Rolling Jubilee just abolished nearly $4 million of student debt

by Kate Aronoff

On September 17, the third anniversary of Occupy Wall Street’s founding in Zuccotti Park, the Rolling Jubilee announced that it bought and abolished nearly $4 million of student debt.

The Rolling Jubilee, a project of the group Strike Debt, purchases debt from banks for pennies on the dollar, summarily abolishing it for borrowers with no strings attached. But, according to sociologist and Strike Debt organizer Andrew Ross, “It’s not easy.” The group searched for and eventually found a sympathetic debt buyer who helped them track down purchasable loan packages. Yet, the nature of the loan industry is such that the details of the loans are murky until they are processed.

“We don’t know in advance exactly whose debts we are purchasing because they are bundled according to risk and type,” he explained. “But we know what kind of debt and roughly from what locations.”

After buying the loans, Strike Debt is finally able to see whose debt they purchased. At that point they write to the borrowers and let them know that they’re off the hook.

Strike Debt is one of many organizing ventures formed in the aftermath of Occupy Wall Street. Now, nearly two years since its launch in November 2012, the group has also announced the formation of the Debt Collective. Similar to a more traditional labor union, the collective hopes to form “a platform for organization, advocacy and resistance by debtors.” While debt is by design an individual experience — a contract between lender and borrower — organizers hope the collective can act as a unifying force for those dealing with a wide range of debt burdens.

Unlike other kinds of debt, student debt was long thought to be exempt from the types of “buy-outs” on which the Rolling Jubilee has made its name; to date, the group has abolished $15 million in medical debt.

“Most student debt is guaranteed and nowadays issued directly by the federal government,” explained Luke Herrine, a New York University law student and organizer with Strike Debt. “The Department of Education has extraordinary powers to collect this debt.”

Under debt contracts, borrowers are unable to file for bankruptcy, and collection firms have been known to garnish wages — a measure largely unheard of with other forms of debt. Because these legal mechanisms make the prospects of collecting on student debt so much higher than in the case of medical or credit card debt, lenders have been more reluctant to release them into the market for public purchase.

So how did they do it? The loans that Strike Dept abolished were private — owed by 2,761 students from Everest College, a part of Corinthian Colleges, Inc. The Corinthian system, which includes over a hundred for-profit college campuses across the country, is teetering on collapse. Also this week, the Consumer Financial Protection Bureau filed a lawsuit against the company alleging that it had provided “false and misleading representations about its graduates’ career opportunities,” enticing borrowers into taking out risky loans. Should the suit go through, Corinthian would be forced to forgive $569 million in private loans issued to students between July 2011 and March 2014.

While it’s had an especially tough week, Corinthian isn’t alone in the bleak world of for-profit colleges. The average cost of a bachelor’s degree from a for-profit college is over $10,000 higher than one from a public state university. Students also find it difficult to get jobs after graduation because of questionable, or non-existent, accreditation. That is, of course, if students graduate: for-profit colleges boast just a 32 percent graduation rate. Of the 260 schools whose rate of loan default topped their graduation rates, nearly half were for-profit colleges. Federal law stipulates that just 90 percent of for-profit college’s income can come from federal student loans, but many exploit a loophole allowing them to skim the remaining 10 percent from GI benefits.

For-profit colleges aren’t just bad actors; the rising cost of higher education has opened up a new and highly profitable market to bridge the widening gap between income and tuition. While some federal loans are collected by the Department of Education itself, the government routinely awards contracts to private services to collect on loans issued through colleges and universities. Navient, a newly formed subsidiary of loan giant Sallie Mae, came under fire last spring when regulators accused the firm of intentionally overcharging and misinforming veterans on their student loans. Despite agreeing to pay a $139 million penalty to resolve the dispute, just three months later the company was granted another lucrative contract with the Department of Education — potentially worth up to $1 billion.

Writing for The Nation, Strike Debt founder Astra Taylor described her group as a “spark — not a solution” to mounting debt burdens and the crisis of higher education. Although the Rolling Jubilee can, and already has, provided instant relief to thousands of debtors, the group lacks the resources to relieve debt at scale. Organizer Alexis Goldstein said that the group’s actions are meant to point out services the government should already be providing.

“It has taken a scrappy non-profit formed by Strike Debt to show that there really are solutions to these problems,” she said. But scrappy as it may be, the group “has created new urgency for the federal government, and shown the inaction at the federal level for what it is: a lack of political will.”

Three years since the start of Occupy, Rolling Jubilee is one of many continuing initiatives to spring from the streets and squares of cities around the country. While Occupy Sandy provided disaster relief through mutual aid in the aftermath of Hurricane Sandy, Occupy Our Homes continues to resist foreclosure and predatory lending across the country. Meanwhile, on Monday, another Occupy-influenced mobilization, Flood Wall Street, aims to focus the climate movement on the 1 percent. Together, these initiatives represent a growing resistance that challenges both a financialized economy and a privatized public sphere, while posing a few real alternatives along the way.