Rolling Jubilee, an activist project inspired by Occupy Wall Street, is buying up delinquent student debt and forgiving it, in an effort to draw attention to the plight of overburdened borrowers and predatory lending, NPR reports.
When borrowers do not make loan payments, the debt is marked as delinquent. Lenders often sell the uncollected debt on delinquent loans to other companies for pennies on the dollar. The purchasing company can then seek to collect the debt itself to make a profit.
Rolling Jubilee flips this process on its head. The group raises money to buy delinquent debt—but then informs borrowers they have no obligation to pay.
It sounded like "a scam" says Courtney Brown of Kalamazoo, Michigan, who received a letter from Rolling Jubilee informing her that her student debt had been wiped out. Brown is unemployed and owed $790 to Everest College, a subsidiary of Corinthian Colleges, a for-profit education company that is being sued by the Consumer Finance Protection Bureau for predatory lending.
Rolling Jubilee announced this week they had erased $3.9 million in debt, including the debt owed by nearly 3,000 Everest College students, using money raised online. "It doesn’t solve the problem," says Thomas Gokey, one of the project's organizers, but he hopes it will draw attention to what the group calls the "unjust" nature of the current lending system.
Some 40 million Americans owe approximately $1.2 trillion in student loan debt. Rolling Jubilee hopes that raising awareness around the issue of student debt will encourage people to push for policy changes, such as allowing student debt to be forgiven in bankruptcy (Kamenetz, NPR, 9/17).
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