{"id":7252,"date":"2023-10-30T20:40:03","date_gmt":"2023-10-30T20:40:03","guid":{"rendered":"https:\/\/infundpros.com\/finance\/i-went-from-nearly-21000-to-0-in-a-moments-notice-how-10m-in-student-loans-were-canceled-for-former-morehouse-students\/"},"modified":"2023-10-30T20:40:04","modified_gmt":"2023-10-30T20:40:04","slug":"i-went-from-nearly-21000-to-0-in-a-moments-notice-how-10m-in-student-loans-were-canceled-for-former-morehouse-students","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=7252","title":{"rendered":"\u2018I went from nearly $21,000 to $0 in a moment\u2019s notice\u2019: How $10M in student loans were canceled for former Morehouse students"},"content":{"rendered":"
When Jordan Young first listened to a voicemail last week explaining that he would have the nearly $21,000 balance on his account with Morehouse College canceled, he was skeptical.\u00a0<\/p>\n
\u201cYou get a lot of phone calls these days from people with scams and all types of stuff,\u201d he said. \u201cI was just like there is no way, there is no way.\u201d\u00a0<\/p>\n
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\u201cThose were things I\u2019ve been praying for,\u201d he added. \u201cTo hear that happen it was just surreal.\u201d\u00a0\u00a0<\/p>\n
Eventually Young, 22, called back the person who left the message, a representative from the Debt Collective, a student debt activist organization. Young learned the money he owed to Morehouse had indeed been wiped away.\u00a0<\/p>\n
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Young checked his account portal with the school and saw the balance had disappeared. \u201cI went from nearly $21,000 to nearly $0 in a moment\u2019s notice,\u201d he said.\u00a0\u00a0<\/p>\n
Young was one of 2,777 people who saw the money they owe to Morehouse, a historically Black college for men, canceled, thanks to a novel partnership between the Debt Collective and Morehouse.\u00a0<\/p>\n
As part of the collaboration, the Debt Collective wiped out $9,710,296 in debt owed to Morehouse by former students. The roughly $9.7 million represented all the debt in collections held by Morehouse for all the terms leading up to fall 2022. To facilitate the debt relief, the Debt Collective\u2019s sister organization, the Rolling Jubilee Fund, purchased the debt from Morehouse for $125,000 and then promptly canceled it. The arrangement required the cash from the Debt Collective and some good will from Morehouse.\u00a0<\/p>\n
The action only applies to students who attended Morehouse and had a balance with the college and cancels only the debt owed to the school. But activists are hoping to use the announcement to highlight the power of debt cancellation more broadly, as the Biden administration continues to work through a process that advocates hope will result in broad-based federal student loan relief.\u00a0<\/p>\n
The Morehouse debt cancellation \u201chas some real tangible benefit for the recipients,\u201d said Andrew Douglas, a political science professor at Morehouse.\u00a0 \u201cBut it also has some real symbolic value for the broader movement for student-debt relief and for debt abolition more broadly.\u201d\u00a0<\/p>\n
Douglas called the announcement \u201ca real opportunity for Morehouse and its community\u201d to highlight racial disparities in debt. Due to decades of policies that have limited Black families\u2019 ability to build wealth, Black students are more likely to borrow for college, tend to borrow more when they do and struggle more to pay it off. <\/p>\n
That two organizations partnered together to cancel debt on their own can help push \u201cthe federal government to do more to provide debt relief for student borrowers, Black borrowers in particular,\u201d Douglas said.\u00a0<\/p>\n
Launched a class on debt in fall of 2020<\/h2>\n
Douglas helped to facilitate the collaboration between the Debt Collective and Morehouse. He became familiar with the organization after launching a class on debt in fall of 2020. The idea for the class came following another major debt-relief announcement at Morehouse \u2014 billionaire Robert Smith\u2019s decision to pay off all the student loans of the school\u2019s class of 2019.\u00a0<\/p>\n
Last week Douglas showed his students in the class a local news clip about the announcement, which provided a \u201cperfect segway\u201d into a conversation about institutional debt at colleges and universities, he said.\u00a0<\/p>\n
Morehouse and the Debt Collective have been working together for about a year and a half to make the debt cancellation a reality. The logistics of purchasing and canceling debt can be challenging, but the Debt Collective and Rolling Jubilee have some experience with the process.\u00a0<\/p>\n
In the mid-2010s, Rolling Jubilee \u2014 named for the year in the Bible when borrowers would be freed from debts after a 49 year cycle \u2014 bought up and canceled medical debt as well as the debt of some students who attended Corinthian Colleges, a now-defunct for-profit school.\u00a0<\/p>\n
In those cases, the group bought up debt on the secondary market, where debt buyers pay a small fraction of what borrowers actually owe and then attempt to collect on the loans, in some cases using aggressive tactics.\u00a0\u00a0<\/p>\n
This time, the Debt Collective and Morehouse worked collaboratively to come up with a number that would make sense for the Rolling Jubilee to pay Morehouse to buy up the debt, said Thomas Gokey, an organizer with the Debt Collective.\u00a0<\/p>\n
