Three moves equal one fire: In these troubled times, shelter should be the first priority.

In the early 20th century, a lot of Americans in the rural South were tenant farmers; and they often moved from farm to farm to remain employed. "Three moves are as bad as a fire," was a common observation because the disruption, property loss, and cost of moving could be devastating. Three such moves caused as much damage as one fire.

According to the Aspen Institute, as reported by Steve Rhode, "One in five of the 110 million Americans who live in renter households are at risk of eviction by September." Most of these people live in urban areas, but the trauma and loss caused by eviction are just as devastating for them as for the Southern tenant farmers who lost their homes a hundred years ago.

Being evicted often means that parents have to pull their children out of school in midyear, which disrupts their kids' education. Renting another apartment usually requires the new tenant to come up with a security deposit, which may be impossible for people who have no savings and no credit cards. Moving to a new apartment also means having to open a new account for electricity and water, and often the utility companies require a deposit.

Three moves equal one fire in modern America. And people who can't scramble successfully from one rented apartment to another become homeless.

Our federal government has distributed massive infusions of cash into the American economy to offset the economic calamity caused by COVID-19. Still, a lot of that money went to people who don't need it. More than 600,000 businesses benefited from the Payroll Protection Program, including 1,400 investment advisors.

Poor people, on the other hand, have received scant relief.  The government mailed out  $1,200 one-time checks a few months ago, but that amount may not cover a month's rent.  Congress fattened people's unemployment checks by $600 a month--a significant benefit, to be sure, but this aid is temporary.

We already see the disruption in housing caused by the coronavirus. The number of adults living with their parents has spiked upward to 24.8 million, with the most significant increases among people in their early twenties.  Sixty percent of young Black men are living with their parents or grandparents.

Matthew Desmond called for radical changes in housing policy in his 2016 book titled Evicted: Poverty and Profit in the American City. He argues for universal housing vouchers to guarantee that every American would live in a home that is "decent, modest, and fairly priced."

In the short term, I don't see significant changes in national housing policy.  But this much seems clear. The federal government needs to devote a substantial amount of its coronavirus-relief money to making sure unemployed, and low-income Americans can stay in their rented homes.

Shanty housing during the Great Depression

America's harsh treatment of student-loan debtors: Greed, corruption and heartlessness reach Dickensian proportions

That old wheel is gonna roll around once more

When it does it will even up the score

Don't be weak, as they sew, they will reap

Turn the other cheek and don't give in

That old wheel will roll around again

This Old Wheel

Jennifer Ember Pierce, songwriter

Sung best by Johnny Cash

If you haven't read Charles Dickens by now, just skip it. 

Dickens is well worth reading for his descriptions of injustice in Victorian England: the workhouses, the brutal schools, debtors prisons, and the mercilessness of English law. But  contemporary America is descending to the depths of social injustice every bit as sordid as conditions in Dickens' England. If you don't believe me, read Matthew Desmond's Evicted, published less than two years ago.  

In particular, millions of student-loan debtors are suffering just as much as the characters in Oliver Twist, David Copperfield or Pickwick Papers.  College debtors are defaulting at the rate of 3,000 a day. The U.S. Department reports a three-year default rate of 11 percent, but that figure is meaningless. The five-year default rate for a recent cohort of student debtors is 28 percent, for students attending for-profit schools it's 47 percent.

And the default rate only tells part of the story. Millions of people are in the economic-hardship deferment program--excused from making monthly loan payments while interest piles up. Now we see people stumble into the bankruptcy courts owing three and even four times what they borrowed.

Our government treats all student-loan defaulters like criminals. We aren't hanging and deporting debtors like the English did back in the nineteenth century, but they are treated pretty rough.

For starters, there is no statute of limitations on an unpaid federal student loan. Even if you borrowed the money so long ago you can't remember the school you attended, the government's debt collectors can come after you. 

In Lockhart v. United States, our lovely Supreme Court upheld the law permitting the government to garnish the social checks of elderly student-loan defaulters. The vote was  9 to 0. There were no liberals on the Court the day the Lockhart decision came down. 

And Congress and the courts have conspired to deprive distressed student-loan debtors access to the bankruptcy courts. Under the "undue hardship" standard nestled in 11 U.S.C. sec. 523(a)(8),  debtors cannot discharge their student loans unless they can show undue hardship, which the courts have interpreted harshly.

In recent years, there have been some compassionate and sensible decisions by the bankruptcy courts: the Abney case, the Lamento decision, and the Acosta-Conniff decision out of Alabama (which was reversed on appeal).

But the Department of Education, Educational Credit Management Corporation, and other debt collection agencies have appealed many of these decisions; and few student debtors have the financial or emotional resources for court fights that stretch on for years.  In the Hedlund case, for example, a graduate of Whittier Law School fought in the federal courts for ten years before he finally won a partial bankruptcy relief from his student loans.

Several federal appellate courts have softened the "undue hardship" standard somewhat: the Roth decision by the Ninth Circuit Bankruptcy Appellate Panel, the Seventh Circuit's Krieger decision, and the Eighth Circuit BAP Court's Fern opinion.

By and large, however, the bankruptcy courts have abdicated their role of providing honest but unfortunate debtors a fresh start. No wonder the myth prevails that it is impossible to discharge student loans in bankruptcy. And the Department of Education perpetuates this myth by opposing bankruptcy for people who are in severe distress, like the quadriplegic in the Myhre case.

Now we are enduring the Trump presidency. Betsy DeVos, Trump's Secretary of Education, has a nasty disposition toward student-loan debtors. She is busily dismantling the Obama administration's modest initiatives to rein in the corrupt for-profit college industry. The Republican dominated House Education Committee recently released a bill that would do away with all student--loan forgiveness programs. And a bill has just been introduced to protect attorneys from being sued for engaging in unfair debt collection.

