Penn is involved in litigation with dozens of former students over the repayment of tuition and loans.
In November, the University filed six lawsuits in the Philadelphia Court of Common Pleas demanding repayments of amounts ranging from $13,200 to $26,800.
Collecting student debt through litigation is not unusual amongst other universities. Yale University has a number of collections suits currently filed. Temple University is also suing former students to recover their loans or overdue tuition bills with the same debt collections attorney who represents Penn in these suits, J. Scott Watson. Watson did not respond to requests for a comment by press time.
“If students graduate or leave the University with an outstanding balance, their debt will be transferred to the University’s Collections Office,” Marlene Bruno, spokesperson for Student Registration and Financial Services, said in an email.
The Collections Office may then decide to hire a debt collection agency or contract a law firm to sue the indebted student.
Former anthropology graduate student Kenya Shujaa, who studied at Penn from 1997 to 2003, was sued for late tuition. She said she was “purged” from the department because of her debt and was subsequently sued by the University.
After leaving Philadelphia for several months due to family reasons, she came back in 2006 to find out she had been ordered to pay back $12,000, though the law firm had initially sought $20,000 due to late fees.
Since she was away while the suit was taking place, she did not fight back in court.
“I didn’t discover it until it was over,” she said, adding that she would not have been able to afford litigation regardless.
SFS sends “proactive” emails advising students of a past-due balance that will result in financial hold,” Bruno said. “Students are encouraged to contact SFS if they are experiencing difficulties in meeting their expenses,” she added.
Current students may reevaluate their financial package at any time.
Some students decide to hire lawyers to respond to the suits. Kristina Baumli, who was sued this November for almost $30,000 in tuition obligations said in an email that she has “turned the matter over to an attorney.”
The lawsuits usually prompt defendants to pay several thousands of dollars in attorney fees and hundreds of dollars in court fees. One student sued in November was asked to pay about $30,000 for his Federal Perkins Loan debt and interests which included an additional $7,400 in attorney fees — about a fifth of the total request amount.
The amount owed may also increase over time due to interest rates.
“Balances remaining beyond the due date are subject to a late-payment penalty of 1.5 percent per month,” Bruno said. Annual interest rates are 5 percent for Perkins Loans, according to court documents.
The University has other measures at its disposal. It can withhold registration, transcripts, diplomas and any other information “regarding the record” of indebted students.
Not having access to her transcript “limited the kinds of jobs that I could have,” Shujaa said.
Nevertheless, she considered withholding her transcript a fair move — “that’s the rule when you owe them money,” she said.
In recent years, more and more students nationwide are turning to loans to pay for their tuition and other costs, according to Laura Perna, a professor at the Graduate School of Education. Nevertheless, this is less of an issue at Penn due to the University’s no-loan policy.
As a result of the policy, “the borrowing amongst Penn students has gone down dramatically,” she said.
Shujaa, who received a fellowship in her first two years at Penn but began to accumulate debt when the money dried up, settled her obligations in February 2012.