Colleges and Universities often sue former students for tuition debt allegedly owed. As with other debt they are generally able to obtain a default judgment and enforce against a bank account or garnish wages. Their other major weapon however, as opposed to credit card or student loan debt is that they will hold the transcript of a student that owes debt so that the student will not be able to apply any credits earned at that institution to another institution. This is a major dilemma for many students including our client who had taken a summer class at Hofstra to fulfill a course she needed to graduate from her college. Hofstra eventually pursued her for an alleged outstanding debt and obtained a default judgment against her. They hired Stein & Stein, a debt collection law firm to sue and enforce this debt.
Tuition debt can generally be discharged in bankruptcy as long as no promissory note is signed but our client did not want to pursue that route. Negotiating a settlement with universities can be a very difficult procedure as they do not have set guidelines to accept certain amounts like credit card companies or student loan firms do. Our client was very concerned as she was applying for jobs at large financial institutions in New York and could not afford a discrepancy like a judgment to appear on her credit report. Thus, we had to use every bit of leverage we could muster to negotiate a resolution to this case. The debt had accrued to over $8,000 because of interest and fees but we were eventually able to achieve a $2,500 settlement with Stein & Stein over a payment term for our client and have Stein & Stein vacate the judgment against her. She ultimately paid less than the alleged original tuition bill of $2,625. Our client's transcript was released and she had no worries when interviewing with potential employers.