Students Sued by Colleges for Unpaid Loans

Student debt is on the rise and colleges nationwide are withholding degrees from graduates who have not paid their federal loans.

Yale University and the University of Pennsylvania are two colleges that have sued former students for unpaid Perkins loans. These are loans that provide low-interest financing for “needy students” to pay for their education, according to the U.S. Department of Education.

Federal Perkins loans are administered by the college to the students. The University of Minnesota offers Perkins loans, but has declined to state whether or not they have sued former students over unpaid loan date.

However, the University of Minnesota does withhold student transcripts if they have not paid their student loans. The school will also use collection agencies to collect the student debt.

From 2010-2011, approximately 735 University of Minnesota students entered repayment of their Perkins loans, but around 5 percent of them defaulted, according to the U.S. Department of Education.

In 2012, the University of Pennsylvania filed at least 12 lawsuits on students who defaulted on their Perkins loans.

The repayment process starts nine months after students leave the University or when they are enrolled for less than half time.

Students are also still liable for the unpaid loans if the file bankruptcy.

One student said that he understands why universities would withhold degrees or transcripts, but said it is not practical because the degree is needed to get a job or career that will pay off the loans. Without the job, the loans can’t be paid, creating a hindrance on students.

Some students are not aware of the fact schools can withhold transcripts and degrees, but did not agree with the practice.

Once students bring their loans current, they are able to obtain transcripts or degrees so that they can move forward to their careers.