increased interest rates and a shot credit rating. MF Global used $1.6 billion of its clients’ money to try and save their firm–and they “could face a negligence charge.” Morality has nothing to do with debt.

What we have seen with debt, as with other areas of social life, is a secularization of Catholic doctrine. In this way, confession became secularized as therapy, for example. St Thomas Aquinas, the fearsome medieval theologian, argued that there is a debt of punishment for sin that cannot be expunged:

sin incurs a debt of punishment through disturbing an order. But the effect remains so long as the cause remains. Wherefore so long as the disturbance of the order remains the debt of punishment must needs remain also.

Of course there was a way out: you could purchase an “indulgence” allowing the debt of punishment to be bought out. In the secularized form, being in debt is seen as punishment for the failure of the debtor to be sufficiently wealthy. As capital now is the highest form of value, sinning against debt is the worst sin of all.

The Credit Rating Scam

Many people are afraid to speak out about debt because they fear it will impact their credit rating. These ratings are scams. As we’ve already seen, lenders are pre-emptively withdrawing credit and increasing rates and fees. If you don’t have a loan and it’s not student debt you’re after, the credit rating score required to get the “best” deals has become so high that no-one who really needs a loan is likely to qualify. So the loan you will get will already have punitive levels of interest.

How Can You Join In?

You don’t have to refuse to pay your own debt to join the debt strike. Here are some ideas:

Speak out. Debt is immoral, not debt refusal. Challenge people who say “they borrowed it, too bad, they should pay it back.” If you’re in higher education, talk to your colleagues about debt, emphasize the risks involved and think of alternatives.

Research. In your area, what’s happening? Do you have a story to tell? Email strikedebtresearch [at] gmail

Take action. Create debtors assemblies where you live. Look for the online materials coming from the Strike Debt campaign to help you. Create a Tumblr or other off-the-shelf websites. One idea that has floated is to collectively buy and forgive loans in default. There are websites where you can buy defaulted loans for a small percentage of the face value. The commercial loan market operation hopes to recover more than that percentage and so make a profit. It’s real bottom-feeder stuff. So even if we can’t actually afford it, let’s expose this kind of scam.

Remember: Debt Is Fucked Up and Bullshit. You Are Not A Loan.

 

Space, Observation and Strike Debt

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In the past weeks since the Debt Assemblies began and led to the formation of the Strike Debt campaign, my relationship to this writing project and to OWS has begun to shift. For a long time, I wrote from the participant observer position. I was there, in the room, often in the square or on the march. But I was not taking decisions or influencing people very much, although I might make the odd comment here and there. Honestly, Occupy and direct democracy were quite a steep learning curve for an academic.

It’s also a somewhat comfortable position, of course, allowing the writer to perhaps imply criticism, although I have always tried to do the harder thing of trying to look for the optimistic or hopeful outcome. Over the past few months since I’ve begun working more closely with Occupy Theory and now Strike Debt, that safety barrier is gone. I find myself questioning whether I have the right to report certain discussions or issues, Or better put, whether I should, not from the point of view of this writing but from the point of view of the movement.

It’s not that I’m party to any secret decisions or that I’m in any way, shape or form a “leader” because there really are no leaders. It’s that I’m not sure exactly what my role is now. Some other writers I know call this “observant participation.” Key here is the acknowledgement that you are writing about the movement as you are also active in it. Unlike most of these people, I’m writing about things as they happen, more or less, rather than for a dissertation, article or book project. It’s not a moral question, although I do respect security culture within the movement and I don’t name people who have not made their writing public. It’s a writerly question: what’s my perspective on this now?

Two other developments impinge on this repositioning. One is that there are fewer people active on a day-to-day basis in OWS now than there were at May Day. A good deal of this is the summer diaspora from New York, and with the climate-changed 97 degrees it was today, no wonder. There are students back home or doing research travel and activists. Others have dropped out, burned out or moved on. So it’s easier to get a sense of the movement than it was when it seemed to be limitless. Perhaps that’s also a coming-to-terms with the sheer difficulty of actually changing this deeply entrenched system.