America's financial industry, cheered on by the business news channels, chirp the Panglossian notion that Americans are living in the best of all possible worlds. The stock market soars ever skyward, and the economist says we have virtually reached full employment. The economy is growing at a healthy rate, and everyone is becoming wealthier.

But that's bullshit. The reality is this: millions of Americans are living day to day, burdened by consumer debt they can't repay. Student-loan indebtedness now exceeds accumulated credit card debt and car loans. Our Congress, our President, our Secretary of Education, and our courts are indifferent to the stark reality that we are constructing a society very much like Dickensian England.

Justice, Johnny Cash assures us, will eventually be restored. "That old wheel is gonna roll around once more. When it does it will even up the score." I hope Johnny is right. It will be a good sign if DeVos is forced from the Education Secretary's job and publicly disgraced. 

Don't give in; that old wheel is gonna roll around again.

References

Abney v. U.S. Department of Education, 540 B.R. 681 (Bankr. W.D. Mo. 2015).

Matthew Desmond. Evicted: Poverty and Profit in the American City. New York: Broadway Books, 2016.

Fern v. Fedloan Servicing, 563 B.R. 1 (8th Cir. BAP 2017).

Lamento v. U.S. Department of Education, 520 B.R. 667 (N.D. Ohio 2014).

Lockhart v. United States, 546 U.S. 142 (2005). 

Krieger v. Educational Credit Management Corporation, 713 F.3d 882 (9th Cir. B.A.P 2013).

Myhre v. U.S. Department of Education, 503 B.R. 698 (W.D. Wis. 2013).

Steve Rhode. Proposed Law Will Make it More Likely Debtors Will be Sued Faster if in n Collections. Get Out of Debt Guy (blog), January 18, 2018.

Roth v. Educational Credit Management Corporation, 490 B.R. 908 (B.A.P. 9th Cir. 2013).

The Wrong Move on Student Loans. New York Times, April 6, 2017.

Attention, Student-Loan Debtors: You Are Being Evicted from the Middle Class

Evicted: Poverty and Profit in the American City tells the story of how greed and the nation's legal system have driven poor Americans to the brink of homelessness.  Author Matthew Desmond follows the lives of eight Milwaukee residents who scramble from day to day to avoid being evicted from their homes and thrown into the street. It is a good read, and I highly recommend it.

As I read Desmond's book, I was struck by the similarity between the low-income housing crisis and the student-loan crisis.  As Martin Luther King observed, "Every condition exists simply because someone profits by its existence." Slumlords profit from renting substandard housing to the poor; stockholders and hedge fund owners profit from for-profit colleges.

And slumlords and for-profit colleges both rely on the government to help them exploit the poor. Slumlords can call on the local sheriff to evict tenants for nonpayment; and for-profit colleges rely on Betsy DeVos's Department of Education to protect their venal interests. Landlord-tenant laws favor the landlords, and the Bankruptcy Code protects the banks, which loan money to students at exorbitant interest rates, knowing that student debtors will find it almost impossible to discharge their onerous debts in the bankruptcy courts.

As Desmond wrote in Evicted, "The United States was founded on the noble idea that people have 'certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."  Indeed, the nation's founders considered these rights to be God-given and "essential to the American character."

Desmond argues that "the ideal of liberty has always incorporated not only religious and civil freedoms but also the right to flourish." In twenty-first century America, people need decent housing to flourish and they also need freely accessible education.

But our federal student-loan program is designed to extinguish the American right to pursue happiness and to flourish. The federal government allows corrupt for-profit colleges to lure vulnerable people into enrolling in education programs that are far too expensive and often worthless. The victims are forced to take out student loans. And the federal government stands by to be every student's sugar daddy--distributing about $150 billion a year in various forms of student aid.

The for-profit colleges get more than their fair share of federal money. In fact, many of them receive from 80 to 90 percent of their entire operating budgets from federal student loans and federal Pell grants.

Then when student-loan victims are unable to find well-paying jobs to service their debt, our once generous government becomes a tyrant. The Department of Education opposes bankruptcy relief for nearly everyone--even a quadriplegic (Myhre v. U.S. Department of Education, 2013) and people on the edge of homelessness (Abney v. U.S. Department of Education, 2015).

America will not begin solving the student-loan crisis until our nation's leaders acknowledge that the federal student-loan program is a massive human rights violation that is evicting millions of people from the middle class. Students who took out loans to attend for-profit colleges have been especially hard hit; almost half the students who took out loans to attend a for-profit college default on their loans within five years.

Student debtors are defaulting at the rate of 3,000 people a day, which ruins their credit and leaves them vulnerable to having their wages garnished. The government can even seize part of an elderly defaulter's Social Security check.

How can higher education return to decency and sanity? First, we must remove Betsy DeVos from her post as Secretary of Education. DeVos is about as qualified to run the Department of Education as the late Charlie Manson. And then we must revise the Bankruptcy Code to allow honest but unfortunate student debtors to discharge their loans in bankruptcy court. And finally, we must shut down the for-profit college industry, which DeVos so assiduously protects.

Student-loan debtors: Evicted from the middle class

References

Abney v. U.S. Department of Education, 540 B.R. 681 (Bankr. W.D. Mo. 2015).

Matthew Desmond. Evicted: Poverty and Profit in the American City. New York: Broadway Books, 2016.

Myhre v. U.S. Department of Education, 503 B.R. 698 (W.D. Wis. 2013).

The Wrong Move on Student Loans. New York Times, April 6, 2017.