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Review of DEFAULT: The Student Loan Documentary

I left higher ed with roughly $50,000 in student loans. That debt, by way of the sometimes staggering monthly payments, has restricted where I can live, what I can do as a career (and specifically what kind of jobs I can afford to take), and what I can do with my free time.

That particular $50k was thanks to one single year of law school. One.

I was one of the lucky few as I left college -- I had zero student loan debt, a combination of commuting from home and tuition remission thanks to my father's faculty position. I had grand visions of walking in the footsteps of other radical lawyers, who eschewed the limousines and corner offices (and 100-hour work weeks) and instead used the law to at best help (at worst, mitigate the harm to) those most beaten down by the powers-that-be.

Of course law school itself, along with Catholic University's public interest loan repayment program, fell far short of the glowing portrayals shown in their admissions materials and campus visits (the sheer magnitude of the sham I'll save for its own blog post).

Law schools generally don't allow students to have a job their first year (1L) -- I can understand why, since the coursework is brutal. But that also means you're living entirely off your loans.

More than a few of my 1L classmates have told me that they wish they had left when I did. Most of their loans ranged from $100k to almost $200k. The running joke was each of us had "a mortgage without the house".

So I was particularly pleased when I had the chance to see a preview of DEFAULT: The Student Loan Documentary.

DEFAULT, over the course of its half-hour running time, charts the the broken careers, relationships, and lives that crippling student loan debt leaves in its wake. As the film makes repeatedly clear, right now there's simply no way out of student loan debt. When I think back to signing my first promissory note, I think of the scene from that obscure Steven Spielberg cartoon, "We're Back: A Dinosaur's Story", when the kids sign a contract in blood, the terms of which only appear after signing it.

Everything is stacked against you as a borrower: the contract itself, the institutional policies of the lending companies, and the Federal regulations that govern the loans. Student loans are unique creatures in the eyes of the law -- as Robert Applebaum, one of the borrowers interviewed, put it: "you can discharge gambling debt in bankruptcy, but not student loan debt."

For those unfamiliar with the true scope of this crisis, DEFAULT is a great introduction that interweaves facts and statistics with the very human costs involved, told through at times gut-wrenching personal stories. Two former USSA presidents, Carmen Berkeley and Greg Cendana, were particularly effective in telling their stories, and hinted at the kind of activism and organizing they do around this issue.


However, this film stumbles a bit in terms of its analysis — and downright falls over in terms of its call to action.

For example, a key question overlooked (and one that might have pointed to more interesting action possibilities) is "why is tuition rising so fast?" Tuition hikes have outpaced inflation for decades now. I would've appreciated even a cursory look at that issue: the changing nature of university administrations' size and composition, changing institutional priorities (showy new buildings, monuments, stadiums, etc.), and for public schools, their blatant and callous abandonment by state legislatures. For state university systems like Wisconsin and California, top administrators there have openly clamored for privatization.

In the film, Student Loan Justice founder Alan Collinge described the source of the student debt crisis as "a three-headed beast, comprising the lenders, Congress and the universities." It would have been good to have explored that last head -- and the filmmakers certainly had running time to spare.

And while I understand that it may not have been included in the film simply because the filmmakers might not be at such a point ideologically, I would've enjoyed a bigger picture analysis, politically and economically, beyond just the three-headed beast. Debt has long been understood as a mechanism of control to wield against the poor and working class, and speculation bubbles are an inevitable expression of finance capitalism's drive for capital accumulation and balance sheet growth.

But if there's one thing I really can't stand, it's flimsy, milquetoast calls to action tacked to the end of a long, depressing accounting of all that's wrong. And that's what it feels like in DEFAULT: tacked on. I don't want to be too hard on the filmmakers, because it's a common thing to do, but I'd much rather see a documentary that spent all its time offering a detailed analysis covering all bases without attempting to offer a feel-good way out at the end.

The action points suggested are very rudimentary, and not seriously considered or studied. The only actions suggested are variations on "lobby your elected officials" and "raise awareness." (The one promising suggestion was by Carmen Berkeley, who argued that we have to get past our social taboo of talking about personal finance in order for everyone to begin to come to grips that this debt is a systemic, not a personal problem.)

And then President Obama is shown at the very end, speaking at a State of the Union address about affordable college and the most incremental of student loan reforms. That snippet is an all too-fitting symbol of the disastrous results of relying on the standard liberal model of social change.

Look at the housing crisis, which was several orders of magnitude larger and better covered in the media than the student loan crisis. There was a ton of awareness -- and an unprecedented level and number of voices raised to their elected officials to 1) provide relief to those hurting now, and 2) prevent this from happening again. Millions of homes are still being foreclosed, banks are back to making record profits, and any teeth in Wall Street regulations were dutifully excised by armies of lobbyists before passage. 

I think part of the problem with the take action segment is due to the lack of that bigger picture analysis. If the framing of the problem is that the laws on the books are simply incorrect, by either mistake or ill intent, and that the solution is simply to correct the laws, then your paths of activism are indeed rather limited.

But when electoral democracy is this broken, it's never that straightforward, and we are demobilized by thinking it is. We need to throw out the old playbook and pick up a new one (or two). DEFAULT's clear definitions of key institutions and compelling human stories provide a crucial piece of the puzzle, and I think the directors and I would agree that it's just one part a very long road ahead on the way to an economically sane system of higher education.


Banks, Government, and Universities are to blame

Solid review. The film's conception and politics are pre-Occupy and don't appreciate the power of direct action and civil disobedience. It's an important contribution but no longer the cutting edge.

A predatory relationship between the banks, universities, and government keeps the student debt system in place and drives up the costs. Disinvestment in public education is certainly important but private banks make money from privatized universities. It's the same situation in housing, medicine, and transportation.

Banks issue government-­guaranteed loans through the vehicle of a student at the magnification of sums possible with fractional reserve banking and wildly unregulated financial markets. The profits are upfront before a single cent is paid on the underlying debt. This funds construction, corporate projects, and other financial instruments, but it does not mostly go toward teachers, most of whom have less job security and almost half the wages of campus police.

The loans also subsidize "legacy" admissions at private schools, which get low tax "non-profit" status along with access to public grants through government contracts. Whether an individual school charges high tuition or not, they benefit when they invest their profits in these bonds. Ability to pay is irrelevant to the upward spiral of paper profits. Banks' paper profits are a main driver of high tuition costs.

Moreover, the government figures of ~8% default rate are statistical lies. The Wall Street Journal reports that financial speculators trade bonds based on these loans with the knowledge that they will default at more than 30% !


With only 40% of the total debt stock in active repayment, the entire system is clearly a way for the government to subsidize private banks and private universities. No wonder, since at least $16 trillion in secret loans have been given to the zombie financial sector since 2008, according to the Government Accountability Office.


Public money continues to build private fortunes. These odious debts must be canceled immediately. I am not an organizer of this campaign but I recommend considering the principles of the Occupy Student Debt pledge: