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VCU makes changes to debt collection practices

people sit near a brick-lined path. A sign in the center of the image reads "RAMS"
Crixell Matthews
VPM News
Students sit on the Monroe Park campus of Virginia Commonwealth University. The university updated its debt collection policies in May 2022.

Students with past-due balances of $500 or less are able to access transcripts.

This story was updated Wednesday at 7:33 p.m. to include the most recent limit for transcript withholding.

Following a more than yearlong process, Virginia Commonwealth University approved some changes to its debt collection practices last May, according to emails and records obtained by VPM News.

Students can now continue to enroll in classes and request copies of transcripts if they have past-due balances at or below $500. Most recently, student debts of $5 and over would trigger a registration and transcript hold.

“We wanted to help them to continue their success either as a student or as a graduate. But we're not able to just say, ‘You don't owe it,’” Denise Laussade, VCU’s treasurer, told VPM News. “This is not a get-out-of-jail-free card.”

The school has also reduced its internal collection fee to 15% — and will now waive the fee entirely if the full balance is settled within two months of being referred to collections. Previously, the university charged a 25% collection fee immediately upon referral of students’ past-due accounts to VCU’s internal collection unit.

As VPM News previously reported, the school collected more than $6 million through that fee alone between July 2015 and January 2021. The school temporarily halted the referral of accounts to collections at the start of the pandemic but resumed the practice in October 2020.

“Our duty is to consider all sorts of scenarios that we think might benefit our students, but still run a business,” Laussade said. “A university is a business. I have to admit that.”

Last year, the attorney general’s office announced it would reduce its attorneys’ fees for student debt cases from 30 to 15% and urged universities to also reduce their fees. While most public four-year colleges in Virginia rely on third-party collection agencies — which set their own collection fees — to collect student debt, VCU has historically relied on its own collection system that includes litigation as a means of collection.

Between July 2015 and February 2020, VCU won 2,800 court judgments against students and filed court paperwork an additional 3,082 times in an attempt to collect. The university also filed 1,209 wage garnishment attempts.

While the school’s collection unit hasn’t filed litigation since the pandemic started, the school is in the process of resuming its use of litigation to collect debts, Laussade said. Emails indicate court filings were initially slated to begin earlier this year.

“We're going to do initial reminders of their past due [accounts] before we take them into any further penalty, if you will, because it's so messy to go to court on these things. We're hoping to keep every student out of court,” Laussade said.

She noted that students have the option of contacting the school’s financial team to work out payment plans to avoid court involvement — but added it’s the student’s responsibility to reach out to the school, not the other way around.

“We are asking our 18-and-up crowd, who now attend VCU, to take responsibility for their academic career,” Laussade said. “And that involves, ‘How do I pay for it’ as well?”

VCU doesn’t call students as part of its collections process, though an internal policy update directs the university to make collection letters easier to understand by using “plain English.”

Jay Speer, executive director of the Virginia Poverty Law Center, said that while he’s glad VCU is making some changes, he doesn’t think they’re that helpful. He said any collection fees just pile on and contribute to “making a bad situation worse.”

“If you can’t pay it, you can’t pay it,” Speer said. “People do not choose not to pay because they just don’t want to pay. It’s because they can’t. And just adding stuff on doesn’t help the situation.”

He said he isn’t a fan of using the courts as a debt collection tool either, because that process can force people into bad situations as well.

“Have your wages garnished and you’re in trouble. You’re already struggling economically and now you’re going to have part of your wages taken,” Speer said.

Rethinking student debt collection

Emails obtained by VPM News show movement to begin critically rethinking VCU’s policies about student debt collection began in spring 2021.

A February 2022 email from Laussade references “initial guidance” on the topic from VCU Vice President for Finance and Budget Karol Gray.

“Karol, Treasury Services understands your desire to lessen the burden of financial obligations on our students,” the email reads. “Since your initial guidance on this topic last spring, Treasury Services has been evaluating procedural changes for the collection process for unpaid accounts due to VCU.”

Laussade said spring 2021 is when a committee — now called the Student Financial Services & Treasury Services Collaboration Committee — was formed to discuss and consider policy changes. Even before there was local and national attention on the issue of transcript withholding — which she said VPM News’ coverage of the issue has been a big part of — she said Gray was interested in doing more to help students in this area.

“Karol cares very much about our students and their success. And I say that unequivocally — she really puts student success at the top of everything we do here at VCU,” Laussade said.

A policy document discussed by the committee states that “higher education also experienced an increase in inquiries surrounding outstanding student account balance policies from late 2021 to early 2022. Higher education was responding to Freedom of Information Act data requests and inquiries from the U.S. Department of Education and state general assemblies.”

VPM News began sending public records requests to public Virginia universities about collection practices and direct-to-school debt starting in summer 2020 and throughout 2021, which culminated in the Dreams Deferred series in fall 2021. VPM News submitted additional public records requests to colleges after legislation to restrict transcript withholding failed in early 2022.

VCU continues to discuss further policy changes

According to emails obtained by VPM News, a proposal to change VCU’s collection policies was ready in January 2022 — but was paused when new interest at the state and federal level developed. The January proposal was slightly different than what’s been implemented — and recommended elimination of all transcript holds, not just those for balances $500 and under.

The January 2022 proposal was in line with legislation Sen. Ghazala Hashmi (D-Chesterfield) introduced at that time to prohibit public colleges and universities from withholding transcripts. However, that bill did not pass.

A revised version of Hashmi’s bill introduced during this year’s general assembly session would’ve required students to set up payment plans in order to receive their transcripts. It cleared the Senate this year but died in the House of Delegates. Budget language that seeks to address the issue is still pending.

Meanwhile, VCU’s new committee continues to meet on a bimonthly basis “to discuss evolving existing and proposed solutions to lessen student unpaid accounts,” VCU spokesperson Mike Porter said via email.

According to policy drafts obtained by VPM News, there are some additional ideas VCU is considering but has not yet implemented. Porter clarified what the draft language means — but said “there’s no timeline, no certainty that any of these ideas will even be implemented.”

Ideas include forgiving outstanding balances of former students who reenroll at the school and agree to “full payment of future tuition and fees … progressing to graduation,” Porter said. Without meeting those terms, Porter said, the forgiven debt would be reinstated. This is similar to programs proposed in other states that VPM News detailed as part of its Dreams Deferred series.

Another proposal would allow students with balances greater than $500 to remain enrolled — as long as they’re in a deferred payment plan. Currently, Porter said, students can only set up a deferred payment plan before their account is sent to the collections unit. And in order to do that, students have to pay off over one-third of the balance up-front.

Another policy consideration: raising the threshold for litigation to collect on unpaid accounts from $500 to $2,000.

Laussade said VCU welcomes a discussion about how to solve both sides of the problem: ensuring the university gets paid, as well as helping students navigate their end of the obligation. But she said there aren’t current plans to further update the school’s policy.

“When you're thinking about how to change a process that's long-standing, you want to put every idea you might conceive of on paper and then noodle through them,” Laussade said. “Does this make sense for our students? Does this make sense for us?”

In our 2021 series Dreams Deferred, VPM News explored how direct-to-school debt creates hardships for students, making it difficult for them to complete their degrees and advance their careers. To start the series from the beginning, click here.

Megan Pauly covers education and health care issues in the greater Richmond region.