Virginia students are stressing as universities tack on penalty fees and send past-due semester bills to debt collection agencies.
According to Virginia law, all state institutions are allowed to charge their own personal penalties on past due accounts. They are also required to aggressively collect on these accounts utilizing collection techniques including collection agencies and credit reporting bureaus, among other strategies.
These techniques, applied to account balances under $3,000 and 60 days past due, can cause students to receive additional fees of up to 30 percent.
VCU’s financial policies state that late fees of up to $100 are charged on overdue payments. In addition to late charges, accounts 60 days past-due are referred to VCU’s Collection Unit, where additional costs and fees, including interest, are added onto existing charges.
Additionally, until all balances have been paid in full, a student is unable to register for any future classes, receive a diploma or request any official transcripts.
International students have been affected by such financial policies. Former VCU student Nada Mahmoud suffered from the financial repercussions of overdue semester bills.
Ineligible for federal aid because she is not an American citizen, Mahmoud paid her international-rate tuition on loans.
Ultimately, Mahmoud withdrew from the university and relocated back to her home country of Egypt.
“It’s a vicious cycle,” a rising junior who asked to remain anonymous, said. “I am already racking up tons of debt and it’s super stressful to think about in the long term. Additional fees every semester only makes it harder.”
She said she broke up her student bill into installments over each semester, and ended up having to pay excess fees in order to sign up for her next semester’s classes.
“It’s unfair to delay a student’s education due to financial issues,” the student said. “Especially ones that can be easily fixed.”
A hold was placed on the student’s account until the bill was paid off in full. It restricted her from signing up for new classes– despite having an installment plan set up.
Edward Millner, an economics professor at VCU, proposes a potential explanation for additional fees, suggesting that the “market for collection services (may be) competitive, (explaining) why the university outsources the collection services.”
Millner said additional expenses serve as a penalty for the student’s failure to fulfill the financial responsibility that comes with attending school.
According to Millner, sending past-due bills to a university owned or private collection agency helps the university enforce the contract a student agrees to when registering for classes.
The contract between a student and the university says that in exchange for taking classes a student will pay the associated tuition and fees.
If the student fails to uphold their end of the contract they will be penalized– therefore universities are able to justify charging late fees.
While additional fees tacked onto past-due accounts can be avoided by timely bill payments by students, that is not necessarily the most pragmatic solution for all.
Given today’s total cost of attendance averaging over $20,000 a year at most Virginia universities for in-state students, students should consider payment options provided by their schools.
These options include: extended installment plans, additional financial aid alternatives and general grace periods that could help alleviate the ever-growing student debt crisis.