Study: Ohio law requiring colleges to certify student debt rife with fees; students of color hardest hit

An Ohio law mandating that public colleges and universities certify student debt to the Attorney General’s office burdens students with multiple fees and high interest rates, at times doubling the debt. Students of color tend to feel the impact the most, according to findings by Policy Matters Ohio, a Cleveland-based non-profit research institute.

Among the institutions, Central State University, Ohio’s sole historically black state school, and community colleges such as Sinclair and Clark State are hardest hit by the law, according to Policy Matters’ findings, which were released Thursday. CSU and the community colleges tend to have more people of color who come from low-income families and are first-generation students, the report said.

“That is really concerning,” said Piet van Lier, a Policy Matters Ohio researcher who wrote the report.

“These are young people in our state who probably most need that extra education and can’t necessarily afford it. I think that’s a really key piece of this. We have to think about what our goals are and who we’re trying to help the most. I would argue that it’s families and students like those who really need the education to find better jobs and contribute to their community in a more meaningful way.”

Central State rebounds from financial crisis, grows enrollment

State officials would like for 65% of all adult Ohioans to have a college degree, certificate or credential by 2025. As of fiscal year 2019, the AG’s office has about 390,000 outstanding student debt accounts valued at more than $735 million, Policy Matters found. Some of those accounts are more than 40 years old, van Lier said, noting that the student debt issue could impact the state’s goal for educated adults.

Among all Ohio schools, Central State’s average value of active debt accounts certified to the Attorney General’s office is substantially higher. At an average of $6,236 per enrolled student, CSU’s is more than two-and-a-half times the average amount at all of Ohio’s four-year institutions, according to Policy Matters.

“While Central State University is the most affordable of all 14 Ohio public, state-funded universities, CSU works throughout our students’ tenure on developing financial literacy and a deep understanding of debt management, said Cynthia Jackson-Hammond, the university’s president. “Consequently, our students have become more cognizant of the importance of graduating with little or no debt.”

In addition to CSU, Shawnee State and the University of Toledo are outliers among Ohio’s four-year universities in terms of the debt, because they tend to have higher numbers of certified accounts per enrolled student than other four-year schools, the report said.

The AG-certified debt includes unpaid tuition, fines for non-payment, parking fines, library and lab fees, and other charges not directly related to tuition. Most schools withhold transcripts from students with outstanding balances, inhibiting their ability to pursue further education and hurting their career goals, according to the findings.

The AG’s office declined to comment.

Debt that force students to drop out of school can start out relatively small, but interest, fines and fees can cause the amount to increase over time. Late fees and fines at the school level and the AG’s collections commission rate is generally 10%. The AG’s office pays debt collectors 21% on a contingency basis, and special counsel charges up to 33%, depending on the type of debt, according to the Policy Matters report. Unlike for most debt in Ohio, state law allows the AG to add collection fees to debt owed, which can burden students with even more to pay back.

This is an unusual practice nationwide. It allow lawyers and other third parties working for the AG sue thousands of Ohio students for amounts that are often many times more than their original past-due accounts, the report said.

Student debt still higher in Ohio than many other states

The state’s community colleges have nearly twice the debt accounts per student — 1.58 — as the state’s four-year colleges — 0.84 — according to Policy Matters. Fifteen percent of Ohio community college students are black and 34% are first-generation students, compared to 9% and 19% at four-year schools, respectively. However, three four-year institutions stand out. The University of Toledo, Shawnee State University and Central State have 1.83, 1.47 and 1.4 accounts per student with an average account value of $1,801, $3,030 and $4,469 respectively, Policy Matters said.

Each school has a higher-than-average number of first-generation students, particularly Central State, where 46% of the student body are the first members of their families to attend college.

“Central State is an unfortunate case study of the impacts of student debt on black students and how broken higher ed systems disproportionately impact minority-serving institutions,” said Prentiss Haney, a Dayton native and executive director of the nonprofit group Ohio Student Association. “We need AG’s office and legislature to step up and take action to address these issues.”

Key findings:

• State law requiring public colleges and universities to certify student debt to the Ohio Attorney General results in collections against thousands of students each year.

• Fines, interest and collection fees make debt balloon over time, ending students’ educational aspirations and trapping Ohioans in low-wage jobs.

• This disproportionately impacts students at two-year colleges, which are more affordable than four-years and serve higher proportions of black, Latinx, first-generation, part-time and older students.

• State policy makes it hard for schools to forgive debt and re-enroll students who can’t afford to pay past bills.

• Schools compound the negative impact by withholding transcripts and barring registration for students with debt.

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