Call to Action: Tell Leaders in D.C. to Raise the Debt Ceiling

Investors are jittery about D.C.'s inability to raise the debt ceiling, so they are seeking alternatives to U.S. bonds. AEM has been discussing the ramifications of not raising the debt ceiling and interest rates on student loans over the past week, and interviewed several experts who painted a grim picture of what will happen to indentured educated citizens if the U.S. loses its AAA rating.

As already stated, there is a likelihood that the U.S.'s credit rating will be downgraded to AA status. That means that variable rates on student loans could increase, and borrowers seeking loans will have a harder time obtaining them. Just to be clear, I do not believe people should have to take out loans to finance their education - as I have stated countless times. In fact, I am so "radical" that I believe higher education ought to be free. But neoliberalism has triumphed, and turned higher education into a market, and one that has been highly lucrative for people like Albert Lord and [insert for-profit President's name here]. But I digress.

The Nation has written a great piece about the situation. It's called, "Shut Up. Raise The Ceiling." 

Call your representatives in D.C. and politely tell the ones who are refusing to act on this simple, procedural mater immediately. Send them tweets asking them to raise the debt ceiling. Tell them you don't care if they signed a promise to not raise taxes. Tell them you are tired of them working against the interests of the American people. Tell them that, if they have been opposed to raising the debt ceiling, they are economic terrorists and victimizing millions of people in the U.S.

Some quick facts on the debt ceiling. Right-wing "wonks" are conflating it with raising taxes. Anyone who understands the difference knows that's crap. The debt ceiling was raised under Bush seven times. It was raised under Reagan eighteen times. 

As a struggling, underemployed freelance writer and activist, the needless focus on the debt ceiling infuriates me. I blame both parties, too. Moreover, most of these clowns make no mention joblessness anymore. This shows the level of dysfunction and corruption in D.C. While I am looking forward to reconnecting with my contacts on the Hill, and meeting new folks there, I am discouraged by our leaders' inability to actively solve problems.

Related Links


"Sell Those Indenture Instruments Immediately! The Debt Ceiling Disaster and Student Loans," AEM (July 25, 2011)

"The Debt Ceiling Fiasco and Student Loans," AEM (July 25 ,2011)

Your thoughts - The Debt Ceiling Fiasco and Student Loan Debt

AEM has interviewed several experts about the debt ceiling fiasco and student loan debts.

There are indicators that the triple A rating that that U.S. has enjoyed will be downgraded to AA. What do you think will happen to interest rates on student loans, i.e., the ones that do not have fixed rates?

Jerry, thanks for the helpful link about the issue on the Facebook pages. (Jerry interviewed me months ago, and it was a delightful interview).

Related Links


Janet Novack, "Debt Ceiling Plan Take Aim At Graduate Student Loans," Forbes, July 27, 2011


"Sell Those Indenture Instruments Immediately! The Debt Ceiling Disaster and Student Loans," AEM (July 25, 2011)

"The Debt Ceiling Fiasco and Student Loans," AEM (July 25, 2011)

Sell Those Indenture Instruments Immediately! The Debt Ceiling Disaster and Student Loans

As I mentioned earlier, Bloomberg reported that if the US defaults and loses its AAA rating, investors might begin to sell off government-backed student loans. The value is a drop in the bucket. It's merely $250 billion in government-backed securities. So . . . yeah, no biggie. But perhaps being so nonchalant about  the issue is wrong? Hmmm . . . I wonder. Since I have been wondering and reading some piss-poor 'analysis' on the subject, I asked people who actually know what they are talking about.

I've spoken with a few economists as well as with a savvy financial reporter, and asked them what they think would happen to student loan debtors if the US defaults. Here's what they had to say:

I'm leaning toward believing that a complete collapse of the financial system, as well as the dollar, would be a *good* thing for the indentured educated class (in a narrow respect), as systemic failure might be the only thing that would cause actual *big* corrective actions to be taken, e.g. a blanket debt forgiveness/Jubilee or other such things. In addition, if the banks collapse, our bought-and-sold-passed-her​e-passed-there debt instruments might simply disappear within the system, as the chain of ownership collapses!

