Debt activists have bought out the student debt balances held by nearly all of the attendees of a historically Black college for a penny on the dollar — and canceled it entirely.
On Monday, a debtors’ union called the Debt Collective announced that, in collaboration with its sister organization, the Rolling Jubilee Fund, it had bought nearly $10 million of debt in collections from Morehouse College for a mere $125,000, or a little more than a penny on the dollar. Morehouse College is a historically Black men’s liberal arts college in Atlanta whose alumni includes notable figures like Martin Luther King Jr.
With the college’s permission, the Debt Collective then released all of the debt, eliminating the balances of 2,777 accounts from the Fall 2022 term and earlier, no strings attached. This was made possible in part by the fact that the debt was owned by the college and not the federal government. The cancellation allows borrowers to access their transcripts and receive their diplomas without thousands of dollars of debt looming over them.
This is one of the single largest debt cancellations that the Debt Collective and Rolling Jubilee Fund have undertaken in their decade-long history of strategically purchasing debt and eliminating it. The dramatic action offers a burst of energy to the debt cancellation movement in a moment when it appears that the Biden administration has set aside the idea of broad-based student debt cancellation.
“Our nation is defaulting on the promise of education when we burden communities, especially Black [Historically Black Colleges and Universities] graduates, with crushing amounts of student debt,” Braxton Brewington, spokesperson for the Debt Collective, said in a statement. “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.”
The debt activists say the fact that they were able to release debt for thousands of borrowers through this collaboration demonstrates that the federal government could also take actions to provide relief for a much larger swath of people.
“President Biden has yet to make good on his campaign promise to eliminate all student debt held by HBCU graduates,” Brewington said. “We’re doing our part, and it’s time Biden does his. 45 million Americans need this relief.”
Morehouse’s president, David A. Thomas, said that student debt and the cost of higher education is often a major deterrent for students.
“Debt has proven itself to be one of the strongest deterrents in a prospective students’ decision to attend college and inhibitors in alumni’s socioeconomic success post-graduation,” Thomas said in a statement. “It is why our Morehouse’s $500 million capital campaign aims to position the College as a need-blind institution by 2030. Partners like the Debt Collective and Rolling Jubilee are making the investment to help level the financial playing field for our students and alumni, and we are all tremendously grateful for their vote of confidence through such a generous gift and financial relief.”
Over the past years, Rolling Jubilee and the Debt Collective have bought and canceled millions of dollars in student and carceral debt, freeing tens of thousands of people from crushing debts. Last year, the group bought $1.7 million in debt for 462 accounts from Bennett College, a women’s HBCU in Greensboro, North Carolina. Rolling Jubilee had bought the debt for $50,000.
The Debt Collective has employed a variety of methods to help relieve borrowers of debt; one of the most significant singular actions has been the group’s debt strike against the for-profit Corinthian Colleges, a defunct fraudulent chain of schools, in 2015. Through actions sparked by the Debt Collective, tens of thousands of former Corinthian students filed applications to have their debt forgiven because they had been misled by the school.
Then, last year, the Biden administration announced that it was formally wiping out $5.8 billion in debt for 560,000 borrowers who attended Corinthian, after years of officials promising borrowers that their debt would be eliminated but dragging their feet on the issue.
Now, with President Joe Biden’s student debt cancellation plan nixed by the Supreme Court, the Debt Collective has launched a tool for borrowers to get their debt canceled through authority established by the Higher Education Act.
Student loan borrowers can fill out a form that will send an appeal to the Department of Education to have their debt fully canceled through the “compromise, settle and release” authority established by the law. According to the group, more than 30,000 borrowers have used the tool in just its two months of existence so far.
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