Universities Hold Transcripts Hostage Over Loans 541
Hugh Pickens writes "Dave Lindorff writes in the LA Times that growing numbers of students are discovering their old school is actively blocking them from getting a job or going on to a higher degree by refusing to issue an official transcript. The schools won't send the transcripts to potential employers or graduate admissions office if students are in default on student loans, or in many cases, even if they just fall one or two months behind. It's no accident that they're doing this. It turns out the federal government 'encourages' them to use this draconian tactic, saying that the policy 'has resulted in numerous loan repayments.' It is a strange position for colleges to take, writes Lindorff, since the schools themselves are not owed any money — student loan funds come from private banks or the federal government, and in the case of so-called Stafford loans, schools are not on the hook in any way. They are simply acting as collection agencies, and in fact may get paid for their efforts at collection. 'It's worse than indentured servitude,' says NYU Professor Andrew Ross, who helped organize the Occupy Student Debt movement last fall. 'With indentured servitude, you had to pay in order to work, but then at least you got to work. When universities withhold these transcripts, students who have been indentured by loans are being denied even the ability to work or to finish their education so they can repay their indenture.'"
Re:Good move (Score:2, Informative)
And if word gets out, maybe we can deter the incoming freshman from this self-destructive strategy.
Taking out student loans for an undergraduate degree is just stupid and lazy.
It leads to the lifelong debt cycle Americans are increasingly trapped in.
This is not the government's fault (Score:1, Informative)
Once a school opens the door for corporations, there is basically no turning back -- corporations begin to influence every aspect of the university.
Re:Blame on both sides (Score:1, Informative)
He has a job, a pretty good job, as an adjunct professor.
Defaulting is Hard (Score:5, Informative)
They will give you an enormous amount of patience and latitude. All you have to do is call and tell them that you can't pay them. They will ask you a few questions, then take your word in regards to your income, employment status, and expenses without asking for so much a a shred of proof, and most likely grant you a deferment of forbearance.
When I couldn't find a job about 5 years ago, at first I got by on deferment for about 6 months, after which a had to bite the bullet and take a job way beneath my education level. When I called to tell them that I was now able to pay about 50% of my payment every month, they offered to keep the deferment in place so my partial payments would go entirely to principal. Yes, that's correct - they had even stopped the interest for the entire deferment period. They stopped time itself to help me. Once I had gotten on my feet I started full repayment. When I lost that job before I'd had a chance to save and build an unemployment hedge, they did it for me again.
They withhold transcripts in cases where students have dodged them, avoided them, and failed to acknowledge the debt.
Re:Blame on both sides (Score:4, Informative)
Adjunct faculty are basically the academic equivalents of temps (no benefits, low pay, term-by-term contract) or are only working part-time while making their living from another job (e.g., professional musician teaching on the side). Generally, not "a pretty good job".
Re:Catch 22 (Score:4, Informative)
Re:This is not the government's fault (Score:5, Informative)
Google Apps for Education is free. There are a lot of good reasons not to use it, but your argument of "enjoy your $100k in student debt" doesn't fly - the University can reduce its costs by outsourcing email. That in turn reduces student fees, which reduces student debt.
A lot of people like Google Apps. Perhaps they did it not out of laziness, but by considering the feature set students need. Many university use crappy webmail clients like Horde or Squirrel Mail... the UX of Gmail is far ahead of those. Google Docs has excellent real-time collaboration features. There are plenty of ways for students to get hands-on experience without avoiding useful web applications.
This sucks, but consider the following: (Score:2, Informative)
The only type of loans where the School is the Lender is Perkins Loans. These are 5% hard coded interest loans where the school guarantees the money. So if they don't get it back, they have to front it back to their creditors, i.e. their bank/the fed/whatever. You can't file bankcruptcy out perkins loans nor stafford loans. A creditor can garnish wages to get them back, but it is definitely a lengthy court process, especially if the student moves out of county/state. You also have to try hard to get a Perkins loan, since it is a subsidized Loan that has the aforementioned unflinching interest rate, generally by having a low enough Estimated Family Contribution (i.e. you are broke and/or your parents are broke). Also, the total amount of perkins loans is 50k per student, and 8k per year, in theory, but I have seldom heard of people getting anywhere near that kind of money since the Perkins allotment are actually quite limited.
A few more factoids:
a) If you have loans out, and if you don't graduate, you have to start paying them back immediately.
b) If you have loans and you graduate, the grace period of any of those loans that are obtained via the fafsa process is one year. This includes Perkins loans.
c) If you can't make the payments, you can choose to pay them back in 20 years instead of 10 (lowering payments) and then backload the payments (for now). By the time I was said and done, my first loan payments were in the sub 150 dollar range.
d) If you can't make those payments after the grace period has ended and you've already lowered the payments, apply for forbearance. When I was working for NSLDS and the FAFSA hotline, the policy was that you'll get it the first time for a length of six months after you fill out a form and apply for forbearancee. Then you have to call again. If you manage to hide in graduate school or fulfill one of the other conditions for deferrment, then you can also apply (using the same form) and your interest for subsidized loans (perkins included), is forgiven.
e) Perkins loan payments are seperate from other fafsa loans. Generally the school uses a different payment processor than the Direct Loans folks. However, the deferrment/forbearance process will bail you out of both types of loans for a while.
f) Once you have defaulted on your loans, you can't apply for deferrment/forbearance, not even if you go back into school. Once you default, you have to make 12 months of payments reliably before you are back in Uncle Sams good graces. So you can't hide in Graduate school and not pay your loans back indefinitely, unless you do some leg work before hand.
