A Little College Student Debt Relief Goes A Long Way

While Washington, D.C. debates huge student debt relief packages, some universities are finding that modest loan forgiveness and support services can get students back to class and help schools’ bottom line, too.

Democratic proposals for student loan forgiveness have so far come in two sizes: Big and bigger.

President Joe Biden campaigned on a plan to provide $10,000 of federal student loan forgiveness per borrower (though he ultimately left the idea out of his proposed budget). Sen. Elizabeth Warren, the Massachusetts Democrat, has called for blanket forgiveness of up to $50,000 in federal loans per student, while Independent Sen. Bernie Sanders of Vermont has proposed the cancellation of all student debt, at an eye-popping cost of $1.6 trillion.

But as an innovative effort by a group of Detroit-area colleges is proving, even modest student-debt relief can have a big impact, especially if it’s coupled with a second shot at college completion for those who have discontinued their studies. Programs like Wayne State University’s Warrior Way Back and Eastern Michigan University’s Eagle Engage Corps are offering former students a combination of loan forgiveness with a chance to finish their degrees. It’s a smart – and purposeful – approach to student-debt relief that could benefit hundreds of thousands of students nationwide. Most importantly, it won’t cost trillions, and schools don’t need to wait for Congress to act.

Roughly 36 million Americans in 2018 had “some college” but no degree, according to the National Student Clearinghouse, and among these, about 10 percent – or 3.5 million – are “potential completers” with at least two years of higher education. Outstanding student debt prevents many students’ from returning to school. Colleges typically don’t allow students to re-enroll (and incur more obligations) unless prior debts are paid. Most schools also won’t release transcripts to students with balances still owed (a practice that some states are moving to ban).

For former students who dropped out close to graduation and with relatively low debts, these barriers are unnecessarily harsh, says Wayne State University Associate Vice President Dawn Medley. “If you have a car and need tires but don’t pay off the tires, they come and get the tires, not the car,” she said. “But in higher education, we hold every bit of your academics hostage, and I just don’t think that that’s the way that we need to be going.”

The solution Medley came up with was Wayne State’s Warrior Way Back program. Launched in 2019, the program allows former students who owe $1,500 or less to the school to re-enroll, despite their outstanding debts. So long as they maintain passing grades, students get a portion of their indebtedness forgiven each semester. Participants – most of them adult learners juggling jobs and families – also receive a variety of supports such as academic advising, career counseling and help with access to childcare to ensure they earn a degree. So far, the program has enrolled more than 230 students and is on track to graduate 70 by the end of 2021, said Wayne State’s Medley. “The youngest student we had was 21, and the oldest was 67,” she said. “We’ve had moms graduate with their daughters and be in class together. It’s been really cool.”

Among the effort’s current enrollees is Jermaine Perguese, who expects to earn his bachelor’s in construction management in December. Perguese, in his early 30s, said he transferred to Wayne State from Tennessee State University in 2012 but dropped out. “I really didn’t have much support when I got on campus, and it was difficult when you were working a full time job,” he said. “And then once I started struggling in class, it was just easy to quit.”

This time around, Perguese is getting the support he needs, thanks to advisor Amber Neher. Neher helped Perguese resolve a student loan default he didn’t know he had and worked with him to apply the credits he had already earned toward his degree. “We focus a lot on the debt forgiveness, but that’s usually just a small piece of a larger picture,” said Neher. With her support, Perguese started out taking two classes a semester and has since worked his way up to a full course load. “I’ve taken 20 classes in 12 months,” he said.

Students like Perguese aren’t the only ones who benefit from programs like Warrior Way Back. Local economies benefit from a better-educated workforce that can help a city or region attract good jobs. In Detroit, for instance, just 15 percent of residents have a bachelor’s degree or more (compared to 32 percent nationally), which is why the Detroit Regional Chamber announced its endorsement of the program and has helped replicate the model at neighboring institutions. According to the Chamber, nearly 700,000 adults in the Detroit area have some college but no degree, many of them potential beneficiaries of these initiatives.

Schools benefit as well from debt-relief programs that allow students to return and stay enrolled. For one thing, Associate Vice President Medley says the program has already earned Wayne State $2 million in net revenues from students who are now able to return to campus (or online) and take additional courses necessary for finishing their degrees. “It’s really simple math,” Medley said. “If you’re going to take six credit hours with us, that’s about $3,000. We’re basically just erasing $500 debt and bringing in $2500 of net tuition revenue.”

But more significantly, Medley says, the university is earning a second chance with former students. “It’s completely changed the relationship that we have with those students because we used to be the evil bill collector who kept them from getting their degree,” said Medley. “Now we are the institution that’s like, ‘Hey, give us another chance, and let’s see if we can be a partner to help you get this degree.’”

Given these upsides, other Michigan schools have followed Wayne State’s lead. Since 2019, schools adopting debt-relief programs for returning students have included Oakland University in Auburn Hills, Henry Ford College in Dearborn and Eastern Michigan University in Ypsilanti. At Eastern Michigan, former students can get up to $6,000 in debts forgiven, provided that students also perform 30 hours of community service per semester and keep up their grades. Oakland University couples its loan forgiveness programs with $500 micro-grants per semester as an additional sweetener. So far, says Oakland’s Senior Associate Director Kelly Flemming, the program has enrolled 286 students and graduated 123 of them since 2019. Some of these students, says Flemming, worked with the school for more than a year before their first day of class to ensure they have the resources they need, such as academic support and childcare. “We want students to feel really comfortable and confident in the path that they’re on,” she said.

Innovative approaches like Warrior Way Back offer a potential exit from dead-end debates over the size of student debt relief. First, they show that you don’t need budget-busting blanket debt cancellation to make significant improvements in students’ lives. Second, they point toward a potentially vital role for colleges, which have so far been cast only as villains miring student borrowers in unmanageable debt.

Current discussions over student loan forgiveness should include proposals to encourage more efforts like Warrior Way Back. This could mean grant funds to help smaller schools foot the upfront costs of starting a program, as well as technical assistance to share best practices. The result could be renewed attention from colleges to the resources students need for success, which is what administrators at Eastern Michigan say is exactly what happened.

“If you’re going to open yourself up to the public and say you’re a school of opportunity, that doesn’t just start when you enter the institution – that has to be continuous throughout,” said Jessica “Decky” Alexander, who is a professor and director of Eastern Michigan’s debt forgiveness program. “Even if they leave, we have to figure out how to make sure to get students back and provide pathways to honor the beginning we gave them here. … It goes to the heart of what public post-secondary education could and should be.”

Students need more than debt relief. They need fresh starts and second chances. Congress should deliver more than big checks to make that happen.

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Anne Kim

Anne Kim is a Washington Monthly contributing editor and the author of Abandoned: America’s Lost Youth and the Crisis of Disconnection. This story was produced with support from the Education Writers Association Reporting Fellowship program.