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In the spring of 2021, $600 stood between Endele Wilson and his dream of achieving a teaching credential from Long Beach City College.

Wilson, 47, started taking courses in 2019, a few months before the pandemic hit and just before he lost his job as an elementary school music teacher. He took on multiple jobs as a musician, and an overnight shift at a gas station, to support his eight children.

When he was about 18 units away from completion, he got the bill that stopped him in his tracks. He didn’t qualify for financial aid, he said, because of low grades years ago at another community college. He was confronting $600 in unpaid enrollment fees — and couldn’t register for classes until he settled the balance.

The college would, effectively, force him to drop out.

“I didn’t know what to do,” Wilson recalled. “Even working two jobs, I don’t make enough money to do anything but survive.”

“Too many students are struggling with hardships that make even modest debts a barrier to enrollment in community colleges.”

Eloy Ortiz Oakley, chancellor, California Community Colleges

Enrollment at California Community Colleges has plummeted nearly 20% during the pandemic to about 1.3 million students from fall 2019 to fall of 2021, according to state data, leaving campuses worried about their future and potential students with fewer of the opportunities offered by higher education. Pandemic-related hardships have propelled many students to choose jobs over education and online classes have been barriers for low-income students without digital resources.

But new research suggests colleges’ own policies around unpaid balances may also be contributing to the decline while creating lasting financial harm for the institutions and students.

A report published Thursday by the Student Borrower Protection Center, a nonprofit advocacy group focused on student debt, attempts to quantify the scope of this problem. Using data from three California Community College districts and student demographic information, researchers estimate that, from July 2020 to June 2021, some 321,000 community college students accrued a collective $107 million in debt to their campuses.

Researchers projected estimates for the system based on the percentage of students affected in Compton, Lake Tahoe and Peralta Community College Districts. The report was provided jointly to The Hechinger Report and the Los Angeles Times.

In addition, The Hechinger Report obtained data from seven community college districts, representing 19 of the 116 community colleges in the California system. Though there is variation in what each district tracks, the data shows tens of thousands of students in debt to their community colleges, roughly in line with the researchers’ estimate.

The records obtained by The Hechinger Report include data on a range of institutional debts from colleges and districts including Evergreen Valley College in San Jose, the three-campus Contra Costa College District, the nine-campus Los Angeles Community College District and the three campuses of the Coast Community College District in Orange County. 

The pain from these debts is not felt evenly, researchers said.

Hidden Debt Trap

There’s a whole world of student debt that no one is talking about. In fact, most people don’t even realize it exists. Millions of students have racked up billions of dollars in debt owed directly to their own colleges and universities. 

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“They impact low-income students at a much higher rate,” said Charlie Eaton, assistant professor of sociology at the University of California-Merced and co-author of the report. “These debts are widening inequalities in who gets a degree and it inflicts financial turmoil.”

Related: Public colleges shock students by sending them to costly debt collection agencies

When students owe money to their colleges — even small amounts — they can be barred from re-enrolling. Schools can refer students to state tax collectors to have their tax refund garnished or send them to debt collection companies, which often charge high fees. Colleges often don’t recoup much money and former students can have their credit destroyed.

Students accrue the debt for a number of reasons, according to experts and college officials. Sometimes, they enter into a payment plan for tuition and can’t keep up. Other times, they’ve paid tuition in full, but owe money for overdue parking, library or housing fees. Sometimes students owe a fine after failing to return a computer or calculator on time.

The number of students in this situation likely grew during the pandemic, Eaton said, although it’s difficult to know by how much. It’s not known how many students wanted to re-enroll but were prevented from doing so because of their debt. The California Community College Chancellor’s Office does not track this information. Nor does it keep tabs on what happens to a student in debt. It also doesn’t regulate how colleges handle unpaid fees.

Researchers estimate that, from July 2020 to June 2021, some 321,000 community college students accrued a collective $107 million in debt to their campuses.

