Debt Relief

As it struggles to reduce a sizable deficit, one community college on the outskirts of Detroit is waiting to see if a program intended to help former students settle their debt and re-enroll in classes will pay off.

Henry Ford Community College’s Tuition Amnesty Program will give students who have a balance on tuition owed prior to the winter 2012 semester a 50 percent break on what they owe. A student does not have to choose to re-enroll in classes in order to pay off their debt at the discounted rate.

Even if students don't want to come back to the college, they may have incentives to clear their debts. If a student has an outstanding balance with a college, the college will not release his or her transcript. That can prevent students from finding employment or transferring credits to other institutions, said Kevin Culler, the college's director of enrollment services and financial aid. By clearing their debt, students can also improve their credit scores.

“Clearly our hope is to bring in some revenue, to clear some people off of our collection rosters and to have them re-enroll,” Culler said. “It gives them a chance to move forward in their life in a positive manner.”

Henry Ford Community College reportedly began budget preparations for the 2013-14 fiscal year with a projected deficit of $16.6 million. Through cost-saving measures, such as layoffs, salary reductions and the elimination of programs, that deficit has been reduced. The college currently has a budget gap of $4.3 million, though "additional strategies" are being put into place to address it, said a written statement from the college.

The statement said that the "real goal" of the tuition amnesty program is to get students "back into class and working toward their degree." Projections for how many students will take advantage of the program is "unknown," but college officials are hoping it will generate significant revenue -- both in paying off past debt and in new tuition payments.

Nearly 50,000 students have past-due balances with the college and are eligible for the program, Culler said. And around 38,000 of those students incurred their balances after 2002, making them the most likely to potentially re-enroll at Henry Ford. The total outstanding balance of those 50,000 students is $33 million. The majority of students (around 15,000) have balances between $100 and $200, and 10,000 student have balances between $1,000 and $4,000, Culler said.

Rhonda Johnson, bursar at the community college, said since most students’ balances are below the $4,000 range, it is likely that students were unable to pay at the time they were enrolled because of an unexpected financial situation. Now that the economy has started to recover, those students’ situations may have improved, and relieving them of some debt will allow them to return to college, Johnson said.

In a statement on the college’s website, President Stanley Jensen said that the community, the college and students will all benefit from the program, because “with the amnesty, students will be able to return to school, which will generate revenue for the college, and have the opportunity to complete their degree to obtain a well paying job. These students become taxpayers with the job skills needed in the region.”

All students participating in the program are required to attend a financial literacy workshop that is offered to all students. Students also may pay off their debt in installments, Johnson said.

The program began on July 15 and will stay open until August 15. Students are able to pay their debts in person, online or by mail.

As of Monday, more than 700 students had contacted the college about paying off their debts at the discounted rate, Culler said. By that time, 64 students had already paid off their debt to the college.

Johnson said there is no way to predict how many students will take advantage of the program, since she has not heard of very many other institutions with such programs. “We are the benchmark in this particular case,” Johnson said.