Why We Need Debtors’ Unions
Even if they don’t bring on a recession, the Federal Reserve’s recent series of interest rate hikes have already dampened wage growth. Some commentators will conclude that this was the real intent, and that taming inflation (largely due to the external factors of supply shock and the Ukraine war) was a convenient excuse to discipline working- class aspirations. After all, the Fight for $15, the Great Resignation, and the wave of organizing that began in 2021 delivered gains that alarmed business owners. A dose of strong fiscal medicine was needed to put out this fire, just as in the 1970s when the last inflation crisis (again externally-imposed by the OPEC oil embargo) was seized upon as an expedient method for transforming employment from a seller’s to a buyer’s market that weakened labor’s bargaining power.
We can ruminate about whether the rate hikes will continue to suppress wages, but there’s no doubt that they will accelerate debt growth. Household debt in the U.S. recently surpassed $16 trillion and all of the numbers for major debt classes—mortgages, student debt, credit cards, and auto loans—have been on a steady upward curve since banks started lending freely again in 2016. Higher interest rates will only intensify that burden, for which there is no foreseeable relief beyond the Biden administration’s miserly offer to cancel $10,000 of means-tested student debt (and up to $20,000 for Pell grant recipients). Even before the inflation spike, the impressive wage gains (an estimated 4.4 percent annually) of the last few years were being eaten up by the rising cost of household debt service. The resurgence of labor helped to deliver these gains, but they are simply not enough to keep people afloat in an economy where they are forced to debt-finance basic social goods like housing, education, health care, and transportation. Indeed, under these circumstances, increased wages might simply translate into more efficient repayment to the creditor class. In response to the financialization of our daily needs, borrowers need a new kind of bargaining power, rooted in collective organization and action. The time is ripe for debtors’ unions to step into this gap that the labor movement (even the most innovative alt-labor initiatives) cannot fill on its own.
Household debt in the U.S. recently surpassed $16 trillion…. mortgages, student debt, credit cards, and auto loans… have been on a steady upward curve ….
Wages of the Future
Debts are inseparable from labor because they are the wages of the future. When we sign a loan we are committing the fruits of our labor to be performed years hence. And debt has always been used to deepen labor exploitation: from the debt slavery of antiquity and early modernity, down through centuries of peonage involving indenture, sharecropping and bonded migrant labor to today’s payday loan-sharking and wage garnishments for unpaid loans. The imposition of debt is an all-weather tool for controlling our mobility as well as our labor. But it is also a highly efficient way of redistributing wealth upwards, given the steady profits to be extracted through excessive interest rates or the sorcery of compound interest. As Karl Marx put it in Capital (Volume III), “Usury lives in the pores of production…just as the gods of Epicurus lived in the space between the worlds.”
In our highly financialized economy, or creditocracy, where most households are drowning in debt that can never be repaid, it is more profitable to lend money at interest than to distribute it in the form of wages for production. In this regard, the gods of usury intervene more in human affairs than Marx or Epicurus gave them credit for. By now, it is widely understood that the decline of public funding combined with the stagnancy of working wages triggered the rise of user-financing for social goods (education, health care, transportation). This development has been a bonanza for creditors looking to extract rents, fees, and tolls from each of our efforts to maintain a modest standard of living. The outcome has been particularly disastrous for racialized populations targeted by predatory subprime lenders, especially in the housing market. Historically, the experience of taking on new loans to service old ones has always been a scourge for low-income households, but in recent decades, this predicament has marched into lives of the middle class. Borrowing through a reverse mortgage, for example, has been an increasingly common way to pay off other debts. Nor are there many local governments, or sovereign nations for that matter, in a position to stave off that same dilemma of juggling debts to balance the books. The world is full of effectively failed states that are obliged to seek out loans from multilateral agencies like the International Monetary Fund in order to make their foreign creditors whole while being forced to neglect the social needs of their citizenry. After the financial crisis of 2008, this predicament migrated from the Global South to Northern countries like Greece, Italy, and Spain. In the intervening years, the ratio of external debt to gross domestic product (GDP) has only increased in all but a few countries.
