After years of inflexible debt collection practices that have burdened SUNY students with punitive payment schedules, high interest and crippling collection fees, New York State officials are promising change.
The State University of New York system’s board of trustees voted last month to review how it collects student debt on all 64 SUNY campuses; Interim Chancellor Deborah Stanley has pledged to make other significant changes.
“Campus debt collection practices that prevent students in good standing from enrolling in classes,” Ms. Stanley said in an email, “are an unfair way to pursue payment and should be prohibited at the to come up”.
The change could mean the end of preventing students from re-enrolling if they owe money. This has often forced students to drop out – even for balances as low as $100 – although the Chancellor has not indicated when the practice will end. The SUNY board resolution also ended the practice of withholding transcripts from students who had completed their courses but still had debts.
Cary Staller, a SUNY trustee, said before introducing the resolution that the state system’s approach to collecting student debt contained some “ugly practices.”
“I think it’s overdue, quite frankly,” Mr Staller said. “It’s the end of a few dark days for SUNY, and I think it’s a really good step.”
The changes come in the wake of an article in the Hechinger Report and The New York Times last September that shed light on many of SUNY’s punitive debt collection practices.
Some lawmakers are also trying to change the New York State Finance Law to reduce penalties and fees that add to a student’s debt load. Current law allows the Attorney General to add a 22% collection fee for any debt owed to the state. It also allows interest to start running from the day the debtor receives notice of late payment.
State Senator Jamaal Bailey has introduced a bill that would remove state-owned student debt from what is defined as debt in the budget bill; this law would no longer apply to tuition fees and overdue fees.
“We’re in a time where student debt is destroying people — it’s crippling, it’s debilitating,” said Sen. Bailey, a Democrat who represents parts of the Bronx and Westchester County. “We’re not saying people shouldn’t have to pay their debt; we want to make it more manageable.
Even though state treasury law does not require the attorney general’s office to add a 22% fee, the office typically does so to cover the cost of debt collection.
Interest on overdue tuition at SUNY can inflate debts by thousands of dollars. Many students are still in debt long after they have paid off the original amount they owed due to rising interest and the addition of collection costs.
In a lawsuit filed this month in Albany state Supreme Court, for example, the attorney general’s office charged a $2,695 collection fee to a SUNY Purchase student who owed $12,073 $. In addition to the additional interest of $908, the student’s debt had increased by 30% in just over three years.
Attorney General Letitia James participated in the drafting of the Finance Act Amendment Bill. A spokeswoman said in an email that Ms James is ‘leading the effort to eliminate the fees that have historically been levied on those in default’, adding: ‘We must do all we can to ease this burden, and we look forward to working with State Senator Bailey, the Legislature, and the Governor to see this all through.
If the next city budget includes funding to cover the cost of collection, it could mean that students wouldn’t have to pay the collection fee.
Still, advocates worry that Mr Bailey’s bill does not specify what standard would replace the current standard for additional fees and interest.
Governor Kathy Hochul ordered SUNY early last month to stop withholding student transcripts simply because of unpaid debt, which has often prevented them from transferring to other colleges or earning honors. jobs that could help them pay off what they owe. The council’s January 25 resolution officially ended this practice.
And in December, Governor Hochul signed a invoice which caps the interest rate at 2% after the attorney general’s office obtains a default judgment. In the past, interest generally accrued at a rate of 9%.
Administrators at the City University of New York, which has a separate governance structure unrelated to SUNY, voted this month to end a policy under which the public system of 260,000 students withheld transcripts. grades and refused to verify the registration of students who owed tuition fees.
These changes are the latest in a series of student debt reviews. Last fall, the New York Attorney General’s Office changed its policy of prosecuting tuition-delinquent students exclusively in Albany, a move made just days before the Times article about the practice was published. Lawyers representing the Attorney General’s office have begun filing lawsuits in the counties where the students reside, making it easier for them to defend themselves in court. Most of the cases filed in Albany had ended in default because many students — some of whom lived hundreds of miles away — failed to show up.
Advocates who lobbied for changes to SUNY’s debt collection practices said the new policies and proposals would have a significant impact if implemented. But they also pointed to the high cost of tuition as a more fundamental problem. The gap caused by students’ inability to pay opens the door to private collection agencies, which can profit from student debt, they noted.
This is a hazard that disproportionately affects low-income students, said Carolina Rodriguez, director of the Consumer Education Debt Assistance Program at the Community Service Society of New York. “Nobody,” she said, “should make money collecting student debt.”