The pandemic has unfairly put low-income students in debt
As if distance learning, quarantines and sick family members weren’t enough, hundreds of thousands of California’s most financially vulnerable students now face an additional challenge: surprise debts owed to their community colleges and public universities.
When increasing numbers of low-income students dropped out of college midway through the school year during the pandemic, their financial aid scholarships became “institutional debts” due and payable to their schools with immediate effect. .
Some California community colleges and California state universities have wisely written off these institutional debts. But most, including University of California campuses, publicly report that students with institutional debt may be barred from re-enrolling until their unexpected debt is paid, and some schools have even dispatched officers recovery after these students.
If that sounds crazy, that’s because it is. California lawmakers and leaders of public colleges and universities should take action to cancel these debts and fix the financial aid policies that have created this problem.
Here’s how it works. Most low-income students receive a federal grant to help cover the cost of college. Federal Pell Grants are typically awarded to students whose families earn $30,000 per year or less. In California, Pell Grants are usually paid in cash to students for room and board, after state financial aid has paid for tuition. If a low-income student is forced out of school after one month of classes, the student’s college must historically repay a pro-rated amount of the Pell Grant to the federal government for the length of time the student is not no longer registered.
Schools then usually charge the student for this amount. Students are expected to pay off this debt immediately, even if, for example, they have already used all of their Pell Grant funds to pay for housing for the semester.
These institutional debts can also arise in other ways. Overdue fines for library books, parking tickets, cost of room and board could all generate institutional debt.
Our research, with Dalíe Jiménez of UC Irvine School of Law, found that canceled financial aids have been the main source of institutional debt during the pandemic.
Students have taken on institutional debt in every state, but the scale is particularly alarming in California. We estimate that 750,000 students at community colleges, California State universities and the University of California will have incurred institutional student debt worth approximately $390 million from July 2020 to June 2022 This represents almost 15% of all student enrollments during this period.
Since these debts are owed to the schools, they are not federal student loans and do not come with the flexible repayment options of federal loans. These debts are also excluded from the current pause in federal student loan interest accumulation and repayment obligations.
Whatever the basis of institutional student debt, it undermines the state’s goal of promoting college accessibility and student success. Prohibiting students from enrolling in classes if they have unpaid institutional debts means that a student cannot resume interrupted studies.
Rather than attempt to collect institutional debts, seven states in California and a handful of community colleges wrote off those debts, using federal funds distributed by Congress for pandemic relief. The Peralta Community College district wiped out $2.8 million. Like Peralta, however, most schools that have written off institutional debt only did so for the 2020 and 2021 academic years, before the omicron wave disruptions.
California lawmakers should act to cancel all institutional student debt incurred during the pandemic. One-time funds should be provided to community colleges, California states, and UCs to pay off institutional debt accrued between July 2020 and June 2022. The Legislature should also compensate the handful of schools that have already forgiven some of this student debt. so that they are not penalized for acting early.
This $390 million expenditure is a necessary one-time solution. To avoid a recurrence of institutional debt, California lawmakers should pressure the Department of Education to eliminate its policy requiring institutions to repay Pell grants. State lawmakers should also prohibit colleges and universities from preventing students in debt from re-enrolling, releasing student debt collectors, or intercepting tax refunds to collect those debts.
Institutional debt has compounded the pain of the pandemic for low-income students. The legislature should act now to lift the unjust burden.
Charlie Eaton is an assistant professor of sociology at UC Merced. Jonathan Glater is a law professor at UC Berkeley. Laura Hamilton is a professor of sociology at UC Merced. ©2022 Los Angeles Times. Distributed by content agency Tribune.