Groups ask Ohio AG to stop collecting student debt during pandemic

Several non-profit organizations have asked Ohio Attorney General David Yost to immediately stop collecting millions of dollars in student debts because of the economic downturn caused by the COVID-19 pandemic.

Policy Matters Ohio, the Ohio Student Association, Innovation Ohio and College Now Greater Cleveland sent a letter to Yost’s office Wednesday, making the request. As mandated by state law, all public universities in Ohio are required to turn over student debts to the Attorney General’s office for certification and collection.

Currently, there are about 390,000 active accounts valued at more than $730 million that have been turned over to the AG’s office in the past 40 years, said Piet van Lier, a researcher for Policy Matters Ohio, a Cleveland-based non-profit research institute. Thousands of new accounts were added in recent years, he said.

The attorney general’s office has shown some willingness to work with the groups.

Yost’s office “agreed to review requests for relief from ongoing collection of previously certified debt on a case-by-case basis with the full cooperation of and direction from individual institutions,” said spokesman Dave O’Neil. “Existing debt collection efforts are at various stages, depending upon the situation, previously entered agreements and pending litigation.”

The AG’s office will stop the certification of new student debt until April 27 at the earliest.

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A case-by-case approach is a great first step, but it’s not the solution given the sagging economy, van Lier said. Instead, a blanket approach is the better option because “This is such a big issue for so many people,” he said.

The group issued six main recommendations to Yost:

  • Extend the Memoranda of Understanding with Ohio's higher education institutions to stop new certification of student debt at least through the end of the pandemic.
  • Suspend state and third-party collections efforts on all active student debt and automatically pause any active payment plans without penalty to the debtor.
  • Stop the accrual of interest, fees or fines on active student debt accounts for the duration of the suspension.
  • Suspend special counsel collections efforts to collect on student accounts, immediately halting debt practice collections of garnishing wages, seizing state tax refunds or bank accounts, and initiating foreclosure proceedings.
  • Reduce by 30% the amount of student debt owed by individuals who are out of work because of the crisis.
  • Report missed payments to credit bureaus as on-time payments.

In February, Policy Matters Ohio released a study that found debts at times causes students to drop out of school. The debt 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%.

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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 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, the group said. 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.

The debts particularly hurt students of color and those who come from low-income families, according to Policy Matters. Students at such institutions as 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. 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.

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.

Student debt still higher in Ohio than many other states

Until Monday, Braxton Jeter, a senior in early childhood education at CSU, was preparing to apply for jobs as a teacher’s aide after graduation in May. Although she recently earned her Ohio teaching certificate, she owed the university more than $2,000, and could not afford to repay the debt by the May 9 deadline. Until the balance was paid, the university likely would have withheld her official transcript, and she would not have been able to prove to potential employers that she completed her degree, Jeter said.

She learned about the outstanding balance at the beginning of March, before students were forced to leave campus because of the COVID-19 pandemic.

However, the university reimbursed students for on-campus housing for the remainder of the semester, and that amount was enough to clear Jeter’s balance, she said.

“There’s stories … about students who are just trying to finish their education, trying to make sure they can make a living in this economy who then graduate or don’t get to complete a degree who are saddled with this debt that can balloon really quickly because of our state practices,” said Ohio Student Association Executive Director Prentiss Haney.

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