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Occupy removes $ 4 million in student loan debt for others

After forgiving millions of dollars in medical debt, Occupy Wall Street is tackling a new beast: student loans.

Marking the third anniversary of the Occupy Wall Street movement, the group’s Strike Debt initiative announced Wednesday that it has removed $ 3.8 million in private student loan debt since January. He said he bought the debts for pennies on the dollar from debt collectors and then simply forgave that money rather than trying to collect it.

In total, the group spent just over $ 100,000 to buy back the $ 3.8 million in debt.

While the group is unable to buy the majority of the country’s $ 1.2 trillion in outstanding student debt because it is backed by the federal government, private student debt is a fair game.

Related: US Government To Corinthian Colleges: Forgive $ 500 Million In Student Loans

This debt bought by Occupy belonged to 2,700 people who had taken out private student loans to attend Everest College, which is run by Corinthian colleges. Occupy focused on Everest as Corinthian Colleges is one of the largest in the country for-profit educational businesses and has been in legal hot water lately.

Following a number of federal inquiries, the college told investors this summer that it planned to sell or close its 107 campuses due to financial problems, potentially leaving its 74,000 students in dire straits.

“Despite Corinthian’s dire financial difficulties, its checkered past, and its history of lying and deceiving vulnerable students, tens of thousands of people can still be held accountable for the loans they took by playing by the rules and trying. to get an education, ”said a strike. The debt member said in an email.

Then on Tuesday the company was hit with a Consumer Financial Protection Bureau lawsuit on allegations of abusive lending practices. The lawsuit demanded that Corinthian forgive the more than $ 500 million in past due student debt that its students had incurred since 2011 under Corinthian’s Genesis loan program.

Strike Debt has said he doesn’t think the lawsuit will impact the debts he has already canceled.

Related: States and Federal Government Crack Down on For-Profit Colleges

Corinthian Colleges spokesman Kent Jenkins said the school stands for the “high quality” education its students have received and is challenging the CFPB’s claims. He noted that Corinthian has a lower default rate than other community colleges, and it has higher graduation and placement rates.

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Levia Welch, 32, enrolled at Everest College in January last year. She was struggling to find a job without a high school diploma or GED, so she enrolled in an 8-month vocational training and GED preparation program on Everest. She took out several loans to pay for the program, and at the end of the program, she said the administrators told her she couldn’t get GED unless she stayed in the program longer, which meant taking more loans. .

Related: 40 Million Americans Now Have Student Loan Debt

Eventually, she gave up, saying that the lessons were not useful and only made more debt. She gave up in May with nearly $ 18,000 in debt, spread over four or five loans. She paid off a small loan of $ 636 while she was still in the program, and she looked for jobs so that she could pay off the rest. But without GED, finding an employer to hire him has been difficult.

“I just wanted to move on in life but I didn’t get it,” she said. “I feel like a victim.

Then, last week, she got a letter from Strike Debt saying she had canceled one of her $ 669 loans. While that means she still owes over $ 16,000 in federal and private loans, the letter came as a welcome surprise.

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The money that Strike Debt uses to buy debt comes from a pool of around $ 700,000 that it has received at fundraising events over the past few years. Before starting to pay off student loans, the group cut more than $ 15 million from emergency bills for thousands of people.

Because the group realizes that abolishing all student loans and medical debt in the country would be an impossible task, they are turning to a new platform called The Debt Collective as a way to bring debtors together so they can negotiate debts with creditors – or refuse to pay them in full.

“Debt is the bond that binds the 99%, whether you are a student past due on student loans or a parent struggling to pay their health care bills,” said Ann Larson, member of Strike Debt, in a press release. “Being forced into debt for basic social services is a systemic problem.”

CNNMoney (New York) First published on September 17, 2014: 12:14 a.m. ET