Chancellor Eloy Ortiz Oakley acknowledged the problem.

“Too many students are struggling with hardships that make even modest debts a barrier to enrollment in community colleges,” he said, adding that he encourages colleges to use their federal relief money to clear student debt.

Oakley said that community college students who needed financial assistance during the pandemic are some of the “most deserving recipients” of federal relief.

“Helping community college students, many of whom are trained to be frontline pandemic fighters, continue their educations is a great investment for America,” Oakley said. “We also know that for every dollar taxpayers invest in community college students, they see a significant return on that investment over the life of the students.”

Community college tuition can be free for students in good academic standing who qualify for state and federal grants through the federal financial aid application called FAFSA. The California Promise Program waives enrollment fees, as does a Los Angeles-specific program.

But Eaton and his fellow researchers uncovered ways in which students can get tangled in financial aid bureaucracy. Some colleges allow students to enroll in classes before their financial aid has been approved and disbursed, they found. If they fill out the paperwork incorrectly, they can receive less money than expected and can’t bridge the gap.

Or, when students withdraw part way through the semester, schools must return their federal financial aid to the Department of Education and the students must repay their school, even if they only attended classes for a few weeks. The Department of Education currently offers waivers for this process, if a college can prove that a student dropped out for a pandemic-related reason, but available data show that many students haven’t gotten relief.

Related: Federal relief money boosted community colleges, but now it’s going away

Some 2,100 students in the Los Angeles Community College District who withdrew between fall 2019 and summer 2021 owed federal aid reimbursement money to their school, according to data from district officials. In total, students owe the district $10 million for all debts.

Compton College decided to clear 2,702 students’ debt during the pandemic, to keep them enrolled, said President Keith Curry.

The median debt forgiven was just $41.

“If you owe $41 and you’re not coming back to school because you owe $41, that’s problematic,” Curry said.

The problem of these institutional debts is particularly high at community colleges, but extends to four-year campuses, as well. The UC researchers estimate that 44,000 students from the University of California and California State University systems have accrued $78 million in debt since the start of the pandemic.

When Daisy Lopez began at UC Riverside in the fall of 2020, she and her family had just been evicted and were homeless.

Lopez, a first-generation college student, had on-campus housing, but spent a lot of time shuttling back and forth between Riverside and L.A., she said, because her family was having to move from motel to motel. She struggled with online learning and began to face severe health issues. She was hospitalized several times and missed classes. Her GPA dropped and she lost her financial aid. When she tried to register in the fall of 2021, it turned out there was a hold on her account for $5,654 – in unpaid housing costs.

The report said that at one UC campus, which it did not name, the share of undergraduates withdrawing with debt doubled from 2019-2020 to 2020-2021 and the amount of debt owed tripled. Additional information obtained by The Hechinger Report show similar pandemic-era growth in student debt at several other UC, CSU and community college campuses.

“If you owe $41 and you’re not coming back to school because you owe $41, that’s problematic.”

Keith Curry, president, Compton College

At Diablo Valley College, in Contra Costa County, for instance, the number of students with outstanding balances grew by 50 percent between 2019-20 and 2020-21, from fewer than 4,700 to more than 7,000. The median debt climbed from $21 to $138 in that time.

California has been at the forefront of policies to ease student debt burdens. In 2019, it became the first state in the nation to ban transcript withholding for unpaid balances – a policy passed or under consideration in at least nine states and advocated for by Secretary of Education Miguel Cardona. But the policy is of little help for students who want to continue their education at the school where they began or who cannot come up with the money to avoid being sent to a debt collector.

California’s public colleges and universities have wide discretion in how to handle student debt collection, and practices vary. Some try on their own to collect the debt. by contacting students. Others use private debt collection agencies. Some forward the debt to the state Franchise Tax Board to garnish tax refunds.

Related: Colleges are withholding transcripts and degrees from millions over unpaid bills

Although some schools paused the use of debt collectors during the pandemic, that practice can have “lasting effects on your ability to rent an apartment, to get a car loan, to get a credit card and to fully participate in the economy,” Eaton said.

