In our personal lives, most of us shy away from debt whenever we can. Sure, there are things worth investing in, and sometimes that means borrowing. But ultimately, we all want to owe less, not more.

The cost of higher education, however, means that many (most!) students do need to take on some debt.  In fact, the average public university student borrows $32K and as of summer 2024, there are 42.8M borrowers with federal student loan debt.  We hear countless stories about how this debt impacts graduates, weighing on them as they try to stay afloat and get ahead.

But for those who take on debt without earning a degree, the burden can feel even heavier.

Approximately, 40% of students at non-profit institutions do not earn a degree or credential within 6 years and the number is a staggering 75% for students attending for-profit colleges.  For these students, it’s often the worst-case scenario: they’ve taken on debt but don’t have the credentials that could make it pay off. Yet, the debt needs to be repaid, degree or not.

There are many reasons students don’t complete a degree—academic challenges, scheduling conflicts, unexpected life events, or financial obstacles. Colleges and universities are working harder than ever to support students through these challenges, offering services like advisors, success teams, daycare, tutoring, emergency funding, and more. But there’s always more that can be done.

When students fall behind on payments, the consequences begin to stack up:

• Monthly late fees
• Finance charges
• Registration holds that prevent them from signing up for classes
• Loss of housing or meal plan privileges
• Collections agencies getting involved

The outcome for some students is that they simply step away, feeling defeated. One day, they’re enrolled in classes; the next, they can’t register. Soon, they owe a balance to the school, then a collections agency, and finally, the government. This is a path no student wants to find themselves on.

This is where a strong pre-collections process makes a real difference. This can be hard to do.  Most schools lack the tooling, processes and people to be effective in reaching students, reminding them, and helping them come up with a solid plan.  Past due students often need even more support than current ones as they try to catch up.

With so many other things to take care of in the student accounts office, this often falls to the bottom of the list even though it’s one of the first steps to keep a student on track. When we can help students stay current on payments, they can keep taking classes, keep working toward that degree. And debt with a degree behind it? That’s a much more worthwhile investment.

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