SUNY ends harsh student debt collection

After years of inflexible collection practices that have subjected SUNY students to punitive payment schedules, high interest rates, and low collection fees, New York State officials are promising a change.

The State University of New York system’s board of trustees voted last month to review how student debt is being collected at all 64 SUNY campuses; Interim Prime Minister Deborah Stanley pledged to make additional key changes.

“Debt collection practices on campus that prevent high-achieving students from enrolling in classes,” are an unfair payment method and should be banned in the future, Ms. Stanley said in an email. . ”

The change could mean an end to preventing students from re-enrolling if they owe money. This often causes students to drop out – even with balances of as little as $100 – although the principal does not say when the practice session will end. The SUNY board resolution also stops withholding transcripts from students who have completed courses but are still in debt.

Cary Staller, a SUNY trustee, said before introducing the resolution that the state system’s approach to student debt collection had some “bad practices”.

Mr Staller said: “I think this is long overdue. “This is the end of some dark days for SUNY, and I think it’s a really good step forward.”

Changes come after a article The Hechinger Report and The New York Times last September brought to light many of SUNY’s punitive debt collection practices.

Some legislators are also trying to amend the New York State Finance Law to reduce penalties and fees that add to a student’s debt burden. Current statute allows the attorney general to add a 22 percent collection fee on any debt owed to the state. It also allows interest to begin accruing from the date the debtor receives notice of a past due bill.

State Senator Jamaal Bailey introduced a bill that would remove state-owned student debt from what is defined as debt in finance law; such law shall no longer apply to delinquent tuition and fees.

Senator Bailey, a Democrat representing parts of the Bronx and Westchester counties, said: “We’re in an era where student debt is ruining everyone – it’s crippling. , it is debilitated. “We’re not saying that people shouldn’t have to pay their debts; We want to make it more manageable. ”

Although state financial law does not require the attorney general’s office to charge an additional 22% fee, the office often does so as a way to cover collection costs.

Interest on delinquent tuition at SUNY can add up to thousands of dollars in debt. Many students are still in debt after paying off the outstanding principal due to interest and additional collection fees.

For instance, in a lawsuit filed this month in State Supreme Court in Albany, the attorney general’s office charged a $2,695 arrears fee to a SUNY Purchase student owed $12,073. Along with an additional $908 interest, student debt has grown 30 percent in just over three years.

Attorney General Letitia James participated in the drafting of the bill amending the financial law. A spokeswoman said in an email that Ms James “led efforts to eliminate fees that were previously levied on defaulters,” adding, “We must do all we can to reduce ease this burden and we look forward to working with Senator Bailey of the State, the Legislature and the Governor to make this clear. ”

If the city’s next budget includes funding to cover the cost of the toll, that means the student won’t have to pay toll fees.

Supporters, however, are concerned that Mr Bailey’s bill does not specify which standard would replace the current standard for additional fees and interest.

Governor Kathy Hochul directed SUNY early last month to stop withholding student transcripts solely because of unpaid debt, which often prevents them from transferring to other colleges or finding work that could help them. pay. The board’s January 25 resolution formally ended that practice.

And in December, Governor Hochul signed a bill cap interest at 2 percent after the attorney general’s office receives a default judgment. In the past, interest often accrued at the rate of 9 percent.

Trustees for the City University of New York, which has a separate governance structure unrelated to SUNY, voted this month to end the policy under which the 260,000-student public system has withheld transcripts and deny enrollment verification for students who owe tuition.

The changes are the latest in a string of student debt overhauls. Last fall, the New York attorney general’s office changed its policy of suing students who pay overdue tuition only in Albany, a decision that came just days before the publication of The Times article on the matter. this. Attorneys 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 ended in default, as many students – some of whom lived hundreds of miles away – did not show up.

Advocates frustrated by the changes to SUNY’s debt collection practices say the new policies and proposals will have a significant impact if implemented. But they also point out that the high cost of tuition is a more fundamental problem. They note that the gap caused by student inability to pay opens the door to private collection agencies, which can profit from student loans.

This is a risk that disproportionately affects low-income students, said Carolina Rodriguez, director of education debt consumer assistance programs at the New York Community Service Association. “Nobody,” she said, “should make money from collecting student debt.”

this paragraph Made by The Hechinger Reportan independent, nonprofit news organization focused on inequality and innovation in education. SUNY ends harsh student debt collection

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