Since Trump won the Presidency, there have been many attempts to characterize the failures of liberalism. Thomas Frank wrote that the Democratic party itself is the “expression of an enlightened professional class [whose] core economic interests simply do not align with those of working people.” What does party liberalism look and feel like to those whose needs and concerns it has been accused of ignoring? We can draw some conclusions by reviewing how Democrat officials behaved when faced with an urgent economic demand from an aggrieved group of working-class people in the last days of the Obama administration.
In 2014 I co-founded the Debt Collective, a group organizing to demand debt relief from creditors. Such organizing complements the work of the labor movement and is aimed at building class power in the age of finance. For our inaugural project, we collaborated with a group of people who had attended Corinthian Colleges, a for-profit chain with more than one hundred campuses around the country. At a cost of two to three times higher than public schools, for-profit colleges emerged from the liberal commitment to give everyone the opportunity to earn a degree. For-profit education grew to a multi-billion dollar industry within a neoliberal framework that treats college as an investment that individuals make to improve their market position relative to others against whom they must compete for access to scarce resources.
Corinthian sold the dream of a better life to working-class people who enrolled to earn precious credentials for higher paying careers. Once the largest for-profit college chain in the nation, the company took in more than one billion dollars per year in federal funding, only a fraction of which was spent on instruction. Profits rolled in to the well connected, including Senator Diane Feinstein’s husband and former Corinthian investor, Richard Blum, and President Clinton’s former chief of staff, Leon Panetta, who served on the board of Corinthian. Students who attended the colleges that proved so profitable to elites ended up with little more than a worthless piece of paper and lifetime of debt.
With assistance from the Debt Collective in the form of resources, legal advice and media training, fifteen former Corinthian students launched a debt strike in 2015. They refused to repay their loans and demanded full debt cancellation from the federal government, which had issued and guaranteed the loans. Relying on an obscure law called “Defense to Repayment,” which says student debts can be canceled in cases of fraud, hundreds more former for-profit students submitted debt discharge applications. Strikers also asserted that everyone should have the right to access free public higher education.
The strike won widespread support from a host of Progressives and liberal-leaning publications. The New York Times op-ed page argued that Corinthian debt should be canceled. Eleven states Attorneys General, thirteen Senators, and members of the Congressional Progressive Caucus made statements in support of the strikers’ demands. Even candidate Hillary Clinton tweeted her approval: “No one should be in debt to a college that defrauded them – forgiving students is the right decision.” Clinton knew that the Department of Education did not need to seek Congressional approval to cancel debts; they could simply erase them automatically. How did the Department respond to this public outcry considering it had the legal and moral authority to act, as well as considerable political cover from Democratic party leaders? Over the next two years the agency took a series of steps that illustrate a gulf between words and deeds. The Department’s response also suggests a deeper problem: liberalism is too compromised by its commitment to individual competition and to the ideology of meritocracy to deliver on its own ostensible values.
Step 1: Sympathizing
The Department of Education’s first response to the strike shows how liberalism substitutes condolences for action. This had become evident during the financial crisis. In 2009 Obama announced to great fanfare the Home Affordable Modification Program (HAMP), an initiative that was supposed to assist 3-4 million homeowners to avoid foreclosure. Yet when the program came to an end seven years later, only a little over one million people had received help. Despite the fact that there was widespread public support for the program and no acts of Congressional obstructionism, Democratic elected officials and party bureaucrats did not make good on their promises.
The Department of Education responded to the Corinthian crisis in much the same way. The strikers were invited to Washington D.C. where they met with officials from the Department, including Undersecretary Ted Mitchell. At the meeting, fourteen former students described in painful detail how Corinthian employees had lied to them and coerced them into signing loan documents. Striker, Ann Bowers, revealed the structural similarities between the struggles of underwater homeowners and her own. “What am I supposed to do if I can’t pay this debt?” she asked Mitchell. “Should I take my dog and go live in a box on the street?” When people have to go into debt for basic needs, including housing and education, they put their lives at risk.
Officials listened to the stories that were, in effect, all the same story and said they were sorry that students were suffering. In an “I feel your pain” moment, Mitchell said he was personally committed to doing all he could to meet strikers’ demands with action. After the meeting, Secretary of Education Arne Duncan (who had not been present) discussed the Corinthian case in an interview. “You have to be made of stone not to feel for these students,” he said.
