Whenever I write about about either income inequality or basic income guarantee I usually get a comment how none of it will matter if we don’t help people get out from underneath debt first. I was also reminded of that recently when I heard how much interest some students are paying on their student debt. And I have started to read Debt: The First 5,000 Years which is fascinating.
So here is an idea. What if there was a site for crowdsourcing debt relief in a lottery format. People contribute some tiny amount (say the price of a Latte) every week. Then there is a random drawing and one or more of the participants’ student debt it paid off in full (obviously this will depend on participation rates).
Why this structure? Because the biggest problem with debt is the compounding of interest which is an exponential process. So to really help someone you have to wipe out their debt (or most of it) in one go as opposed to slowly over time. Incidentally, anyone could contribute if they wanted to even people who don’t have student debt but just want to help.
Now this may face all sorts of obstacles. First, I don’t know if student debt can generally be paid of early without penalty. If not then this could serve as a rallying cry for making that possible. Second, this would have the structure of a lottery, so the recipients would owe income tax. There might be a slick structural way around this though if they then continue to owe their $3 per week for several more years into the pool (effectively making it a debt swap but just to a much lower interest rate). Third, there are likely to be other legal restrictions (eg state lottery laws). Those two could provide a rallying opportunity.
I would love to see someone take this on and build it. And by the way if you do and want DebtRoulette as the URL I will happily contribute the .com and .org which I registered this morning.
