Jubilee for student loan debt is no cause for celebration

An anti-debt organization is playing fairy godmother to Americans drowning in debt, swooping in and paying off bills randomly to protest “unjust” expenses.

Rolling Jubilee claims it is fighting against the oppression used by the 1 percent to control the 99 percent. But critics say its system of selecting debt to cancel fails to consider which bills are “unjust” and which might be well-earned. The unexpected payoff also could net borrowers more debt, in the form of a tax bill.

Courtney Brown of Kalamazoo, Mich., recently received a letter from Rolling Jubilee with the surprising news it had paid off a portion of her student loan debt.

“We are writing you with good news,” Brown said on NPR, reading from the letter. “We got rid of some of your Everest College debt. … No one should be forced to mortgage their future for an education.”

The $790.05 that Rolling Jubilee paid for Brown’s private student loan represents a small portion of the more than $18 million listed as “abolished debt” on the organization’s website.

Established in November 2012, and described as “a bailout of the people by the people,” Rolling Jubilee purchases random debts in an effort to “liberate” people. Unlike most other debt-buying transactions, Rolling Jubilee pays off the debt rather than collecting on it. Once paid, the former debtors, like Brown, receive a letter informing them of the transaction and Rolling Jubilee’s role.

While the majority of Rolling Jubilee’s purchases are unpaid medical bills, it has paid out nearly $4 million towards private student loans, with the average amount at just under $1,400. Most of those student loans are to for-profit colleges, like Everest.

Rolling Jubilee emerged from the Strike Debt movement, which originated from Occupy Wall Street. Strike Debt describes itself as a “nationwide movement of debt resisters fighting for economic justice and democratic freedom.” Rolling Jubilee is one tool Strike Debt uses to combat those perceived injustices.

“Some debts are just, and others are unjust,” Thomas Gokey, one of Strike Debt’s organizers and the vice president of Rolling Jubilee’s board of directors, told NPR. “Providing affordable, publicly financed, world-class education is a moral debt we are failing to pay.”

The name Rolling Jubilee likely evokes festive images of the biblical event where debts were forgiven as part of a celebratory year in the Jewish calendar. The organization even references the “jubilee” as having its roots in Christianity as well as many other faith traditions.

While injustices in the system of borrowing and lending may exist, Strike Debt’s position seems to assume injustice and oppression are the norm. And since Rolling Jubilee’s debt purchases are bundled and anonymous, it has no method to determine whose debt it’s paying ahead of time or of exercising any discretion regarding the perceived “justness” of someone’s debt.

Rolling Jubilee’s model also poses unresolved tax problems. Strike Debt and Rolling Jubilee maintain their legal team has thoroughly vetted the model and that the debt payments amount to “gifts” rather than “income.” But that distinction has yet to be confirmed by an actual ruling from the IRS. Gifts are free; income is taxed.

Rolling Jubilee, which is funded by donations, is not soliciting new funds. According to the Strike Debt website, the Rolling Jubilee project will continue to acquire and pay off debts with its remaining funds. Strike Debt claims it has other plans for the future.

But hopeful borrowers should not count on Rolling Jubilee to swoop in and forgive their debts. The group’s payouts since November 2012 only account for 0.03 percent of the entire student loan market for that time period.