But the punitive policy is self-defeating. Far from strengthening repayment and retention, it erodes students’ capacity to persist, to graduate, to transfer or to re-enroll — and to repay what they owe. Most of those who stop out must soon add loan payments to the stressors that led to their unpaid balances in the first place. About one in six late payers have their accounts referred to collection agencies, which typically add fees of up to 30 percent.
A bursar’s hold, in short, is less likely to serve as the opening of a negotiation than as the closing of a door. It blocks the student’s access to past and future credits and the college’s access to revenues. “Strictly enforcing unpaid balances,” conclude the researchers at EAB, “is a lose-lose proposition for institutions and students.”
Beneath these impacts on revenues and retention lies a more basic problem. The punitive policy misrecognizes students, leading institutions to ignore much of what they know or could easily discover about those who owe money. Four-fifths stop out in good academic standing. Most have completed and paid for credits in previous semesters. And what they owe averages 10 to 20 percent of their unsettled bill.