Policy

I’ve never owed a balance to my college, but I’ve watched classmates disappear without explanation. One week, we were sharing notes and preparing for midterms; next, their name was gone from the roster. Sometimes, word would spread that it was because of a few hundred dollars they couldn’t pay. Other times, no one knew. But at schools like mine, I’ve come to understand that financial holds are not rare but very common. Common reasons why students leave aren’t because they failed or gave up; it is because an unpaid balance was enough to shut them out.

Institutional debt quietly disrupts students lives. Institutional debt refers to money owed directly to colleges and universities, such as unpaid tuition, housing charges, or course-related fees. While these amounts are often small, the consequences are severe. Students with institutional debt can be barred from registering for classes and completing their degrees. This isn’t just unfair, it is unjust.

 This issue is especially pressing at public institutions like CUNY and SUNY, where most students come from working-class backgrounds and more than half identify as Black or Latinx. According to a 2023 report by the New York City Comptroller, over 60% of CUNY students come from households earning less than $30,000 per year. Many of us are balancing part-time jobs, supporting our families, and navigating college systems that we were never taught to understand. When financial aid falls short or an unexpected bill arrives, there’s often no safety net to catch us.And when we fall behind, we are not offered a path forward… we are locked out of opportunity.

The impact is not just personal; it is systemic. Institutional debt disproportionately affects students from low-income communities, students of color, and first-generation college students. Higher education should be a tool to uplift these communities. Instead, financial holds and institutional debts serve as barriers that push students out. Research from the Brookings Institution found that colleges recover just seven cents on the dollar through lawsuits over small debts. Meanwhile, the cost of losing students and replacing them with new enrollees is far greater. The harm outweighs any limited financial gain.

There is a proven path forward, and New York should not hesitate to take it. In Ohio, the College Comeback Compact provides a model: students with institutional debt are allowed to re-enroll and repay gradually, and they can qualify for up to $5,000 in forgiveness as they progress toward their degree. This program focuses on completion rather than punishment, helping colleges maintain tuition revenue without resorting to aggressive collection tactics. Programs like Wayne State University’s “Warrior Way Back” also demonstrate how removing minor financial barriers leads to increased re-enrollment, retention, and graduation rates.

These kinds of policies put student needs first by recognizing that education is a public good, not a privilege to be revoked over a few hundred dollars. New York has the opportunity to join other states in being a leader on institutional debt reform. 

New York should begin by banning lawsuits over small institutional debts, which do little to recover costs and a lot to derail lives. CUNY and SUNY should be required to implement “return-to-complete” programs that give students a clear, supported path back to the classroom. Most critically, the state must establish a permanent Institutional Debt Relief Fund that allows students to resolve minor balances and continue toward graduation. 

We already know this approach works. During the height of the COVID-19 pandemic, CUNY and SUNY used federal relief dollars to eliminate institutional debt for thousands of students. The result was immediate: re-enrollment climbed, retention improved, and students who had been stuck in limbo found a way back in. That success should not remain a temporary fix. It should serve as the foundation for a lasting commitment to equity and access. 

The time to act is now, and the solution is already within reach! No student should be forced to abandon their education over a few hundred dollars. College should be a gateway to opportunity, not a maze of financial roadblocks. New York must decide whether it will continue enforcing policies that penalize poverty or lead the way in dismantling them.