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UPDATE

On May 4, 2022, New York Gov. Kathy Hochul signed a bill that prohibits all colleges and universities in New York state, public and private, from withholding transcripts from students who owe tuition or fees. The  practice makes it difficult for students to transfer to another college or get jobs that could allow them to pay their debts. In January, as reported in our story below, Gov. Hochul directed SUNY colleges to stop transcript withholding, but this bill ends the practice at all private colleges in the state, too.

After years of inflexible debt-collection practices that have burdened SUNY students with punitive payment schedules, high interest and crippling collection fees, New York State officials are promising change.

The board of trustees of the State University of New York system voted last month to review the way it collects student debt at all 64 SUNY campuses, and the interim chancellor, Deborah Stanley, pledged to make additional significant changes.

“Campus debt-collection practices that prevent students in good academic standing from registering for classes,” Ms. Stanley said in an email, “are an unfair means of pursuing payment and should be prohibited in the future.”

The change could mean an end to blocking students from re-enrolling if they owed money. This has often forced students to drop out — even for balances as little as $100 — although the chancellor has not indicated when the practice will end. The SUNY board’s resolution also stopped the practice of withholding transcripts from students who had completed courses but still had debt.

“We’re not saying that people shouldn’t have to pay their debt; we want to make it more manageable.”

Jamaal Bailey, New York state senator

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

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

The changes come in the wake of an article by The Hechinger Report and The New York Times last September that brought many of SUNY’s punitive debt collection practices to light.

Some legislators are also trying to amend the New York State Finance Law to reduce the penalties and fees that add to a student’s debt burden. The existing statute allows the attorney general to add a 22 percent collection fee for any debt owed to the state. It also allows interest to start accruing from the day a debtor receives notice of an overdue bill.

State Senator Jamaal Bailey has introduced a bill that would remove state-owned student debt from what’s defined as debt in the finance law; that law would no longer apply to overdue tuition and fees.

“We’re in a day and age when student debt is destroying people — it is crippling, it is debilitating,” said Senator Bailey, a Democrat who represents parts of the Bronx and Westchester County. “We’re not saying that people shouldn’t have to pay their debt; we want to make it more manageable.”

Students at SUNY Buffalo, and at other SUNY campuses, may soon be able to register for classes, even if they still owe tuition. Credit: Malik Rainey for The New York Times

Even though the state finance law doesn’t require the attorney general’s office to add a 22 percent fee, the office typically does so as a way to cover the cost of collecting the debt.

Interest on overdue tuition at SUNY can balloon debts by thousands of dollars. Many students are still in debt long after paying off the original amount they owed because of mounting interest and the addition of collection fees.

In a lawsuit filed this month in the State Supreme Court in Albany, for example, the attorney general’s office charged a collection fee of $2,695 to a SUNY Purchase student who owed $12,073. Along with additional interest of $908, the student’s debt had grown by 30 percent in just over three years.

Attorney General Letitia James was involved in drafting the bill to amend the finance law. A spokeswoman said in an email that Ms. James “has been leading the effort to eliminate fees that have historically been levied on those in default,” adding, “We must do all we can to alleviate this burden, and we look forward to working with State Senator Bailey, the Legislature and the governor to see this through.”

If the city’s next budget includes funding to cover the cost of collection, it could mean that students wouldn’t have to pay the collection fee.

Still, advocates are concerned that Mr. Bailey’s bill doesn’t make clear what standard would replace the current one for additional fees and interest.

Gov. Kathy Hochul directed SUNY early last month to stop withholding transcripts from students simply because of unpaid debt, which has often prevented them from transferring to other colleges or getting jobs that might help them repay what they owe. The board’s Jan. 25 resolution officially ended that practice.

“I think this is overdue, quite frankly. This is the ending of some dark days for SUNY, and I think it’s a really good step.” 

Cary Staller, State University of New York trustee

And in December, Governor Hochul signed a bill that caps the interest rate at 2 percent after the attorney general’s office has obtained a default judgment. In the past the interest usually accrued at a 9 percent rate.

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

These 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 with overdue tuition exclusively in Albany, a decision made just days before publication of The Times’s article on the practice. Lawyers representing the attorney general’s office have begun to file suit in the counties where students reside, making it easier for them to defend themselves in court. Most cases filed in Albany had ended in default, as many students — some of whom lived hundreds of miles away — did not appear.

Advocates who have been pressing for changes to SUNY’s debt collection practices said the new policies and proposals would make a significant impact if put in place. But they also pointed to the high cost of tuition as a more fundamental problem. The gap caused by students’ inability to pay opens the door to private collection agencies, which can profit from student debt, they noted.

This is a hazard that disproportionately affects low-income students, said Carolina Rodriguez, director of the education debt consumer assistance program at the Community Service Society of New York. “No one,” she said, “should be making money off collecting student debt.”

This story SUNY student debt was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Try Hechinger’s Tuition Tracker tool to learn more about actual college costs.

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Meredith Kolodner writes investigative articles and produces data analyses for higher education and K-12 stories. She previously covered schools for the New York Daily News and was an editor at Inside...

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