In response to the financialization of our daily needs, borrowers need a new kind of bargaining power, rooted in collective organization and action.
Under pressure to meet those obligations, elected officials, whether at the state, municipal, or county level, have shown they are not able to protect their constituents from the economic harms imposed by finance capitalism. Effective resistance to this tollbooth economy—where every point of social access is turned into a source of revenue for the creditor class—requires new forms of collective organizing. Trade unions arose in response to the conditions of the industrial factory, where the struggle over wages was the frontline conflict between capital and labor. Today, we are living in a social factory, where the extraction of wealth can occur far beyond the workplace walls and through an ever-expanding web of financing opportunities. Exploitation of wage labor has hardly diminished, but it has been supplemented, and in some respects surpassed, in sheer profit, by the capacity to take advantage of our numerous borrowing needs. A new kind of union—a debtor’s union—is needed to leverage the collective power of our debts in order to stop the lords of finance from siphoning off our earnings.
The first organization of this kind already exists. The Debt Collective, of which I was a cofounder, was launched in 2014 with the goal of becoming a debtors’ union. With no precedents to speak of, the fledgling union was not guided by a preexisting template. It has had to “make the road by walking,” improvising tactics and strategies along the way, and is still in a formative state, operating on a shoestring budget with a modest payroll. Nonetheless, it has established itself as a national force that can deliver results and project its influence onto mainstream policymaking. The pressure on Joe Biden to offer chunks of student debt cancellation in 2022 was largely spearheaded by the Debt Collective’s activist efforts, its proven capacity to win debt relief for hundreds of thousands of graduates of for-profit colleges, and its ability to secure the attention and support of key elected officials. As one of the leading, longtime loyalists of Wall Street on Capitol Hill, Joe Biden—long known as the “senator from MBNA” (after one of the credit card companies that he protected in Delaware)—was sorely pressed to grant student debt relief for fear that it would erode the crucial “payback morality” on which the financial industry depends. Even though the amount covered by his 2022 executive order was minimal, it was still the biggest debt jubilee—mass debt abolition–in U.S. history, affecting more than 40 million borrowers and would have been unthinkable before the Debt Collective’s role in mobilizing debtors made it politically unavoidable.
The Debt Collective… promoted the call for a debt jubilee as well as tuition-free college—ideas that were regarded at the time as hopelessly utopian.
How did the idea of a debt jubilee move from the far margins of social acceptance to the desk of the Oval Office? The Debt Collective’s origins lie in Occupy Wall Street, and, specifically, the Occupy Student Debt Campaign. Breaking with Occupy’s no-demands policy, our campaign, launched in 2011, promoted the call for a debt jubilee as well as tuition-free college—ideas that were regarded at the time as hopelessly utopian. The runaway rise of student debt since the early 1990s had sharply foreclosed the futures of two generations of young people and this mounting burden was about to become a political cause. The demands of the campaign were further fueled by resentment at the disparity between the generous federal bailout of banks and corporations and the lack of relief for ordinary households. The Occupy Student Debt Campaign fell short in its goal of provoking a mass debt strike, but it elevated public consciousness about the gathering crisis.
In the summer of 2012, a successor group, Strike Debt, formed to broaden the movement’s focus to include other debt types. Strike Debt was inspired by the Jubilee South campaigns to cancel the external debts of Global South countries. In the 1970s and 1980s, many of these countries found themselves in a debt trap, owing vast sums to Northern creditors, and unable to move forward on an independent development path. Jubilee advocates regarded many of these debts as “illegitimate,” since they had been taken on by kleptocratic officials and delivered little to no social benefits for the general population. Burkino Faso’s socialist president Thomas Sankara, the movement’s leading voice until he was assassinated in 1987, argued that the South’s debtor nations needed to act collectively rather than go individually to the Paris Club (Club de Paris)—a group representing the major creditor countries—to beg for longer payment terms. In planning the work of Strike Debt, we took Jubilee South’s approach to sovereign debts and applied it to household debts in the Global North, arguing that loans incurred for basic social goods like health care and education were also illegitimate and should be targeted for economic disobedience and collective pushback. No one should have to go into debt because they get sick or they need a college degree for employment in the twenty-first century economy.
