Ohio’s punitive approach to debt collection a roadblock for students

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Everyone benefits when students can pursue training and education beyond high school. Post-secondary education helps people become more engaged in their communities and get higher-paying jobs. Wisely, Ohio policymakers set an ambitious goal that by 2025, 65% of our state’s adult population will have a college degree, certificate or credential. 

But Ohio law works against this goal by requiring public colleges and universities to turn student debt over to the Ohio attorney general for collection. At the same time, Ohio schools withhold transcripts from students who owe money and bar them from re-enrolling.

A student’s ability to stay in school can be derailed by something serious like the loss of a job or something that seems relatively minor, like the breakdown of a car. Ohio’s punitive approach to debt collection compounds the seriousness of these kinds of unexpected life events.  

Part of the problem is that the AG’s office generally charges 10% interest and pays debt collectors 21% on collection; lawyers paid by the state to collect the debt charge up to 33%. State law allows the AG to add collection fees on top of the initial debt, which can make it impossible for students to pay them back and re-enroll. 

With these practices, Ohio law sets a financial roadblock that prevents Ohioans from reaching their educational goals, trapping them in lower-paying jobs.

An analysis by Policy Matters Ohio of data from the AG’s office shows this policy hits students attending the state’s community and technical colleges the hardest. These students are more likely to attend part-time, be people of color, the first in their families to attend college, or at least 25 years old. Ohio’s two-year schools have almost twice as many active debt accounts per student as the state’s four-year schools. The data also show a bigger impact for three universities: Central State, Ohio’s only public historically Black university; Shawnee State; and the University of Toledo.

The impact on students of color and those from low-income families makes a system that’s already stacked against them even harder to overcome.

State legislators and college administrators can fix this problem.

State lawmakers should stop requiring schools to send debt to the AG’s office for collection. Instead they should incentivize schools to focus on debt-forgiveness, and to provide financial and advisory support for students who can re-enroll and complete their degrees and certificates. Lawmakers also should restructure the state’s need-based aid program, the Ohio College Opportunity Grant, so students at two-year colleges and lower-cost four-year schools can use the grants to fund their schooling, an option that is not available to them now.

For their part, schools should stop the practice of withholding the transcripts of students who owe money. If they don’t, legislators should ban the practice, following the lead of states like California.

Several Ohio colleges and universities are already piloting a better approach, starting programs that forgive debt, provide extra support for students who struggle financially, and offer new ways to help students finish their studies. These schools have found that they get more in tuition from returning students than was initially owed by the students, creating a win-win, helping not only students and the schools, but boosting the state’s economy.

Students shouldn’t be held hostage when unexpected life events derail their studies. If we work to help students get back on track, Ohio can achieve its educational goals and help everyone thrive.