\u201cThey didn\u2019t want to have these balances on their books and we wanted to give them some money for it,\u201d Gokey said. The resulting transaction \u2014 $125,000 for roughly $9.7 million in debt \u2014 meant that the Rolling Jubilee paid pennies on the dollar to wipe out the accounts. Some of the debt was quite old and would be difficult to collect on or to sell for very much, Gokey said.\u00a0<\/p>\n
Nonetheless, \u201cit was still having a big impact on people,\u201d he said. \u201cThe math on it was really what made sense in the context of our collaboration.\u201d<\/p>\n
$1 million donation helped facilitate debt buy<\/h2>\n
The money for the debt buy came from a $1 million donation the Rolling Jubilee received in 2020, from a \u201cwealthy woman who made her fortune in business,\u201d said Astra Taylor, an organizer with the Debt Collective.<\/p>\n
The donor was inspired to make the contribution after watching the so-called K-shaped recovery during the early days of the pandemic, Taylor said. The donor watched as \u201cher investments were booming,\u201d but \u201cworking people were really struggling despite the pandemic assistance that was there,\u201d Taylor said.\u00a0<\/p>\n
\u201cShe saw the connection between COVID and the need for debt relief clearly, which is a really interesting thing for someone who is extremely wealthy to see,\u201d Taylor said. \u201cWe made a commitment that we would spend the entire donation on debt abolition in as strategic a way as possible.\u201d\u00a0<\/p>\n
In addition to the Morehouse debt, the organization used the donation last year to cancel $1.7 million in debt for nearly 500 people who owed the money to Bennett College, a Historically Black liberal arts college for women in North Carolina. The Debt Collective also used the funds to wipe out about $3.2 million in probation debt, owed by roughly 20,522 people in 2021.\u00a0<\/p>\n
Taylor said announcements around other debt-cancellation actions are coming soon. Still, unless the group gets another similar donation for this specific purpose, they don\u2019t expect to continue to buy up and cancel debt, organizers said. That\u2019s in part because they\u2019re focused on activism that aims to push the government and other institutions towards broader debt cancellation.\u00a0<\/p>\n
In addition, bringing these announcements to fruition can often take years of work, organizers said. Finding the right partners and working through the logistics can be a challenge. \u201cWe didn\u2019t want to buy debt from predatory debt-collectors and feed that industry,\u201d Taylor said.<\/p>\n
\u201cThey understood the value of cancellation for their community,\u201d Taylor said of Morehouse. \u201cIt\u2019s still something that took many conversations and building trust.\u201d\u00a0<\/p>\n
Colleges take different approaches to debt owed to them by students<\/h2>\n
Colleges across the country take different approaches to debt owed to them by students and former students. Some withhold transcripts making it difficult for students to continue their education at the school or transfer elsewhere. Others will go as far as taking students to court to collect on the debt.\u00a0<\/p>\n
In recent years, some colleges have become more willing to wipe out debt owed to them. During the pandemic, the federal government gave schools flexibility to use COVID relief funds to cancel balances owed to them and many community colleges, HBCUs and regional public colleges took the government up on the offer.\u00a0<\/p>\n
Last week, the Department of Education said starting in July 2024, colleges won\u2019t be able to withhold transcripts for terms that students used federal student aid to fund and that are fully paid for.\u00a0<\/p>\n
Owing debt presented an obstacle to continuing education<\/h2>\n
For Young, owing the debt to Morehouse had presented an obstacle to continuing his education. Young started at the college in fall 2020, during the height of the pandemic, when courses were virtual. During the 2021-2022 school year, Young\u2019s first year on campus, he faced some mental and emotional health challenges, which ultimately resulted in him being diagnosed with ADHD.\u00a0<\/p>\n
\u201cI was having to go out and seek that help outside of the institution,\u201d Young said. \u201cIt took a lot out of me, it took a lot of my energy and time which I wasn\u2019t able to give to my academics. After that year and all of those struggles I decided it was best for me to take a year off.\u201d He left Morehouse with a balance.\u00a0<\/p>\n
Young, who lives in Dayton, Ohio, enrolled at Sinclair Community College this fall. The school provided him with some flexibility that allowed him to enroll with an unofficial transcript, but he worried that eventually he\u2019d have to produce an official transcript to have his credits from Morehouse count towards graduation.\u00a0<\/p>\n
\u201cTruthfully I did not know how I was going to get back to school, with having a balance at Morehouse,\u201d he said. \u201cThey would not release transcripts if you had an outstanding balance.\u201d\u00a0<\/p>\n
Now, Young said he\u2019s excited to have a \u201cfresh start.\u201d His experience navigating the healthcare system as a college student inspired him to pursue a career in psychology, which will require several more years of schooling.<\/p>\n
\u201cI learned a lot about that system and I really developed a passion for that work and wanting to fill a gap or a void that I saw,\u201d he said. Young described the gap as \u201cthis disconnect in terms of the resources and access to and even just how we use these resources as people of color in America, but specifically Black men and women.\u201d\u00a0\u00a0<\/p>\n<\/p><\/div>\n