WASHINGTON – More tuition bills than ever are going unpaid at Maryland’s public four-year colleges, at a time when the University System of Maryland is grappling with a $67 million budget cut and faces additional cuts next year.
The amount of bad debt turned over to the state’s Central Collection Unit by Maryland’s public universities has more than doubled in the last four years, jumping from $6.3 million in 1998 to $13.4 million in 2002.
Over the years, Maryland’s 13 public colleges and universities have accumulated $32.1 million in past-due bills — mostly from unpaid tuition and fees, according to data from the Central Collection Unit.
“The amount of debt is surprising,” University Comptroller Bob Page said Friday. “The university system is sharing in the pain the state budget is feeling right now, so we are very concerned with these figures.”
But while the debt has grown, the collection rate has not. In the last four years, the Central Collection Unit has collected almost the same amount each year, ranging from $3 million to $4.7 million.
Henry Raymond, the new director of the collection unit, said he did not know how the unit has collected debts in the past, but he has proposed some changes.
“We’re trying to take more aggressive action on those debtors (who have) assets or wages,” said Raymond. Such action could include intercepting tax refunds, filing property liens and garnishing wages.
But Raymond believes the collection rate of around $3 million or $4 million a year might not budge for another three or four years, because of the lag between students graduating with debt and those same students becoming responsible adults.
“It takes that long for students to get settled down, get a stable job and try to clean up their credit record,” he said. “In university debt, we’re able to make a recovery over a long period of time because (students) eventually try to get car loans or mortgages. And then they have to take care of this debt.”
Page said university officials were surprised by the figures, but he also noted that the $32 million in bad debt is small compared to the system’s estimated $2.8 billion in total annual revenue.
It is not welcome news, however, at a time when the system is trying to save all the money it can, Page said.
Many school officials attribute the rise in unpaid bills to the simple fact that there are more students in the system and they are paying higher tuition.
“We’re at the front end of what’s called the `baby-boom echo,'” said Alan Selser, a budget officer for Salisbury University. He said the baby-boomers’ children, who are now in high school, present a “huge” number of potential college students.
Enrollment at Maryland public universities is projected to grow by about 30 percent — or an additional 38,000 students — by the year 2011, according to the Maryland Higher Education Commission.
Meanwhile, tuition is rising. State budget cuts this year forced a midyear tuition increase along with layoffs and furloughs at universities.
The amount of bad debt will only get worse as tuition and enrollment rise, Selser said.
But even with low tuition rates, some schools have accumulated a large amount of debt.
Coppin State College had the lowest tuition costs among the public universities in fiscal 2002. It brought in $9.6 million last year in tuition revenue but has an accumulated debt of $2.9 million.
In contrast, the $9.4 million in debts owed to the University of Maryland, College Park, is small potatoes compared to that campus’s $224 million tuition revenue in fiscal 2002.
Typically, universities forward bad debts to the state’s collection agency after pursuing the debtor for a semester. While Raymond’s unit hopes to boost collections, officials there and at the different campuses said they expect debt will continue rising for the foreseeable future.
“We might not be doing a bad job, meaning the percentage of unpaid accounts isn’t going up,” Selser said. “But the total amount definitely will go up just because of more students and higher tuition.”