Fix Ohio’s punitive approach to student debt to help more Ohioans graduate

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Every Ohioan deserves the opportunity to pursue their educational dreams. For some that may mean a two- or four-year degree once they’re done with high school. For others, it could be a credential that opens the door to a better paying job. Higher education doesn’t only benefit those who graduate; better educated residents get better paying jobs and can better provide for their families. That strengthens all our communities and the state’s economy.

But Ohio law erects a huge barrier for many who want to finish their education: A national review of state policies shows that our state takes one of the most punitive approaches to collecting student debt owed to public colleges and universities.

Institutional debt is separate from student loan debt, which is generally not held by schools. It can include tuition, fees, or room and board — even parking tickets or library fines. Compounding the harm to students, nearly all Ohio schools withhold the official transcripts of students who owe money. That can keep students from transferring to another school, pursuing a graduate degree and can even limit their job prospects.

2020 study by Policy Matters Ohio showed that Ohio’s punitive approach to the collection of student debt disproportionately affects people who have gone to schools that serve higher percentages of Black and brown students, students who come from families with low incomes, those who attend school part-time, and those who are older than 24.

Ohio among most punitive

Each state treats institutional student debt differently, but there are common practices, such as transcript withholding. Schools in most states can withhold transcripts to compel former students to repay their debts. One exception is California, which recently banned the practice.

States vary widely when it comes to the collection of student debt. Unlike Ohio, 20 states have no formal law or collections process. Twenty-seven states, including Ohio, allow schools or the state to claim students’ state tax refunds. Ohio is one of just five states that require student debt to be sent to the state Attorney General for collection.

Of the five states with such laws, Ohio requires schools to turn over all debts to the state AG within the shortest time frame. These debts can stay in collections for up to 40 years. To make matters worse, nearly all Ohio schools practice transcript withholding. The 2020 Policy Matters study showed that the Ohio AG’s office is holding more than 390,000 student-debt accounts, many of which are likely tied to withheld transcripts.

Lasting damage

Imagine a young person whose family situation changes and they leave school mid-year owing money for room and board. Their first priority is finding a place to live and a job, and by the time they realize they owe money, even a payment plan to resolve their debt is unaffordable. Consider a mom who takes out a loan to cover the cost of summer classes for her daughter at a local university, only to realize she can’t use the funds as intended. By the time she figures it out, she has missed payments and the university is withholding her daughter’s transcript. Hear the frustration of a man whose effort to re-enroll eight years after leaving school was nearly derailed by unresolved debt.

What should Ohio lawmakers do?

  • Ohio should follow California’s lead and prohibit schools from using transcripts to leverage payment. A bill introduced in the Ohio House of Representatives last year would have done this, but it died in committee, leaving this barrier in place for thousands of current and former students. If policymakers don’t act, schools should stop this practice on their own.
  • Ohio lawmakers should get the AG out of the business of collecting students’ debt and allow schools to manage it on their own. Barring that, policymakers should create a more flexible system that allows schools to more easily implement debt forgiveness and re-enrollment initiatives like one in Detroit, which has also been piloted at some Ohio schools.

Ohio has set ambitious goals to increase the number of residents with postsecondary degrees or credentials, but it won’t achieve them if it doesn’t change its punitive approach to the collection of student debt. The nearly 400,000 former students who are tied up in this system are stuck. A legislative solution can free them to live up to their potential and pursue their passions.

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