Like Obama, who in speech after speech framed home ownership as a path to the middle class, Duncan’s comment revealed the neoliberal rationality of individual competition lurking under the surface. “Students everywhere,” he continued, “deserve and need the opportunity to make their lives better through education – to climb the economic ladder.” As soft padding around policies that valorize individual effort and competition in a world of scarcity, liberal sympathizing eased the way for the Department to extend the pain.
Step 2: Waiting
Liberalism looks and feels like a waiting period that may never end. A primary purpose of this tactic is to allow policymakers and elites to announce their intention to do something about a problem while hoping the problem goes away on its own as public attention dies down or as they move on with their careers.
The Department’s first official response to the Debt Collective’s growing campaign – by this time 200 borrowers were on strike and thousands had disputed their loans – came three months later in the form of a memo. Continuing to foreground his agency’s sympathy with borrowers, Secretary Duncan said he was disappointed that some “bad actor” colleges had “preyed on some of our nation’s most vulnerable students.” He announced that he had appointed a “Borrower Defense Special Master” to review individual student’s claims of fraud. (It is unclear whether Duncan or other federal officials had considered how the acronym, BDSM, might be read by those suffering under the burden of debt.)
Prognostications of future pain did not end there, as the similarities between the administration’s handling of the foreclosure crisis and its treatment of Corinthian borrowers became downright uncanny. Duncan announced that the Special Master would be former securities lawyer, Joseph A. Smith, the man who had been nominated to monitor the National Mortgage Settlement in 2012. The National Mortgage Settlement was a federal program that was supposed to punish banks and help underwater homeowners. In the end, like HAMP, the program provided far less relief than promised. By hiring Smith to oversee former Corinthian students’ claims, the Department embarked on a similar trajectory: it would do all it could to avoid relieving debts while claiming to be deeply engaged in the process of relieving debts.
As the months wore on, thousands of former students from other for-profit colleges came forward with similar complaints. The media began to publish stories about the abusive behaviors of scam colleges, including what recruiters at Corinthian had called the “pain funnel” which entailed preying on people’s emotions about their economic problems. Under pressure to show it was making progress, the Department doubled down on making people wait: two months after the Special Master was appointed, the agency announced that it would set up a “negotiated rulemaking” process to determine how to respond to claims from students who had attended other for-profit schools, including ITT Tech and the Art Institute. These two maneuvers set up ostensibly to facilitate debt relief (the process for Corinthian borrowers headed by the Special Master and a separate process for everyone else) were an attempt to signal to the public that the Department was taking action on an important issue, but in reality the wheels of bureaucracy were spinning in place.
Meanwhile, debtors were suffering. Debt collectors working on behalf of the federal government have extraordinary powers. They can garnish wages, offset borrowers’ tax returns, and ruin credit scores. Collectors can seize a portion of a debtor’s disability or Social Security benefits to pay defaulted debts. Since for-profit colleges enroll disproportionate numbers of low-income and first-generation collegians, those debtors were harmed the most by collection efforts.
Debt Collective members were not the only ones sounding the alarm. In September 2016, Senator Elizabeth Warren released findings from an investigation that found that as many as 80,000 Corinthian borrowers were still being collected on. In the year and a half since former students had declared a debt strike and made an in-person appeal to the Department of Education, federal officials had promised to help before shifting the responsibility away from schools and government regulators and onto the borrowers themselves. In a telling exchange in a Senate committee hearing that might as well have been a scene from a Beckett play, Acting Education Secretary John King told Warren that his Department was reaching out to borrowers one by one to let them know they might be eligible for relief. Notified borrowers then had to apply and the applications had to be individually reviewed and approved. This lengthy process was taking place even though the Department already knew which borrowers had attended which schools and who was eligible. Godot will surely come tomorrow.
Step 3: Individualizing
Liberalism looks and feels like being required to prove that one is worthy of basic rights. The primary purpose of this tactic is to assure that individuals get bogged down in the details of their specific case so they are unable to see themselves as members of a class, a collective systematically wronged and robbed.
In April 2015 Corinthian students were shocked to find out their campuses had closed. The remaining schools had collapsed for good in the wake of the growing debt strike movement and increased public scrutiny. Approximately 16,000 people were still attending at the time. Rather than simply cancel their loans automatically, an action allowed under the law, the Department of Education set up another protocol whereby individual students had to fill out a form attesting that they had been attending the school when it closed. In other words, students were required to send data to a federal agency that already had the information it was asking for because it had issued the loans. The Department’s tactic for limiting debt relief worked. Of those left in limbo by Corinthian’s closure, less than half had had their debts canceled six months later.
