September 30, 2022
  • September 30, 2022
  • Home
  • Loans offer
  • Rutgers turned down the chance to write off at least $2 million in student loans. Why?

Rutgers turned down the chance to write off at least $2 million in student loans. Why?

By on April 29, 2022 0

For his final semester at Rutgers in 2018, Reet Starwind completed a semester abroad, ending with a two-and-a-half-week visit to Ireland. Because his mother worked in the Rutgers system, he received free lessons and hadn’t realized there was an extra charge for the trip.

But when he went to get his degree, the university told him he couldn’t get it until he paid $3,000 for the trip to Ireland. He worries that because he still owes money to Rutgers, he won’t be able to get his undergraduate transcript if he wants to apply for graduate school and that the debt could hurt his credit score. wants to rent an apartment.

In October, Rolling Jubilee, a nonprofit group that wipes out debt, offered to pay off between $2 million and $5 million in internal student debt like Starwind’s — money students owed to college, and not to a government entity or private lender. But late last month, Rutgers declined the opportunity.

University spokeswoman Dory Devlin said various teams, including Finance, had reviewed the proposal but determined it would be “an unprecedented asset sale in other major public or private universities.

She said as of Tuesday, 4,072 students out of nearly 70,000 university-wide had financial withholdings that could block course registration. There were 7,644 enrolled students and 20,391 alumni who had deductions that prevented them from receiving official transcripts.

In October, Rolling Jubilee board secretary Astra Taylor met via Zoom with Rutgers officials to discuss giving the university $50,000 to repay loans the school would otherwise send to collections. . Debts included unpaid tuition fees, library fees and fines, parking tickets and health insurance. These debts can be difficult to collect, and colleges often sell them as a bundle to collection agencies for pennies on the dollar, as the agencies believe they can recover at least some of the amount owed. Or a university will contract with law firms or collection agencies to attempt to recover the funds.

Taylor called the meeting very positive, and school officials said they would respond to the offer in two weeks. She explained that she explained that the $50,000 offered was part of a large gift from an anonymous donor who wanted to reduce personal debt in many sectors of society during the pandemic and that the donor wanted the money is spent by the end of March.

“We basically allow you to take some of those debts from the collectors who harass the students when needed,” Taylor explained.

In November, Taylor sent a one-page follow-up email asking for the number of eligible debts and their ages, but she got no response. Later emails went unanswered, she said.

Taylor said she was surprised at the university’s lack of response.

“They basically blocked us,” she said.

On March 21, Taylor received an email from Rutgers saying the proposed arrangement would be considered an asset sale rather than a philanthropic interaction and that the university would pursue no further.

Taylor said he told Rutgers in October that the gift didn’t need to be considered a purchase. Rolling Jubilee could have made a philanthropic donation to Rutgers, and the school could have transferred the debt to Rolling Jubilee or pledged to stop trying to collect the debt.

For example, the group erased $3.8 million in student debt from the defunct Everest College for-profit in 2014 and another $13.4 million later that year, paying $1 for debts that over 94 000 students owed Everest’s parent group, Corinthian College Inc.

Taylor said she was surprised at Rutgers’ “total lack of creative commitment.”

In December, U.S. Department of Education Secretary Miguel Cardona said the withholding of transcripts was unfair and called for re-evaluating college policies aimed at preventing students with outstanding balances from enrolling or receiving their school reports.

The Consumer Financial Protection Bureau said such transcripts could force students to take duplicate classes or stop attending college altogether.

“Perversely, this practice could have the effect of prohibiting students from getting the jobs that would allow them to pay off their debts,” according to a blog post on the Bureau’s site. “Some students suffering from these repercussions may find themselves financially worse off than if they had never attended school in the first place.”

Meanwhile, some Democratic lawmakers have called on President Joe Biden to write off student debt, a move he said was under consideration Tuesday. The administration canceled student loans for more than 750,000 borrowers, including some with disabilities and those defrauded by their schools.

Other institutions have seen the value of canceling their students’ debts. Last summer, colleges and universities across the state of Connecticut used federal COVID relief funds to forgive $17 million in debt for more than 18,000 current and recent students.

Among historically black colleges and universities, Wilberforce University erased $375,000 in student debt last summer, and Delaware State University used stimulus funds to erase $730,000. South Carolina State University wrote off $9.8 million in debt, covering 2,500 students, and in 2019 billionaire Robert F. Smith and his family promised to pay off all student loan debt for Morehouse College graduates of that year.

Such efforts can help narrow the racial wealth gap, as black college graduates have, on average, twice as much debt as their white peers: $52,000 per person for black graduates, compared to $27,000 for white graduates.

Devlin said Rutgers provides transcripts to students with deductions if they need them to apply for a job and as a one-time courtesy to those with deductions who constantly pay their balances. Waiting students can also order a free unofficial copy of their transcript.

As for Starwind, he started paying Rutgers what he could while earning $9,000 a year in a retail job after graduation. But the university sent the remaining bill to collections, and a law firm asked him to pay the school $200 a month. Following an injury, he was unable to work, but spent all of his savings – $1,800 – trying to pay his college bill.

“My financial options are very limited,” he said.

Our journalism needs your support. Please subscribe today to NJ.com.

Tina Kelley can be reached at [email protected].