Withholding Dreams: Why Washington Must Tie COVID Relief for Colleges to Relief for Students Burdened by Institutional Debt

Abstract

There is a little-discussed type of student debt hanging over the heads of millions of Americans. These debts often come in small amounts. A few hundred here. A few thousand there. These are debts that students and former students owe directly to their schools, for everything from unpaid library fines to unpaid tuition. Unlike federal student loans, these debts do not come with special consumer protections or guaranteed repayment options, and they are not subject to the same current payment freeze. Yet these debts can completely upend a student’s educational aspirations and hang over borrowers’ heads for years, dinging their credit and otherwise causing unnecessary financial pain. Recent research estimates that there may be as much as $15 billion in these so-called “institutional debts,” even though they are rarely discussed as part of the student debt crisis. In this paper, the SBPC and Student Loan Justice Fellow Mark Huelsman argue that Washington must implement ways to provide relief to students burdened by these debts as part of COVID relief in higher education.

Keywords: student debt, transcript, accounts receivable, postsecondary education, institutional debt, college