The Joys of Abolishing Debt

2014.9.23.Debt.MainStudent debt concept. (Image via Shutterstock)For the last two years I have worked as a volunteer debt abolisher for Rolling Jubilee, which just announced the the abolition of nearly $4 million of student debt. It’s a nice addition to the nearly $15 million of medical debt we have erased since November 2012 when the campaign launched.

Earlier this month, the Rolling Jubilee team posted 2,761 letters in the mail. “Jubilant Greetings! We are writing to you with good news,” the letters began. “We just got rid of some of your Everest College debt….You no longer owe the balance of the particular debt. It is gone, a gift with no strings attached.”

The Rolling Jubilee began when a group of us learned that people’s debts — think credit card bills, pay day loans, utilities bills, medical bills and school tuition debts — are widely available on a shady and largely unregulated secondary market for pennies on the dollar.

Here’s how it works: a bank or a hospital might sell a portfolio of unpaid accounts to a debt broker or a debt collector for a fraction of the official worth. That means a collector who calls on the phone trying to get you to pay him for a $1,000 trip to the emergency room may have only paid $50 to purchase your account.

Perhaps not surprising, given our roots in the Occupy movement, we found this unconscionable. Why should someone profit off another’s misfortune? What if we bought these cheap debts and, instead of collecting on them, made them disappear?

We decided to do just that. And with approximately $600,000 of crowdfunded donations, we’ve been able to abolish nearly $20 million of debt.

The Rolling Jubilee is premised on the argument that no one should be forced into debt for basic needs like healthcare and education — services that are freely and publicly provided in many developed countries. Thus, we would argue that all student loans are, in a sense, illegitimate. (The average class of 2014 graduate has to repay $33,000 in debt, and more than one in 10 are defaulting on their loans.) But we also believe any student debt owed to Everest College, a subsidiary of Corinthian Colleges Inc., is especially odious and should not be repaid.

This week the the Consumer Finance Protection Bureau (CFPB) announced a $500 million lawsuit against Corinthian, a corporation they have been investigating, as have various state attorneys general. Corinthian is charged with running a “predatory lending scheme.”

For-profit schools are notorious for preying on students from disadvantaged backgrounds and spending more on advertising and marketing than on teaching. For example, according to the CFPB, Corinthian paid other companies to temporarily hire graduates in order to inflate job placement statistics and tricked students into taking out private loans from the school itself.

“Part of the tragedy here is that most students who attend the Corinthian company schools come from disadvantaged backgrounds, and many are the first in their families to go to college,” a CFPB official said. “For these students, Corinthian too often turned the American dream of higher education into an ongoing nightmare of financial despair.” (A spokesman for Corinthian has disputed the claims made by the CFPB.)

Through our work with the Rolling Jubilee we have heard from dozens of people who were scammed by Everest (or “Mt. Everest of Debt,” as some students call it) into precisely such a nightmare, including disabled individuals who were promised services and aid that didn’t exist. Some of the people whose debts we erased have come forward and spoken to the media, like 32-year-old Levia Welch, who recounted being lured by false promises of a high-paying career, and 24-year-old Courtney Brown, who spoke about her inability to get certified as a dental assistant.

At the moment, current and former students of Corinthian Colleges feel isolated and powerless, forced month after month to make payments on unfair loans while working minimum wage jobs no better than the ones they could get before enrolling. Some, like Everest graduate Ben Lopez, sacrificed mightily to get through school, at one point living in his car while attending classes. Now he’s so ashamed of his degree he has taken it off his resume. But the over $60,000 of debt he incurred to attend will not so easily vanish. Student loans, unlike most other kinds of debt, cannot be discharged in bankruptcy — they will haunt you to the grave.

After nearly two years of dedicated effort, the Rolling Jubilee is winding down, partly because we know we can’t buy and abolish everyone’s debt. But we can help people organize and fight for what’s right, and that is why we have launched a new organization called The Debt Collective. In the case of Everest and Corinthian our demand is simple: instead of propping up for-profit predators the Department of Education needs to use its power to protect students, discharging their debts and providing access to free education. Rolling Jubilee’s all-volunteer group of debt abolishers has already shown that it is possible to do what’s right.