Using crowdfunding to purchase debts for pennies on the dollar …. Strike Debt … abolished …. more than $35 million in debt….
To demonstrate the value of a debtors’ union, the group decided to provide useful services. The first product was the Debt Resistors Operations Manual, which offered accessible advice to users about how to get out from under a groaning debt burden. It has been downloaded more than a hundred thousand times, and is still in use as an accessible primer to the debt system. The Rolling Jubilee, a second mutual aid project, was launched in the fall of 2012. Using crowdfunding to purchase debts for pennies on the dollar through the secondary debt market, Strike Debt then abolished the debts. With the $750,000 raised from small donations, more than $35 million in debt was wiped out. This was proof of the concept that ordinary people could win debt relief for themselves and for others. Since very little was known about the secondary debt market (where creditors sell non-performing loans at heavily discounted prices) and how cheaply debt collectors buy loan portfolios through the market, the Rolling Jubilee also served as a public education resource. Once you are aware that a collector has paid only a pittance for your debts and is still trying to extract the full amount, you have much more leverage over them.
Despite Strike Debt’s success in growing chapters nationwide, the long-term goal of collectively organizing debtors proved elusive. Founded after Strike Debt wound down, the Debt Collective refocused on student debt, and set out to build a union from the ground up, this time beginning with a small-scale effort. We started with graduates from the now-defunct Corinthian Colleges system, contacting and organizing those who had been scammed through their enrollment in Corinthian’s for-profit colleges. Fifteen of these students formed the first Debt Collective branch and staged a pilot debt strike in February 2015, soon to be joined by hundreds of others. The strike was amplified by exploiting a little-noticed provision in the Higher Education Act, guaranteeing a debt discharge to borrowers who had been misled or defrauded by colleges. Using this provision, the Debt Collective helped tens of thousands to file “borrower defense to repayment” claims, which the Department of Education was obliged to recognize as legitimate.
The discharges, potentially amounting to billions of dollars in federal loans, began to be processed before the 2016 election. But the rate slowed to a trickle during the years of the Trump presidency, when then Secretary of Education Betsy DeVos actively opposed the process. Under the Biden administration, the payouts resumed, and, in June 2022, $5.8 billion of debt owed by 560,000 students of Corinthian Colleges was cancelled, with much more to come in the case of students at other for-profit schools. These large-scale wins represented the Debt Collective’s second proof of concept; that collective action—in this case, in the form of a debt strike—can produce results.
Debt jubilees relieve hardship and allow people to restart their lives. But they do not stop the clock of accumulation. The only way to do that is to definancialize public goods. In the case of education, that means tuition-free college, a benefit available in many other industrialized countries, none of them as affluent as the U.S. The Debt Collective collaborated with members of the Congressional Progressive Caucus, Senator Bernie Sanders, and Representative Pramila Jayapal, to draft and introduce College for All legislation in 2019 and 2021 that would eliminate tuition and fees at all public four-year colleges and universities, provide funding streams to historically Black colleges and universities and tribal colleges, and make community colleges, trade schools, and apprenticeship programs tuition- and fee-free for all. Progress on these bills has been thwarted by congressional gridlock, but among those lobbying discreetly against them were the nation’s private colleges (represented by the National Association of Independent Colleges and Universities), who stand to lose enrollments and revenue as a result of tuition-free options opening up in the public system.