Finally, it’s the debt campaign itself, which is a re-orienting of my own position. We are all “in” debt, or I certainly am. Mortgage, credit cards, refinanced mortgage. It’s a place of some shame and embarrassment: isn’t a middle-aged, more or less successful person (in their field) supposed to be past all that? Maybe, but I’m not, given a commuting work situation that requires two households in one of the world’s most expensive regions. I assumed getting “out” of debt was a combination of personal discipline and professional success, a Houdini-like escape trick that has eluded me so far.

Now I can see that getting “out” of debt requires getting into public space. It means striking debt so that if a corporation is a person and must be bailed out, guess what, I’m a person as well. It’s realizing that if there are 5 million households still under threat of foreclosure, 27% of student debtors behind or in default, and $800 billion of revolving credit card debt, there’s a massive debt strike already taking place. We just haven’t dared to admit it. You are not a loan.

Strike Debt: an emerging consensus

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For a long time, Occupy was a combination of radical affect, method and principle. It did not have a central subject. Readers will have noticed that debt has increasingly become a key theme in this project. And now it’s perhaps becoming the theme in OWS as well. A growing consensus is emerging that the next major day of action will be orchestrated around debt. This will be Black Monday, or September 17, Occupy Wall Street Year One.

In a sense, this is overdue. After all, OWS’s own David Graeber is the author the global best-seller Debt. But just as the 2011 protest lagged behind the worst of the bailouts, it’s only now that the full extent of the debt crisis is becoming apparent.

There are three main factors at work here. One is the exemplary resistance in Montreal to the privatization of higher education and the refusal of endebted futures. Here is a direct challenge to the idea that morality means debt. Quebecois consider that they have already paid for education via direct and indirect taxation, one. And, two, they see a moral society as one that educates its citizens as a public good.

“I fought nazism. I fought fascism. I detested Duplessis. I didn’t make it to 94 for this. NO to law 78.”

Next, and perhaps resulting from this rigor, is the new refusal of student debt that I’m seeing. I’ve met several graduates who are talking about going directly into default from graduation, confronted with apparently long-term unemployment. Many others have moved home with family to a very different future than the one they envisaged when matriculating.

Finally, the macro-economic picture continues to worsen. Spanish banks can’t even calculate how much bailout they need. And this, incidentally, is one of the many reasons why the parallel between family budgets and financial institutions doesn’t work. If the EU came to me with an offer to bailout my debt, I could work it out in about half an hour. Yet giant Spanish institutions with highly qualified staff offered a spread of between 20 and 62 billion euros. So the real amount needed is probably 120 billion.

Major US banks had their credit ratings cut on Thursday so that Citigroup and Bank of America are now two notches above junk bond status. The only upside for their customers is that these banks have so maximized their fees and penalties already that they have run out of room for more.

In his European travels, David Graeber has been saying that the question now is, not if there will be some form of debt abolition, but how it will happen. In Iceland, the state has decided:

to forgive [mortgage] debt exceeding 110 percent of home values.

This forgiveness has affected between 15 and 20% of mortgages to a cost of at least $1.6 billion (in a country where the population is only about 300,000) and has had a dramatic turnaround effect on the economy.

Here banks have moved to a new tactic to their own benefit alone: short-selling, in which a house is not formally foreclosed but the bank accepts a sale at a loss. A striking 233,000 homes were sold this way in the first quarter of this year, a quarter of all such sales. That’s a million people who have had the banks sell their homes for them. Thus the headline-making foreclosure sales are technically down, at just over 20% of the market. Banks still own nearly 700,000 homes and the same number are in some stage of foreclosure: over 5 million more people are confronting homelessness.

The housing crisis is an invisible reason the student debt situation has worsened, I suspect. Parents and other financial supporters no longer have home equity to draw on to sustain ever-rising tuition costs, as universities assumed they did until 2008. That’s me right there.

And next week the Supreme Court is going to overturn health care, which, as flawed as it is, represented at least a chance that medical debt might be contained. In today’s New York Times, a couple with two health insurance policies are reported to have found themselves with a $90,000 bill after a fall led to an unexpected set of surgery and nursing home stays. A consultant reduced the costs by $22,000–but charged 25% of that as a fee.

