Student Debt Strike? Not So Much
I have to admit when I first heard about Andrew Ross’ student debt strike I was thrilled. I’ve been talking about the possibility of mass defaults as a collective bargaining tactic for years now. To organize something like this could take years, though, so I was shocked to see a campaign for mass defaults this early. And there’s a reason for this: it’s way too early.
First of all, a strike is typically a last resort strategy when all else has failed, when negotiations have failed. Is it too early for a last resort? Emphatically, yes.
Secondly, because there are so many student loan lenders and types of loans, a general debt strike will not necessarily hit the heart of the beast. To organize a debt strike effectively, you have to start with specific lenders otherwise the impact of the strike will not be felt. It’s like if you asked all the electricians in the country to refuse to work until they got a raise in salary. This would just get a bunch of electricians fired. A better strategy would be to rally all the student debtors who owe Sallie Mae. Sallie Mae might negotiate a better interest rate once they calculated how much money was withheld.
Or they might not. As Alan Collinge explains very clearly in The Student Loan Scam, the student loan industry has learned to make more money on defaulted loans than ones that are successfully repaid. But at some point Sallie Mae’s stock goes down if there is a widely publicized debtors strike.
I recently read about a $850,000 smear campaign on Occupy Wall Street, coordinated by right-wing lobbyists. Could the student debt strike be a part of this? (It is no secret that right wing politicians and the student loan business are working together via campaign contributions and lobbying, etc.) If it were a campaign of this type it could potentially make idiots out the the defaulters by putting them in even more debt and ruining their credit, to boot. Meanwhile, the private student loan industry increases profits from the defaults.
Most likely, though, the student debt strike will not happen. After six days of a highly publicized campaign only 1,000 debtors have signed the pledge. The strike will ensue only after 1 million debtors have signed. And this is only a barometer for how many people might conscientiously default. For example, I signed it, but now have decided I will not participate unless it is organized by lender. I won’t ruin my credit unless I believe it will have an effect. And right now the only effect is that people are talking about it, and that is worth something. It’s just not worth the farm.