In the first 100 days of Biden’s presidency, the Debt Collective launched a student debt strike to convey to the new administration that mass relief was not only a highly popular demand but also an important source of economic stimulus. When Biden tried to punt the cancellation decision to Congress, our legal director provided proof that the president had the power to cancel student debt through an executive order. By then, the Debt Collective had established relationships on Capitol Hill, and we helped to persuade leading Democrats, including Senator Chuck Schumer (another reliable friend of Wall Street), to lobby the White House for a larger jubilee than Biden had been willing to entertain on the campaign trail. After the August announcement of minimal debt relief, and in anticipation of the ending of the pandemic payment moratorium in December 2022, the Debt Collective called for another debt strike, this time among debtors older than 50, the fastest growing student debtor demographic, to add weight to the campaign for a fuller jubilee.
In the first 100 days of Biden’s presidency, the Debt Collective launched a student debt strike to convey to the new administration that mass relief was not only a highly popular demand but also an important source of economic stimulus.
In some ways, this lobbying process has become a form of open-air contract negotiation. Labor unions bargain with employers for a fair contract, and the employer’s first offer is often rejected. A debtors’ union must bargain—for the common good— with the leading creditor (the federal government, in the case of student debt) for better terms than those on the table. The Debt Collective has been playing that role, not as a negotiator behind closed doors but as a militant voice for debtors in the daylight of public advocacy; drawing on knowledge and arguments accumulated from a decade of movement work, new and old media weaponry, the clout of well-situated allies, and the strategic use of small-scale strikes as fair warning of the potential power of 45 million education debtors to participate in larger ones.
In addition to branch chapters in various cities, the Debt Collective already has several thousand members; and the organizational platform is built for communication among members who can rarely meet in person. Some members regularly pay dues at whatever monthly rate (from $5 to $50) they choose; many of them are active participants in political education through monthly Jubilee School workshop sessions on the debt system and the history of the movement. New members are recruited through participation in debt assemblies, where they are encouraged to “come out” about their debts. But the power of the union does not necessarily depend upon member density. Organizing around debt is quite different from, and also more difficult than, labor or tenant organizing. Unlike workers, debtors do not enjoy a common workspace where organizers can draw on relationships of trust. Unlike tenants, whose unions can protect them and their neighbors from unscrupulous landlords, debtors do not have the advantage of knowing each other as neighbors and are often in the dark about the true identity of their creditors. In that regard, traditional modes of site-dependent organizing are not so obviously applicable.
Yet corporate agglomeration increasingly means that labor solidarity initiatives have to be organized on a regional, national, or global scale, while the rise of private equity’s housing empires has confronted tenants with the challenge of organizing against faceless Wall Street landlords. Corporate lenders can be just as inscrutable, but there are also many financial contracts where the creditor in common is well known, deeply resented, and easily targeted as a result. So, too, a tactic like the debt strike, or mass payment refusal, can be just as powerful, both as a credible threat and in the court of public opinion, as the withdrawal of labor or the withholding of rent. Billions of dollars owed may seem like a huge liability, but what if these large sums were to be used collectively as leverage, not just to win relief for borrowers but to help tear down the neoliberal infrastructure of user-financing? This kind of latent power has barely been tapped, yet its potential is colossal in scope. As J. Paul Getty put it, “if you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”
Building on Wins
Looking beyond education, the Debt Collective has also been active in the domains of housing and carceral debt, creating such digital tools as the Tenant Power Toolkit for Californians to fight eviction and the Abolition Bail Debt Tool to dispute bail debts. These apps were developed to put power in peoples’ hands so that they can take action for themselves rather than rely on costly legal counsel. Users can make connections with others in the same boat. The tools were designed to take advantage of underutilized approaches or loopholes in the law and in the collections process, but they are also steps on the pathway to dismantling a housing system built around speculation rather than much-needed shelter and abolishing a carceral system that criminalizes people who are too poor to pay fines and fees that are habitually levied to raise revenue for strapped local government agencies.
Medical bills are the largest source of unpaid debt in U.S. collections and are the leading cause of bankruptcy.
