Law suits against indebted students should be a last resort

The attainment of a post-secondary education as a means to socio-economic advancement has been the cornerstone of American society for many decades. For many students, attending public institutions may be the only financially viable option for doing so. Approximately three-quarters of enrolled students attend public institutions, many of whom come from low-income backgrounds.

It is reported that 23% of full-time students enrolled at a four-year college do not complete their studies due to low academic skillsets. This lack of academic preparation is most prominent in immigrant, Native Americans, Black and Hispanic students.

Some public higher education institutions have compounded the pre-existing barriers further by threatening legal action against students for unpaid tuition. For many, there may be no ability to pay the outstanding balance due to economic hardship.

While this practice has been in place for almost 30 years, more students have been experiencing legal pressure to repay astronomical amounts which include interest as well as fees.

For students such as Amanda Belony who attended State University of New York (SUNY) Plattsburgh in upstate New York, withdrawing from classes became a necessity due to health reasons.

At SUNY Plattsburgh and many institutions across the United States, students are given a timeframe within the academic term to withdraw from one or more classes without a financial penalty. Unfortunately, by the time Amanda withdrew, this timeframe had lapsed.

Well after withdrawing from classes she received a notification from the attorney general’s office regarding a lawsuit. Amanda was unable to retain a lawyer for her defence, but also had to commute to Albany to attend the hearing from her hometown of Brooklyn, which is approximately 160 miles away.

With heavy rates of interest added to the principal balance owed, the overall amount was too great for her wages to cover. Although the amount was reduced by the court, Amanda still found herself having to take an additional job to pay this debt while also covering her regular bills.

Default judgements

Amanda is just one of many students in the SUNY system who have been faced with lawsuits filed against them. To date, there are almost 16,000 lawsuits filed against former students of the SUNY system for unpaid tuition.

Based on a law enacted by the state, the attorney general’s office is at liberty to file lawsuits against students for outstanding tuition fees owed. Moreover, no matter what city or county a student resides in or attended school in, any claims filed against them must be heard in the state’s capitol courts.

Unfortunately, most of these cases end in default judgements as students are unable to attend their hearings due to the location or to their inability to afford a lawyer. When cases do default, restitution can include deduction of wages and-or income tax refunds. By doing so, either a portion of these students’ wages or all eligible tax refunds can be withheld in accordance with the judgement until the required debt has been met.

With reduced state funding on the rise, public higher education institutions are now beginning to shift their focus and strategies to tuition-based revenues. The average cost of attending a four-year course at SUNY is US$26,000 per year. Even with other forms of financial assistance, such as student loans and grants, less than half of these costs are covered.

The practice of taking legal action against students should be a last resort and students should be notified well in advance and given several opportunities to settle their debts. This has not always been the case. Between November 2019 and March 2020 there were significant increases in students having legal action taken against them, some within a year of inactive enrolment and others immediately after non-enrolment.

Since taking office Attorney General for New York State Letitia James has made known her intentions to advocate for students by reducing the number of cases being filed against them. Likewise, Assembly member Harvey Epstein has also committed to assisting these students by introducing a bill that allows attorney generals to file claims against students only in the cities or counties in which they reside.

Compounding debt

In addition to New York State, other states such as Virginia, Pennsylvania, Ohio and Louisiana have all passed laws that allow attorney generals to take action against students for outstanding debts.

Like New York State, Virginia has also implemented deducting wages for students found liable of defaulting on tuition payments. In Ohio, once unpaid tuition payments have been reported to the attorney general’s office, they will then send this debt to private debt collectors and private law firms. As the debt is sent to each party, additional fees are included.

A further look should also be taken at how institutions are dealing with student debt, as well as the accuracy for financial aid packages. Any negligence can further contribute to students’ debt. For students who are not knowledgeable about their finances or financial aid, these errors and mistakes can go unnoticed or unresolved until it is too late.

Students are fighting back. A class action lawsuit was brought against Binghamton University by four former students of the institution. In the case of Strum v SUNY, a lawsuit was initiated by two students, amongst others, who were incorrectly charged out-of-state tuition.

Both students initiating the lawsuit, while residents of New Jersey, graduated from New York State high schools and met the conditions for in-state tuition. Approximately 29 institutions fell within the lawsuit, all of which are four-year colleges.

Ability to repay

There is no expectation that institutions should automatically forgive what is owed, as tuition payments help sustain their operations; however, better attention and care should be given to the financial upheaval created for specific populations in recovering lost revenue.

Administrators within institutions should ask themselves how students from low-income backgrounds can repay additional monies owed that have been inflated by interest rates and other fees.

Based on the US$247.7 million already owed in unpaid tuition fees, institutions have only been able to recoup US$11.8 million. Government officials aware of the impact individuals without a post-secondary education have on the economy have also taken very little action to address this problem.

For institutional and future research purposes, institutions should track the reasons for students un-enrolling. This can help identify any internal or external threats to the institutions and better prepare them for finding empirical solutions.

Tracking this information could also shed light on how many students will face or are faced with financial burdens that will prohibit them from resuming their studies. If legal action is required, the legislature should allow courts within students’ jurisdictions to oversee these proceedings instead of having students travel to a central location which may be a financial burden for them.

Donelle S Bailey is an EdD student in educational leadership and change at Empire State University (State University of New York), USA.