Wouldn't it be great if you could buy back your own debt at a deep discount, essentially making the burden disappear?
While that is not legally possible, Strike Debt's Rolling Jubilee just might be the next best thing. An outgrowth of the Occupy Wall Street movement, the debt-relief and resistance group takes aim at debt that it considers particularly unjust, purchasing bulk past-due accounts for pennies on the dollar.
Last year, Rolling Jubilee retired nearly $15 million worth of uncollected medical debt, saving about 2,700 people from being dunned by collection agencies. This month, the group announced that it bought $3.9 million of student loan debt incurred by students of Everest College, owned by for-profit education company Corinthian Colleges.
A history of dodgy educational lending
Rolling Jubilee's announcement coincided with the filing of a lawsuit against Corinthian by the Consumer Financial Protection Bureau. Corinthian and its ilk have been under regulatory scrutiny for some time: In a lawsuit filed in late 2013, California accused the school of fudging job placement outcome numbers, and pushing loans onto low-income students.
The CFPB suit alleges similar improprieties, as well as charging the company with strong-arming students into taking out private "Genesis" loans without disclosing that Corinthian had an interest in the loans being made.
Because the school was required to buy these loans if they became past due, students were reportedly subjected to bullying behavior when it tried to collect on the debt -- including demanding payment while students were still attending classes. If enrollees could not pay, they were reportedly taken out of classes and prevented from returning until they caught up on loan payments.
A reprieve for those who need it most
The CFPB lawsuit demands that Corinthian, which is winding down operations in accordance with an agreement with the Department of Education, forgive more than $500 million of these loans. That outcome could take years, however, and the recipients of the Rolling Jubilee's largesse are no doubt relieved that they will not suffer under Corinthian's debt collection practices any longer.
While student debt has become a burden for a large number of college graduates over the past few years, for-profit college operators such as Corinthian used high-pressure tactics to persuade students to take private loans.
The lawsuit points out that admissions officers were actually salespeople, and that the company knew its students would be unable to repay the onerous debt they were incurring. Still, Corinthian pressed families with incomes as low as $10,000 per year to take out loans to cover costs of up to $75,000 for a bachelor's degree.
Bringing attention to the worst kinds of debt
By paying less than $0.03 on the dollar, Rolling Jubilee was able to buy up the past-due student accounts for roughly $100,000. Instead of trying to collect the balance, as true debt collection agencies would do, the group forgives the debt, notifying the borrower by mail that the outstanding balance no longer exists.
The group acknowledges that its actions won't erase student debt, but seeks to bring attention to the particularly distasteful tactics of some for-profit colleges. Rolling Jubilee would like to see debtors organize into a "debt-resistance" force that can bring about change by empowering themselves against creditors.
Until that time, Strike Debt will likely continue using Rolling Jubilee and its current stash of donated funds to selectively purchase debt in order to liberate debtors -- and using the publicity to educate the American public about the causes and effects of oppressive debt.