Meanwhile, the Chancellor’s Office has continued running its tax-offset program. Participating schools send the office names of students with past due balances and the information is sent to the state Franchise Tax Board. Students can then have their state tax refund and any lottery winning garnished. According to the Chancellor’s Office, 21 districts, involving about 96,000 students currently participate in the program. Seven others are in the approval process.

Officials at Rio Hondo Community College in Whittier decided to pause participation in the tax-offset program for current students before the start of the pandemic and will not restart for at least three more years, said Stephen Kibui, vice president of finance and business. The campus typically gets back about 40 percent of what it’s owed after allowing for a 25 percent administrative fee, he said.

Enrollment at California Community Colleges has plummeted nearly 20% during the pandemic to about 1.3 million students from fall 2019 to fall of 2021, according to state data. Credit: Gary Coronado / Los Angeles Times

The college also previously worked with a debt collector, but scrapped that when the 33 percent fee was too high and students’ credit was being damaged.

For now, Rio Hondo is using federal relief money to waive current student debt, which Kibui says benefits both students and the college. The campus has lost more than 8,000 students since 2018-2019, with enrollment dropping from 33,500 to 25,000.

“The college is in dire need of students,” Kibui said. “We are not adding any financial hardships to any of our students.”

Several other community colleges and universities across the state have used their federal relief funds to forgive student debt, in hopes that students will stay enrolled or dropouts will return.

Long Beach City College, for example, has forgiven $2.1 million in debt for 7,990 students from spring 2020 to summer 2021, according to the interim executive vice president of student service, Dr. Nohel Corral. Individual debts forgiven ranged from $100 to $5,000.

The decision meant thousands were able to continue with their education. Endele Wilson was one.

For him, the timing was critical. If his debt were not forgiven, “I would have had to stop school,” he said. “It’s my hypothesis that if people stop for two semesters it’s not as easy to get started again – I could have easily been fully sidetracked.”

The UC researchers’ report recommends that the state should require – and financially support – all colleges and universities to forgive these debts, arguing that it could have an enormous impact. When Lake Tahoe Community College District canceled pandemic debts for 457 students last year, it found that 152 of them immediately re-enrolled to resume their studies.

“If Lake Tahoe’s success was replicated statewide, tens of thousands of students would be re-enrolled,” the report concludes.

Some advocates say that schools should use this moment to rethink how they handle student debts, as federal relief money is about to dry up.

“See if you can come up with a more mutually beneficial solution than just saying, ‘This is a public debt, I’m sending it to collections,’” Jessica Thompson, vice president at The Institute for College Access and Success said. “Nobody wins and the person whose name the debt is in gets into a spiral that has repercussions that benefit nobody.”

She pointed to Detroit’s Wayne State University, which has seen success with its program that allows students with debts to re-enroll and forgives those balances after they complete a semester. Such a program benefits colleges as well, by helping them boost enrollment and, ultimately, bring in more money from the former dropouts.

“It turns into a self-sustaining way of dealing with this debt,” Thompson said.

Dr. Curry, who led the effort to forgive debts to Compton College, worries that the program cannot continue without pandemic-related funds.

“We never had the opportunity to pay off students’ debt” before the pandemic, said Dr. Curry.  “The question will be, can you sustain it? And also, what policy changes will you have over the next two or three years to ensure that this doesn’t happen to other people?”

For now, forgiveness has brought back many students who see completing college as one of their few options to advance.

Lopez, the UC Riverside student, had her debt lifted through federal funding. Her mom is dealing with homelessness and her own health isn’t perfect, but she is managing.

“I was struggling, honestly, and without it, if I still had the debt, I wouldn’t be in school,” she said. “I need college. Without it I would feel like I have nothing left for me, and no option to build for the life that I want.”

This story about college fees was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our higher education newsletter.

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