It takes a great deal of negligence to piss off schools to the point where they will come after you. If you game it right, you can not pay anything back for 2 years if you manage to speak to the right individuals on the phone. Indentured servitude it is not.
Here is the thing. For an undergraduate who is less than 25 in age, not married, not a veteran, not a ward of the courts, i.e. not an independent student, the limit for total loans are almost inadequate for the average state school. For example a standard University of Kansas education, estimated cost of tuition was 300 a credit hour plus fees for an _in-state_ student. It comes out to about 12k a year after fees. (Here is another interesting tidbit, 300 a credit hour fees use to be for _out_of_state students, the in-state fee was 67 a credit hour in 1996 and a flat fee of 3k a year for as many hours as you want to take before 1995. Those were the days). Typically your stafford loan limits are:
Dependent Students:
First Year $5,500 ($3,500 subsidized/$2,000 unsubsidized)
Second Year $6,500 ($4,500 subsidized/$2,000 unsubsidized)
Third Year and Beyond $7,500 ($5,500 subsidized/$2,000 unsubsidized)
Independent Students:
First Year $9,500 ($3,500 subsidized/$6,000 unsubsidized)
Second Year $10,500 ($4,500 subsidized/$6,000 unsubsidized)
Third Year and Beyond $12,500 ($5,500 su
Re:does it surprise you? (Score:4, Informative)
Very true, I live in one of those places where the government can give you 100% of the tuition if you're below a set income.
It works because our education establishments are non-profits, usually registered as charities (state owned schools are non-profit by nature, but you can open your own private non-profit school if you want). There is no profit motive, so there is no drive to milk the system for money, therefore we don't have runaway costs.
People don't work at at these places to make boatloads of money, they do it for education/research/furthering knowledge/etc... If they wanted to make money, they could do that in all sorts of private companies that exist.
Re:does it surprise you? (Score:1, Informative)
Some countries pay--not loan--100% of the tuition for a fairly large percentage of their student population and don't seem to have the runaway cost problems that we do.
Care to name a few? Just because "countries pay", it does NOT mean they don't have runaway cost problems. Single-payer systems just hide those problems better.
What do places like Denmark do differently?
They tax the bejeezus out of their people [wikipedia.org]. Danish sales tax is a whopping 25% (second only to Hungary) and their MEAN income tax rate is over 40%. Don't kid yourself (or mislead others) -- a Danish student pays more dearly for his "free" education over the course of his life than even the most debt-saddled American student ever will.
Can we try that,
I'd rather we didn't.
Re:Didn't the banks pay? (Score:5, Informative)
AFAIK, although there are no federal laws that require a university to withhold transcripts of students that are in default of their student loans, it is apparently highly encouraged by the department of education to withhold the transcript if a Title IV loan is in default.
However, some states have actual laws that require institutions to withhold transcripts. For instance, California Section 66022 of the California Education Code provides that...
The governing board of every community college district, the Trustees of the California State University, the Regents of the University of California, and the Board of Directors of the Hastings College of the Law shall adopt regulations providing for the withholding of institutional services from students or former
students who have been notified in writing at the student's or former student's last known address that he or she is in default on a loan or loans under the Federal Family Education Loan Program. The regulations shall specify the services to be withheld from the student and may include, but are not limited to, the following: (1) The provision of grades. (2) The provision of transcripts. (3) The provision of diplomas.
Also, many states (incl CA), penalize institutions that have high default rates (for instance by not making them eligible for state student loan programs like Cal Grants), so even private institutions have an incentive to help get the default rates down so they can continue to offer those loan sources to future students even if they aren't required by law to do so.
Re:I put 3 kids through the UNC system no debt (Score:5, Informative)
Nice that you paid for your kids. Would that every parent could do so, would that every child could count on it.
Your vision is very narrow and takes into account only people in similar circumstances as yourself.
I haven't lived with my parents since I was eight years old as they weren't able, in many ways including financially, to take care of me. I certainly could not count on them to pay my Uni tuition for me.
I, like others who don't have parents who can pay for them, took on a heavy load of student debt in order to get an education and increase my prospects for putting myself in a position where I could pay for my children's education at some point in the future because you know what? If I wanted an education I had no other choice.
Your lack of 'sympathy' for people who don't have parents to pay for their education is unfortunate. If enough people think like you then anyone who isn't so fortunate as your children will continue to be completely fucked.
Your similar lack of sympathy for poor people who got sold a bill of goods by financial institutions to follow 'the American dream' and lost what little they had, not to mention all the folks who HAD good jobs and lost them due to the failing economy and could thus no longer afford to make their normally reasonable mortgage payments, losing their homes and looking to their government to support them is similarly unfortunate. I can only hope that you have the chance to experience similar misfortune at some point in your life so that you can gain some perspective.