An offshoot of the Occupy Wall Street movement has purchased, and promptly abolished, almost $4 million in student debt from former students of Everest College, the national for-profit college chain that is in the process of being shut down by the Education Department in the wake of numerous lawsuits and violations.
The group, the Rolling Jubilee, announced the debt buy today along with the launch of a website called the Debt Collective. In 2012, the Rolling Jubilee drew attention when it bought and abolished $15 million in medical debt. The group's aim in buying and abolishing loan debt, it says, is to build a broader "debt-resistance movement," with the Debt Collective website as its organizing hub.
"Debt is the tie that binds the 99%, whether you are a student delinquent on your student loans or a parent struggling to pay healthcare bills," said a Rolling Jubilee member in a statement.
Medical debt is frequently bundled, bought, and sold to debt collectors, most often for pennies on the dollar. But because most student loans are through the federal government, student debt is more difficult to acquire. The debt bought by the Rolling Jubilee, which the group said cost about $100,000, is from private loans made by Everest College. Most of those were taken out by students who had maxed out their federal loan limits, many of whom will still owe anywhere from $20,000 to $60,000 for their degrees. Because the debt is sold off in portfolios, Rolling Jubilee cannot buy an individual's debt and learned the names of those whose debt it is abolishing only after the fact.
Private loans made by Everest were also targeted yesterday in a lawsuit by the Consumer Financial Protection Bureau, a government watchdog agency that sued to abolish three years' worth of private loans made by Corinthian Colleges, Everest's parent company, which also owns the Wyotech and Heald chains. The CFPB Corinthian's private Genesis loan program "predatory," saying that the company lured students into the loans with deceptive job placement claims and allegedly harassed them to repay. Corinthian's private loans cost twice as much as federal loans, with interest rates of around 15%. The CFPB lawsuit said that more than 60% of Corinthian students with private loans defaulted within just three years.
Corinthian Colleges is also facing a criminal probe in the state of California, as well as lawsuits from attorneys general there and in Massachusetts and an SEC probe into the school's recruitment.
A previous version of this story stated that the debt bought by the Rolling Jubilee came from the same loan program that was targeted in the CFPB lawsuit. The loans are similar, but not identical.