Report Calls Out ‘Costly’ Debt Collectors For Working Debts Owed to Public Colleges

Public colleges in 49 states across the country — all but Louisiana — are being called out in a report for placing unpaid debts with private collection agencies to be repaid for tuition, library fees, and parking fines, creating a “spiraling” amount of debt that former students are not able to repay, which keeps them from being allowed to continue their educations. A pair of collection agencies are specifically identified in the report, but there are other private collection agencies that are being accused of being part of a system that is keeping as many as 36 million Americans from not being able to finish their degree.

In many cases, colleges are required by state law to use private collection agencies to recover unpaid debts, and collection agencies have nothing to do with policies that keep students from being allowed to continue their educations if they have unpaid debts. University administrators also say they need private collection agencies to recover as much money as they can, because states are cutting education funding and making it harder for colleges to operate. But, the report notes, there is evidence that not placing debts with agencies and having colleges work out payment plans and other ways of repaying debts can provide more money to the schools and keep students enrolled at the same time, according to the report.

Like many of these media reports, the situations of a number of individuals are spotlighted, some of whom are being denied their diplomas or access to their transcripts because they have unpaid debts owed to the schools.

The report looks at the situation in Ohio, in which six different agencies have contracts with the state’s attorney general’s office to collect on unpaid debts owed to public colleges. The report looks at the lobbying and political contributions made by two of the agencies, inferring that they were awarded the contract because of donations and patronage. The report notes that one agency has the opportunity to bring in $20 million in revenue because it is trying to collect $95 million in unpaid debts owed by 40,000 students.

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