TV show host just paid off $15m medical debt on live TV
In a quest to expose just how criminal the debt-buying industry is, John Oliver just bought $15m in medical debt for $60k – and wrote it off on live TV!
Credit: HBO – YouTube
On Sunday night, British-born TV host, John Oliver, tackled the crazy world of student debt-buying in the US on his HBO talk show, Last Week Tonight.
The show – which is known for its ability to break down bizarrely complicated and controversial issues and somehow make them sound hilarious (and simultaneously depressing, of course) – took a peek into just how badly regulated the student loans system is in the US... and the result was pretty bleak.
To prove the debt-buying system's major flaws, Oliver and his team started up their own debt-buying company online for a clean $50 (which they called Central Asset Recovery Professionals Inc. or ‘CARP’ for short, after the greedy, bottom-feeding fish, apparently – how apt!).
They then went on to buy $15 million (around £10 million) worth of medical debt from another debt-buying company at a rate of less than half a cent to the dollar, so for a grand total of $60,000 (£41,000)!
He told viewers:
Debt-buying is a grimy business and badly needs more oversight, because as it stands any idiot can get into it. And I can prove that to you because I am an idiot and we started a debt-buying company – and it was disturbingly easy.
How debt-buying works
In the US, it's quite common for banks to sell debt on to third-party private debt-buying companies for a fraction of what the debt is worth if the debtee is more than 90 days late on payments.
Knowing no details about the accuracy of the debt or the particular situation of the debtee, these companies are then given the green light to move forward with shady fear-inducing tactics in order to get the money back in full (so they can make a profit on the price the bank originally sold the debt onto them for).
So for a measly $60,000 Oliver’s fake debt-buying company was able to buy $15m worth of medical debt (all online, without so much as a face-to-face meeting) and were handed the names, addresses and social security numbers of 9,000 people in the US, as well as a round figure of how much debt was up for grabs.
It would have been just as easy for Oliver to have bought over student loan debt as he did with that mass of medical debt. As he explains, it's thought that the total current US student debt amounts to around $1 trillion!
So what about the privatisation and selling of UK student loans? Our student finance expert Jake Butler says:
The only student loans in the UK that have been sold to a private company are those from students that attended uni before 1998.
The company, Erudio, that handle these loans are not allowed to change the terms but they have made some small changes including providing info to credit agencies of those that didn’t make payments on time.
The government did plan to sell off the 1998-2012 student loan debt but have yet to do so. Watch this space on that one...
We're lucky that we don't have the same loan system as US students and it's unlikely that we'll change to these styles of loans this side of the Atlantic any time soon.
In an unexpected twist, Oliver then announced to his live audience that he was about to make television history, by forgiving the entire $15 million medical debt he'd bought, on live TV.
Running across the stage to push a big shiny red button, he declared “F**k you, Oprah!” (in reference to the time Oprah Winfrey decided to give all 276 members of her studio audience a Pontiac G6 sedan during her live talk show).
And that was that – $15m of debt gone with the push of a button.
Which leaves us wondering...can we get one of those buttons in the UK?
If you're worried about student loan repayments, don't sweat! We've got all the info you need to put your mind at ease in our big fat guide to student finance.
Edit: This article has been adjusted to reflect the nature of the debt that was actually cancelled.