A second form of individualizing was imposed on those students who had left the schools prior to the closure. Those borrowers were required to provide the Department with paperwork, including citations of the specific laws that the claimant believed the school had violated, a bizarre request to make of non-lawyers from a federal agency that employed dozens of them. In a Kafkian twist, former students were responsible for figuring out if they were eligible for relief. For example, the Department had determined that Corinthian had lied to students enrolled in an Associate’s program in Criminal Justice housed at a campus in West Los Angeles. But only students enrolled in the program from July 2013 to September 2014 were deemed eligible for relief. Someone taking classes in the same program at the same school before or after those dates was stuck with their debt. A student enrolled in the Medical Assistant program in Southfield, Michigan between 2010 and 2014 was eligible for debt cancellation. But a student enrolled in a Massage Therapy program at the same campus could only receive relief if she was enrolled after July 2013. The Department’s individualized process was not a program for granting relief; it was a program for denying it.
Individualizing basic rights means relying on data to determine what is true. The Department of Education decided which Corinthian campuses were defrauding students by relying on numbers provided by the schools themselves. The data the Department considered truly meaningful is apparent in a letter sent in 2015 to the CEO of Heald College, a branch of Corinthian, by Robin Minor, the Department of Education’s Acting Director of Administrative Actions (a Kafkian title if there ever was one). The letter starkly reveals the logic of individualizing at work: an attention to numerical detail bordering on the absurd. “Heald Stockton’s backup data reflected only 209 placements rather than 281,” Minor wrote.
In addition, of those 209 placements, (1) Heald Stockton reported as placed at least 23 students who had in fact completed Heald Stockton’s diploma program in Medical Assisting, which is not accredited by MAERB [Medical Assisting Education Review Board], rather than the 98 credit-hour associates in Applied Science (AAS) program; (2) Heald Stockton counted 13 students twice, and counted one student three times. . . . The Department’s recalculation revealed that the correct number of placements was only 109 rather than 281.
The letter demonstrated that regulating U.S. higher education in the neoliberal era is a job for forensic accountants who pore over spreadsheets to find mathematical errors. Did school officials take advantage of prospective students? Did enrollees receive a quality education overall? Are for-profit colleges a good use for federal money in general? Equations do not ask and cannot answer such questions.
Individualizing debt relief based on schools’ job placement statistics was an attempt to make an arbitrary policy appear like the result of objective analysis. In her book about for-profit education, Tressie McMillan Cottom explained that regulators’ emphasis on job placement statistics is “mostly a distraction” from the real issues, including a lack of good jobs, racism, and gender discrimination. The Heald College enforcement letter illustrates how Obama’s Department of Education conducted a rarified regulatory process divorced from the needs and concerns of ordinary people.
Step 4: Paper Pushing
Liberalism looks and feels like being buried in bureaucratic documents written in an esoteric language. In Chain of Title, David Dayen described how banks illegally foreclosed on millions of people using fake documents. Only the most dedicated homeowners who spent years studying the industry were able to spot the fraud. A primary purpose of the paper pushing strategy is to bury non-professionals in documents that they feel unqualified to engage.
During the Debt Collective’s campaign, the Department of Education issued a regular stream of memos, press releases, reports, spreadsheets, and forms usually rendered in an elite idiom that obscured the line between action and inaction. Reports written by Smith, the Special Master, are an example of the kind of paperwork dump to which former for-profit students became accustomed.
The first report was released in September 2015. In it, the Special Master wrote that the Department had received 4,140 debt disputes from Corinthian College debtors. Smith explained why none of the disputes had yet been approved. “The [Borrower Defense] regulation,” he wrote,
indicates that a borrower’s defense is based on acts or omissions by the school. Thus, for the defense to be successful, the evidence must support the claim that those acts or omissions occurred. Furthermore, the terms of the regulation also indicate that, from a legal point of view, those acts or omissions must be such that they would give the borrower a cause of action against the school.
The tactics used to lure in students, including promising them new jobs, higher salaries, and better lives, were now being referred to as “acts, omissions, and causes of actions.” The implication was clear: only trained professionals could establish that those things, whatever they might be, had actually occurred. This was a convenient reversal of the position the Department held when it required individual borrowers to affirmatively state that they had been defrauded. Smith functionally moved debtors’ urgent needs into a realm of in/action where erudite professionals studied, ruminated, and, most of all, took their time.