So when the Montreal solidarity march last night took the theme “Night of the Living Debt,” it really made sense to people. It might as well be zombies spreading the debt crisis because it would be no more out of control than it is now.

Night of the Living Debt

Today, a group called “Free Bed-Stuy” had a great Free University-style event in a lovely park in deepest Brooklyn (I forgot to take pictures because I was doing a teach-in). An urban farm next door housed chickens, pigs and vegetable plots: and also a serious sound system that was luckily far enough away from the event that we could hear ourselves talk. No cops. And a comfortable curious crowd, who were eager to hear our ideas about linking debt to prison, slavery and stop-and-frisk. Tomorrow, the fourth Strike Debt assembly in Washington Square Park, 12pm. I’ll report back.

 

Welcome to the Garbage Can University

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In the last few days, a coup at the University of Virginia (UVa) and a report on the mass exploitation of the part-time academic workforce have made it clear that the US university system has come apart at top and bottom. All that’s left is the middle, endlessly putting itself into debt to stay in these increasingly dysfunctional institutions. Welcome to the garbage can university. There’s garbage at the top, rubbish pay at the bottom, and people treated like garbage in-between. And the masterwork of the new Interim President at UVa is on, yes, garbage cans.

First, UVa. This is unbelievable, even by the messed-up standards of university administration. Out of a clear blue sky the Board of Visitors (i.e. the Trustees) simply fired the current President Teresa Sullivan. The email trail dug up by student journalists at The Cavalier Daily, and pursued by the online daily Inside Higher Ed, shows what was up. Board members were so taken by a mediocre  Wall Street Journal piece of hype about online courses that they felt they had to expedite removing Sullivan. Here’s what got them salivating:

Online education will lead to the substitution of technology (which is cheap) for labor (which is expensive)—as has happened in every other industry—making schools much more productive.

The sleight-of-hand that will not have escaped your attention is to transform education, which is a public good, into a private industry. Rather than create a well-informed citizenry, this manufacture can be quantifiably more “productive.”

Perhaps most telling is what the Board did next. Sullivan, an expert on work and debt, was replaced with the Dean of the Business School. What use could a university have for the author of As We Forgive our Debtors : Bankruptcy and Consumer Credit in America? Or The Fragile Middle Class : Americans in Debt? Interim President Carl Zeithaml, former dean of the McIntire School of Commerce, is the third author of Barriers to Corporate Growth (1981). That really tells you all you need to know. Except that Zeithaml wouldn’t make tenure in most places with that publication record. Oh, I’m sorry, I forgot his recent essay “Garbage Cans and Advancing Hypercompetition.” My mistake. What could possibly better summarize the current American university than that?

At the other end of the academic pay scale, we learned today from the Coalition on the Academic Workplace that the neo-liberal revolution has fully succeeded. Composed of 26 scholarly societies like the College Art Association, the American Academy of Religion, and the  Modern Language Association, the Coalition began from this starting point:

According to data from the United States Department of Education’s 2009 Fall Staff Survey, of the nearly 1.8 million faculty members and instructors who made up the 2009 instructional workforce in degree-granting two- and four-year institutions of higher education in the United States, more than 1.3 million (75.5%) were employed in contingent positions off the tenure track.

Rightly, the Coalition saw its responsibility as trying to learn more about the conditions of these workers. Their survey received over 30,000 responses, with 20,000 from self-identified part-time faculty/instructors. The conclusions are stark:

◆ The median pay per course, standardized to a three-credit course, was $2,700 in fall 2010 and ranged in the aggregate from a low of $2,235 at two-year colleges to a high of $3,400 at four-year doctoral or research universities.

◆ Part-time faculty respondents saw little, if any, wage premium based on their credentials.

◆ Professional support for part-time faculty members’ work outside the classroom and inclusion in academic decision making was minimal.

◆ Part-time teaching is not necessarily temporary employment, and those teaching part-time do not necessarily prefer a part-time to a full-time position. Over 80% of respondents reported teaching part-time for more than three years, and over half for more than six years.