Quite intriguing and optimistic even though the collapse will be, obviously, cataclysmic.

Someone else asked me what could happen to loans that have been consolidated and have fixed rates. Certainly nothing will change with those loans, and the rates in place won't change. But it would be insane if that turned out to be false. Can you imagine the number of people who would be ruined financially if they changed those terms and conditions?

I am, by the way, not trying to be alarmist. In addition, I am not suggesting that this will happen. We - all of us - are merely theorizing, because no one really knows what will happen if the US defaults.

Finally, another reliable source suggested that variable rates could skyrocket. The cost of new loans would most likely balloon.

Thinking about the ramifications of investors selling off government-backed loans is just wild!

Related Links


Julie Haviv, "Dollar hits record low versus Swiss Franc in debt standoff," Reuters (July 25, 2011)


"The Debt Ceiling: Why It's A Real Issue For The Indentured Educated Class," AEM (July 25, 2011)

"Steve Eisman Blasts For-Profits, Arguing 'Subprime Goes To College," AEM (May 28, 2010)

 "We don't want those mutha-f$#%!-ing indenture instruments! Sell! Sell! Sell the indentured educated class off! 

The Debt Ceiling Fiasco And Student Loans

If the US loses its triple A status, investors might end up selling off their student-loan backed securities. The $250-billion government-backed securities would be hit hard. This concern is only being framed into terms of how it would affect the markets. If those securities are shaken, what does that mean for the debtors who owe the loans? What sort of disastrous results could occur in their world?

Related Link


"The Debt Ceiling: Why It's a Real Issue for the Indentured Educated Class," AEM (July 25, 2011)

UPDATE: Exclusive Interview - Whistleblower David Goodstein Discusses Victory over Kaplan University

Last Friday, AEM broke the news that David Goodstein, a former high-ranking employee at Kaplan University, settled his suit against the school for $1.6 million. There was something remarkable about the case. In many instances, if the students even win, they never see a dime of the settlement money. That is not the case here. The NYT picked up the story hours later, and provided details on the disbursement of the money, stating, "the settlement includes nearly $500,000 to be paid on behalf of 43 students who had taken out student loans for the program, but were not able to graduate because the school, one of Kaplan’s for-profit campuses, had no placement for them."


David Goodstein agreed to answer some questions about his settlement. We spoke briefly by phone on Friday (I called to congratulate him), and he then answered a few questions later that day by email.


CCJ: This settlement is great, especially because students are seeing a direct benefit from it and being refunded. But do you really think settlements are the best way to solve the problem with proprietary schools and their practices? 

If you could change the current higher educational system, what do you think should happen to proprietary schools? Is it unrealistic to shut them all down? 

DG: Although there are probably some schools that are ok the vast majority are a waste of the students' time and money both. They make lots of money for the shareholders. Given a choice of all or nothing, I would shut them down.

CCJ: Have you spoken to any of the former students about the settlement? Were they surprised by the outcome?

DG: To date I have not spoken to any of the former students. I would hope that this gets them talking to each other and perhaps a class action will come out of it by all the students who are not being reimbursed.

David had the courage to stand up against an exploitative system. It was brave of him to fight against this pernicious "university." We need more people in the world like David. It was an honor to speak with him again, and I am glad he initially came to me in November of 2010 to discuss the suit.


While the suit doesn't address the systemic problems that have led to the student lending crisis, it is a victory for these students who were defrauded. Like David, I hope they file a class action suit against the school. I am working on several large writing projects at the moment, but I am definitely going to try and get in touch with a few of these individuals and ask them for interviews. Stay tuned for updates.

Related Links


"Sordid Relationships and Broken Promises: Kaplan University's Troubling Financial Relationship To The Washington Post," AEM (November 23, 2010)