Debt Traps by Necessity

San Jose     The Everett Program at the University of California at Santa Cruz specializes in technical solutions for social change organizations.  ACORN has enjoyed a partnership with the program for the last three years that has seen several students work with our hawkers union in Bengaluru the first year, another team work with the ACORN Home Savers Campaign in the USA last year, and this year work to produce PSAs to run for ACORN Honduras on television in that country.

Annually, I visit there when I’m in the California in order to meet the students face to face and move the partnership along.  This year was interesting not only as they showed me the progress on the video, but also talking to a class of Everett students about techniques to develop organizational commitment and how to develop campaigns.  I also interviewed several of our interns for Wade’s World.  The combination of these conversations may have been helpful to them, but the real eyeopener to me was the huge debt trap that seems almost inevitable for these students, even with their eyes open as well.

Having just done a campaign training in Oakland only days before on payday lending, I used that as an example in Santa Cruz as well.  The students told me that the average all-in cost for this public university was about $36,000 per year.  There is a housing shortage on campus where many of the common spaces are now bedrooms, and two-person rooms are now sleeping three.  In town, it’s no better.  Asking the class about their individual rents, the responses were as low as $750 for one young woman living with 7 or 8 others, but more commonly the rents per person ran from $1200 to $1400 per month.  The Census Bureau recently released a report indicating that the median rent is now over $1000 per month throughout the country.  A rent freeze measure on the ballot in Santa Cruz in the last election fell short along with the statewide expansion of rent control for additional cities.

Some students knew about payday lending, but that tended to be only the few who had come from lower income neighborhoods in California.  Most had bank accounts, but no one had a physical checkbook, and most claimed little experience with overdrafts since they lived out of the instantaneous information online on their balances, and banks blocked them going past the levels.  Asked how they picked their banks, one explained he was “born into it,” and others nodded in agreement.  Virtually all of them seemed to be facing the prospects of significant school debt when they would graduate.

Financial literacy is a fairly meaningless phrase when you really don’t have much money and are forced by necessity to embrace predatory products and debt prospects.  I thought about this reading about a migration of payday lending practices into lending arrangements for rent for millennials with irregular income.  An article in the Wall Street Journal described the companies entering this space:

Uplift, one of several startups offering loans to recent college graduates, professionals moving to a new city and others who want to build credit or could use assistance making rent payments. These companies, which also include Domuso and Till, are entering a market long associated with payday lenders. Compared with cash-advance loans, which come with annual interest rates as high as 700% in some states, funds from the rent-lending startups are available at much lower cost. Some are competitive with credit-card borrowing rates at less than 20%.

Reading that piece and thinking about what I was hearing from these young students, I couldn’t help thinking that I was working with minnows while the barracudas were circling.  It wouldn’t be pretty, and swimming in debt and desperation, too many of them will be easy prey through desperation rather than choice.


Fighting for Affordable Housing on All Fronts in Toronto

Toronto    The fight for affordable housing is global, but Toronto and ACORN Canada have been at the forefront of this war for the last fifteen years, and even while winning major victories, including recently landlord licensing or RentSafe, as the city calls the program, ACORN members want much more and are committed to fighting to get it.  Listening to an ACORN housing forum with fifty members in the Scarborough area of Toronto last night, there was no question about their determination on a number of fronts.

On the RentSafe program, Marva Burnett, ACORN Canada’s president and the president of ACORN International, was clear, saying “We want more!”  The inspection program only guarantees that apartment complexes will be visited every three years. Burnett made the point that when it came to health no one said only check your temperature or teeth every three years, why is your housing so unimportant.  She and ACORN also advocated red, green and yellow signs after the inspections similar to what a restaurant receives if it passes.  She added that ACORN members were lucky to eat out twice a year, but lived in their units every day, so safe and healthy housing was a higher priority.


The real issue the members argued is that the City of Toronto defines affordable market rent as $1200 per month, and that is “not affordable.”  One of the bulletins being discussed in the small strategy groups at the forum zinged the fact that only one in forty units of housing being developed in Toronto is affordable even under that definition.  One speaker after another said the word “condos” in the same way others would spit out curses.

One part of the campaign now demands “inclusionary zoning,” and this has been a huge battleground.  ACORN is demanding that 30% of developments on private land be affordable rental units and 40% near transit stops, fully recognizing that even on private land developments cannot succeed without public support, infrastructure, zoning allowances, and amenities.  On public land, ACORN is demanding that 100% be rental, and 50% be affordable.

After an explication of the issues still unresolved and the ongoing housing crisis for tenants and low-and-moderate income, the members broke into smaller groups to devise action plans for moving the campaign forward at the next stages.  This is going to be a long, hard fight.

Toronto has always been a tenants’ city in the fifteen years of ACORN’s organizing here, but as the wealth gap increases, areas, like Scarborough, are increasingly condo-and-mall-construction zones.  Driving to the new City of Toronto Hilltop community center where the forum was being held it was hard to recognize some of the areas I remembered years ago when Judy Duncan, ACORN Canada’s head organizer, and I first drove through the neighborhood plotting the early organizing drives.  ACORN leaders and members were spot on:  this is a fight for survival in the city!