It is in this context that we need to discuss the assertion that labor costs are too high at US universities. It is in this context of systematic impoverishment of part-time faculty and instructors that students and those who support them should discuss the value of the tuition being paid for these courses, which now amounts to over $40,000 per year at all the top-ranked private institutions.

The disgrace of all this has been realized in Quebec. CLASSÉ point out that state support for public universities has fallen from 87% of the budget to 71%. That’s a level no US public institution can now dream of receiving. And that’s why they are on strike: because they can see where they are going–a world of essays on garbage cans, garbage level pay and garbage universities. And they want none of it.

 

Debt Strike: Make Debt Public

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There’s a growing call in OWS for a debt strike. What does that mean? It means using the call to refuse debt as a means to make debt public. There should be a public discussion about how endebted we all are within the debt square that has replaced the public square. It means overcoming our shame at being locked in the debt square. And it means taking the debt public set people free. That last is not a demand because we all know no legislature at present is going to enact it. Look at Montreal, though: the government has not listened to the popular will and the people have not backed down. It’s public.

What is the debt square? It is the space defined by the four corners of modern US life:

  • student debt ($1 trillion)
  • mortgage debt ($14.6 trillion)
  • credit card debt ($800 billion)
  • medical debt (unknown)

Mortgage debt has declined slightly from $14.6 trillion in 2008 to $13.4 trillion at the end of 2011. The real change is in the amount of mortgage debt held by the federal government in various ways. From $725 billion in 2007, it’s now over $5 trillion. That means that the Feds control close to 40% of mortgage debt.

You hear less now about foreclosure because banks are short-selling houses and taking a loss:

All told, 233,299 bank-owned homes or those in some stage of foreclosure sold in the first quarter, making up 26 percent of all U.S. home sales in the period

As for credit cards, it’s what you already know: debt is rising, as are interest rates. Credit card debt snuck over $800 billion last year, even as interest rates rose to over 12% on average. The average credit card in households that have them is now over $15,000. Fewer people do have cards, as credit is being denied more often, but people who have credit cards have 3.5 each on average.

Increasingly, people are using credit cards to “pay” their medical bills, which is the third corner of the debt square. One in three households are struggling with medical bills and eighty per cent of those questioned for a PBS Newshour survey were having issues with financing health care.

If that seems a little abstract, here are some hard numbers:

As of 2010, 73 million people reported problems paying their medical bills or were paying off medical debt, up from 58 million in 2005. An estimated 44 million people were paying off medical debt in 2010, up from 37 million in 2005. (Source: Press release, The Commonwealth Fund, March 16, 2011.)

The least surprising news story of June 2012 will be the Supreme Court decision to revoke the Affordable Health Care Act, setting back even those modest improvements to health care affordability. But note that the Commonwealth Fund also found that

Sixty-one percent of those with medical debt or bill problems were insured at the time care was provided.

There is little available recent data on medical debt and no collated national figure that I could find.

Student debt has been the most widely discussed form of debt here. Today NYU President John Sexton announced:

Undergraduate tuition, fees, and room and board – For the 2012-13 academic year, we have budgeted an increase of 3.8% in tuition and mandatory fees, and 3.5% in room and board; the aggregate increase in the cost of attendance will be 3.8%.

So that $1 trillion of student debt is going to keep rising beyond the rate of inflation yet again.

The debt square defines the aspirations of most citizens: health, education, shelter, consumer goods. It defines them as things you need or want but renders the means of obtaining them into an object of shame. Who hasn’t stayed awake at night worrying about one or other of these debts? The answer to that question is now simple: the one per cent.

What is the answer to the prison of the debt square? To make it public. As we can see with mortgages, the so-called free market wants to move non-prime debt to the public sector anyway. With public money so cheap, the government could take on all private debt and have us reimburse them at the one percent rate it charges banks. Or it could just abolish the debt altogether.

That government is not this government that we have now. It is the government that the students in Quebec want. It is, more exactly, not a government at all but a means of enabling the possibility of autonomous citizens. To get there, we have to imagine not just a world without student debt, but one in which you are not a loan. A life to be lived rather than a credit rating to be lived up to: debt strike!