Student Debt Strike Targets For-Profit College; the Consumer Financial Protection Board Sued Corinthian Colleges, but Students Are Still Liable for Federal Loans

By Schlanger, Zoe | Newsweek, March 13, 2015 | Go to article overview

Student Debt Strike Targets For-Profit College; the Consumer Financial Protection Board Sued Corinthian Colleges, but Students Are Still Liable for Federal Loans


Schlanger, Zoe, Newsweek


Byline: Zoe Schlanger

Mallory Heiney, 21, owes $20,000, a debt she took on to attend a for-profit college she says scammed her and thousands of other students. And she isn't going to pay anymore.

Heiney and 14 other students from Everest College, one of the for-profit schools that belong to the Corinthian Colleges Inc. brand, declared a debt strike on Monday. The federal Consumer Financial Protection board alleged in a lawsuit last year that Corinthian lured students with "bogus" job-placement statistics and saddled them with predatory loans, even going so far as to "strong-arm" students into making loan payments while still in school.

By declaring a strike, the students effectively formed a new kind of union--a debtors' union--that they hope can lead to negotiations with a loan system that doesn't typically negotiate. Most of their loans are owed to U.S. Department of Education--so while one branch of the government has said the loans were predatory, another is still trying to collect the money.

Americans are drowning in student loan debt. As of last year, 40 million people in the U.S. owed a combined $1.2 trillion to banks, lenders and the federal government for their educations. For the many who find themselves unemployed or stuck in low-paying jobs after college, there's often no way out. Student loans aren't dischargeable, even if you go bankrupt.

The 15 Everest students are working with Strike Debt, a group of economic activists that emerged out of Occupy Wall Street. Strike Debt recently launched its latest project, called the Debt Collective, to support the students in their strike and encourage others to do the same. "If you owe the bank thousands of dollars, then the bank owns you. But if you owe the bank millions, then you own the bank," their website reads. Debt Collective is organizing legal support for the students to fight consequences of refusing to pay their loans, such as having their wages and tax returns garnished, and their credit ratings going down. But the students say they're willing to take that risk. They want all their student loans--private and federal--forgiven outright.

Heiney, from Tecumseh, Michigan, found herself saddled with $20,000 in debt and a low-paying job after completing a one-year nursing program at Everest College last year. She says the consequences of going to a Corinthian school cut way deeper than even what the federal government has uncovered.

In 2013, Heiney returned from a mission trip to Guinea that she says inspired her to pursue a career in nursing. She called Everest's campus in Grand Rapids, Michigan, to ask questions about its program.

"As soon as I showed any interest in them, they jumped on my back. They called me kind of relentlessly. When I came to look at the school, they put me right in front of a computer and had me start filling stuff out. They told me I was a really good match, and put all these things in front of me, [saying], 'Here's what you could be making in a year.'" Heiney says she later learned the employment statistics they showed her were false.

She enrolled, and things started smoothly. But within less than a year, Corinthian announced it was in a financial quagmire. (Later, it would shut down the Grand Rapids campus.) Suddenly, her professors stopped showing up: "They started dropping like flies." But classes weren't canceled: Instead, she said students were often told to write their names on a piece of paper for attendance and go home. Heiney says she passed her state nursing exams only because she taught herself the material outside of class.

Heiney graduated from the one-year program in August, $20,000 in debt. That's when trouble really began. Potential employers, she said, would hardly look at her.

"When you go into an interview, you have to go at it like [the Everest degree] is a criminal background. You have to convince people to hire you despite it," she says. …

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