From Atlanta comes an uplifting story of nearly 3,000 students getting a brighter future after a debtor organization bought $10 million in student loans for the purpose of canceling it.
The total cost of the purchase was one-and-a-quarter pennies for every dollar of debt—with the low value reflecting the likelihood of the university in question—Morehouse College—of recovering it.
The purchase from the Historically Black College wiped out the debt for 2,777 students, amounting to around $3,600 dollars of debt per student from the Fall 2022 school term.
Debt Collective and the Rolling Jubilee Fund were responsible for the purchase which amounted to the largest in the organizations’ histories.
“This nearly $10M of student debt cancellation will put thousands of black folks in a better position to be able to save for retirement, purchase a home, or start a small business,” Braxton Brewington, spokesperson for the Debt Collective, said in a statement.
These kinds of non-profit debt relief purchases have become less-than-rare in the US, where public and private debt levels are as high as they have ever been. With so much debt burdening students, consumers, and patients, it has become a valuable charitable service to seek to alleviate these by negotiating flat prices for the creditors’ claims.
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As GNN reported in 2022 in the case of medical debt, large hospital bills are often so costly, that hospitals know from the get-go that they will probably never see the full amount repaid. As such, a fast cash injection is often a lucrative prospect for hospital bookkeepers, who have been making such deals for pennies on the dollar to RIP Medical Debt—an organization similar to Debt Collective, but which has canceled $6.7 billion with a ‘b’ in American medical debt so far.
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Student debt, because most of it is guaranteed by the government and is by law unescapable even through bankruptcy, is often even less valuable to creditors, and so Debt Collective and the Rolling Jubilee have been able to make these extraordinary purchases often for less even than RIP Medical Debt can.
Last year, the two organizations bought $1.7 million in student loan debt from Bennett College, another Historically Black College in Greensboro, North Carolina, for just fifty grand, according to Truthout.
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