In recent years, the Debt Collective has revived the Rolling Jubilee to make targeted debt buys—private probation debt, lunch school debt, ambulance debt—in order to shine a spotlight on predatory financial activity. The union now has plans to launch a large-scale campaign for medical debt cancellation. Like the others, it is conceived not only as a way to win relief but also as a contribution to the abolition of our for-profit healthcare systems. Medical bills are the largest source of unpaid debt in U.S. collections and are the leading cause of bankruptcy. Leveraging these and other financial obligations may prove to be an effective tactic for taking on the growing power of private equity firms that have amassed medical empires from their acquisitions.
Collective action around other classes of debt offer new opportunities to rein in predatory and under-regulated financial conduct. Auto loans, for example, have doubled over the last decade, thanks largely to the market entry of subprime lending. The average monthly payment recently passed $700, approaching the cost of apartment rentals in some locations. For most households, the auto-centric landscape makes car ownership in the U.S. compulsory, guaranteeing that auto financing is a tightly-sprung debt trap, rife with deception and fraud. The bills, fines, and fees that come with car ownership and car use are also a gateway to incarceration. Debtors’ prisons were abolished in 1833, but they have returned in all sorts of ways in recent decades; for low-income drivers, a simple traffic fine can have cascading legal consequences that include arrest and detention. Instead of individual owners desperately trying to renegotiate loans under the threat of repossession, wage garnishment, property liens, and ruined credit scores, imagine a concerted debtors’ campaign against giant subprime swindlers like Credit Acceptance Corporation, an auto financing company that has been under investigation by the Department of Justice and the Federal Trade Commission for its predatory practices. Such a campaign might be more effective at protecting borrowers than the paltry efforts made so far to regulate predatory lenders (who regard fines, even hefty ones, as the cost of doing business), and it would help to highlight the vulnerability of low-income households in places chronically lacking in public transportation.
The Debt Collective’s mottos, “You Are Not A Loan,” and “Can’t Pay, Won’t Pay,” have become watchwords for a political movement that challenges the concentrated power of finance and the elected officials who do its bidding. The creation of a union at the center of the movement has demonstrated how important it is to imagine new models of organizing in response to major shifts in the practice of profiteering.
 See Ben Klippenstein and Jon Schwarz, “Bank of American Memo Revealed: “’We Hope’ Conditions for American Workers Will Get Worse,” The Intercept (July 29, 2022), https://theintercept.com/2022/07/29/bank-of-america-worker-conditions-worse/?utm_medium=email&utm_source=The%20Intercept%20Newsletter.
 The Debt Collective, Can’t Pay, Wont; Pay: The Case for Economic Disobedience and Debt Abolition (Chicago: Haymarket, 2020); Andrew Ross, Creditocracy and the Case for Debt Refusal (New York: OR Books, 2014).
 Astra Taylor, “The Real Heroes Behind Biden’s Student Debt Announcement,” New Republic (August 26, 2022), https://newrepublic.com/article/167539/activists-student-debt-biden-plan.
 Strike Debt, Debt Resistors Operations Manual (PM Press, 2014)
 Hannah Appel, “Workers and Debtors of the World, Unite!” Jacobin (May 1, 2022), https://jacobin.com/2022/05/workers-debtors-union-financialization-labor-debt.
 Debt Collective and L.A. Tenants Union, “Tenant Power Toolkit,” https://tenantpowertoolkit.org/about.html; and “Cancel Bail Debt,” https://abolishbaildebt.org/
 Julie Livingston and Andrew Ross, Car and Jails: Freedom Dream, Debt, and Carcerality (New York: OR Books, 2022)
Andrew Ross is a social activist and professor of Social and Cultural Analysis at New York University. A contributor to the Guardian, the New York Times, The Nation, and Al Jazeera, he is the author or editor of more twenty-five books, including, most recently, Sunbelt Blues: The Failure of American Housing, (Macmillan, 2021).