In the Special Master’s third report, issued 6 months later, Smith recommended discharges for 736 Corinthian borrowers while 8,952 claims had yet to be approved. The fourth and final report was released almost a year and a half after Corinthian students declared a debt strike and more than a year after Corinthian had declared bankruptcy. The Special Master wrote that the Department had so far received a total of 26,603 applications, which he acknowledged represented a “sharp increase.” The Department had approved only 3,787 claims and the rest were still under review.
Exquisite in their soul-crushing banality, the BDSM memos are an example of paper-punishing bureaucracy at work. In his final report, the Special Master suggested that what had turned out to be a process of limiting debt relief was a sign of liberal sympathy. “Although the college investment still pays off for most students who graduate,” he wrote, “any students that enroll in colleges that engage in the deceptive, fraudulent practices evidenced at [Corinthian] risk having their investment do more harm than good.”
As if channeling his experience denying loan modifications to defrauded homeowners, Smith defended the value of college as an investment and suggested that students were partly to blame for enrolling in deceptive colleges. This expression of faith that our economic system can work for responsible individuals is reminiscent of “America is Already Great,” the slogan some Democrats used in response to Donald Trump’s campaign promise to “Make America Great Again.” Debtors were not surprised that the Special Master hadn’t recommended automatic, group-wide debt relief for Corinthian borrowers. Nor were they cheered by the closing lines of his final memo: “the leadership of the [Department of Education] has informed me that it will continue to issue periodic reports.”
Step 5: Arrogance
Liberalism looks and feels like being patronized by an elite class of professionals who are disengaged from the concerns of regular people.
In late October 2016, the Department of Education published the new regulation – more than a year in the making – describing how it would apply the Defense to Repayment law. The 927-page document had been drafted, officials wrote, to “give students access to consistent, clear, fair, and transparent processes to seek debt relief.” Critical observers noted that the Department had made itself the arbiter of group-wide claims. Only the Secretary of Education in his or her infinite wisdom could decide that a group of student debtors should have their loans cancelled.
Yet, even the most cynical observers could allow themselves to hope that some, maybe even most, of the tens of thousands of former for-profit college students who had applied for relief might soon receive it. Liberalism makes people wait, requires that they prove themselves worthy, and buries them in paperwork. But a liberal universe is also supposed to mean that those who doggedly pursue justice will eventually get it.
The Presidential election revealed that universe as an abyss. Days before the vote, the Department of Education released the regulation with an effective date of July 2017. That meant the administration that had written the rules would leave the actual canceling of debts up to the next one, which they likely presumed would be headed by Hillary Clinton. Instead, it will be up to Donald Trump, and a Department possibly headed by Betsy DeVos, to follow through on the Obama administration’s commitment to provide “every penny” of relief to defrauded student debtors.
The fight will continue because we know that debtor organizing works. A multi-racial group of people from different regions of the country had banded together against their common creditor, the U.S. Department of Education. By the end of 2016, thousands of people carrying for-profit college debt had their loans cancelled, a small but important victory. Hundreds of thousands more are entitled to relief, and some of them have been politicized by the process of fighting for it.
The narrow scope of the victory was foretold by the foreclosure crisis that preceded it. Both HAMP and the National Mortgage Settlement failed to deliver to underwater homeowners. Dayen described the political context of this bewildering outcome as “a passion in the [Obama] White House to protect bank balance sheets.” As a new year dawned, for-profit college debtors wondered about their own fate. Everyone knew the window to meet the strikers’ nearly two-year old demands likely closed for good on 20 January.
The story of battles between debtors and the Obama administration fills a gap in an often highly theoretical literature on liberal pathologies. If the previous pages seem too weighted with procedural detail, too infuriatingly “in the weeds,” it is because bureaucracy wielded like a cudgel feels like that. But the view from the murky depths also illuminates. While there are surely many reasons why someone might subscribe to a politics rooted in a desire for small government or vote for the candidate who promises to “drain the swamp,” it’s not hard to see that life in the weeds might be one of them. The “enlightened professionals” (to use Thomas Frank’s term) in the Department of Education had the moral and legal authority to relieve debtors’ suffering. Instead, under the banner of liberal sympathy and reform, they delivered a group of aggrieved working-class people into a maze of delay and obfuscation where they were patronized by pretentious professionals and then delivered into the hands of President Trump. There is no better illustration of the function of liberalism at the present time.