COVID-masked woman peers into a microscope.

Federal emergency dollars for colleges and universities provide a once-in-a-generation opportunity – not only to respond to the pandemic, but to reimagine how institutions support current and prospective students. This is especially true for those who know that college can be helpful but aren’t sure how to fit it into their complex lives.

Even as businesses and schools reopen and vaccinations and travel pick up, we must remember that for many Americans the end of the pandemic may mean even more stress and disruption.

Federal, state, and local eviction bans, debt collection pauses, and bans on shutting off utilities have provided essential relief. But balances have continued to grow even when payments weren’t due. A recent study found that about 10 million people – 18 percent of renters in the US – were behind in their rent payments, with the average renter nearly four months behind and owing $5,600. This is about three times the typical number of renters at risk of being evicted.

Colleges and universities face their own challenges, especially from the COVID impact on enrollment and budgets. But most are expecting huge sums from federal and state governments, including the three Higher Education Emergency Relief Funds (HEERF) passed over the last year.

And new guidance from the U.S. Department of Education offers ideas for how federal support could specifically benefit students, including using the relief funds to discharge student debt or unpaid balances. The department gave these examples:

  • Transcript withholding: A student who was enrolled at any point on or after March 13, 2020, has competed a degree, but owes an unpaid debt to the institution so could not obtain an official transcript
  • Enrollment hold: A student who was enrolled at the institution at any point on or after March 13, 2020, has made progress toward a degree, but is blocked from enrolling in the next term
  • Transfer student: A student who was enrolled at any point on or after March 13, 2020, has made progress toward a degree, but is blocked from obtaining an official transcript to transfer their credits

The guidance suggests that schools can provide emergency financial aid grants to students for outstanding balances and possibly waive associated penalties and fees. Schools might also discharge unpaid balances as lost revenue and reimburse themselves with the federal funds. In both cases, the student needs to give written consent, and the guidance emphasizes that students own the decision to use these funds to address an unpaid balance. A student may decide, for example, to apply those funds to their current expenses or for emergency, pandemic-related costs.

We should applaud the department for offering this kind of detailed guidance. After all, institutional actors – particularly in the compliance-driven financial aid sector – may not always believe they have the flexibility to address these problems even when they are aware of them.

Imagine that you’re an adult student, partway through a degree program and not sure if you can finish it. You took a pause in your program in April 2020, overwhelmed by your kids’ move to Zoom school and your own loss of income after you were furloughed. Since then, you’ve managed as best you could and gotten relief from rent and utilities bills. But the numbers stacking up in the ‘unpaid balances’ line of your bills keep you awake at night. One of those is a $125 bill that you never got around to paying your college last spring when you withdrew. You know that you can’t get your transcript or reenroll unless you take care of it.

Out of the blue, you get an email from your college titled, ‘Addressing your unpaid balance.’ Your stomach drops again. But opening it, you discover that your college is giving the option of forgiving that balance using new federal relief dollars. They also suggest setting up a time to speak with an advisor about how to help you get re-enrolled and back on track. For the first time in a while, the future seems less bleak.

This kind of effort is possible right now – and stands to help many students stay enrolled or re-enroll in programs.

But the opportunity is necessarily limited to this unique federal funding program. If you’re an adult student who withdrew in February 2020 – or in February 2015 – the HEERF funds can’t help you with that $125 hold, though you might be lucky and attend an institution that has a forgiveness process in place such as Wayne State University.

The problems with unpaid balances, however, predate the pandemic and are likely to continue without concerted action. An analysis from Ithaka S+R last year estimated that 6.6 million students have ‘stranded credits,’ academic credits earned but inaccessible due to unpaid balances. All these students’ debts predate the pandemic, so the HEERF strategy described above doesn’t apply. Ithaka also found that nearly all surveyed institutions hold transcripts for one reason or another.

Lumina is now working with the American Association of Collegiate Registrars and Admissions Officers (AACRAO) to understand more about the magnitude of the problem and who is impacted. They will also review institutional policies to understand why schools have these policies – with the hope that many are quite old and remain on the books simply because no one ever questioned them. We are also exploring new solutions at scale with Ithaka. Institutional change seems especially possible if colleges can get in the habit of discharging unpaid balances and retaining or re-enrolling students using the limited HEERF funds.

But it’s not going to happen if no one knows about it. We in philanthropy and advocacy must take a lead role in public awareness because institutions are not allowed to use HEERF funds for marketing and outreach. That means that they can’t buy a billboard, run a radio spot, or place social media ads to tell people about this opportunity.

The HEERF funds do ‘belong’ to students and should be used in ways that benefit them directly. But if students don’t know about allowable uses – or even that the opportunity exists at all – they may not benefit from what amounts to a generational opportunity for change.

I hope this blog provides one way of getting out the word, which otherwise might be buried in a long federal policy guidance document. Will you let me know what other ideas you have?

Terri Taylor is strategy director for innovation and discovery at Lumina Foundation

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