UOU: How Universities Are Suing Alumni Who Owe

"Federal Perkins loans are available at schools in all 50 states. They were created to assist college and graduate students in exceptional financial need. As student debt has grown, so have loan defaults, which rose nationally from 8.32 percent in 2011 to 11.08 percent in 2012," Al Jazeera America reports. "Defaults have occurred at Ivy League universities and community colleges. At Harding University in Arkansas, 323 borrowers defaulted in 2012, representing $677,161; at Harvard, 402 borrowers defaulted, owing almost $3 million. The U.S. Department of Education requires schools to comply with due diligence regulations in collecting Perkins loans, including litigation if appropriate. Not every school takes that step, although Yale, the University of Pennsylvania and Temple University have all sued students, court records show. 'It just shows how student debt is a huge issue for our generation, and we’ve got to figure it out,' says Rory O'Sullivan, policy and research director at Young Invincibles, an organization dedicated to expanding opportunities for young people. 'It really is a symptom of a much broader problem.' But the colleges are in a tricky position, says Justin Draeger, president of the National Association of Student Financial Aid Administrators. Because Perkins loans involve federal funds, schools have a responsibility to collect what is essentially taxpayers’ money. Schools also have a more pragmatic motivation. In 2011 and 2010, no new funding was added to the Perkins loan program, meaning that the only money available to new students comes from the funds that alumni repay. 'If funds aren't coming back in, that means there's fewer funds available for future students,' Draeger says."

 

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