Virginia Attorney General Miyares Announces Plan to Cut Delinquent Student Debt Collection Fees in Half
RICHMOND, Va. — Virginia Attorney General Jason Miyares announced an internal policy last week that will provide immediate relief to working families and students struggling with student debt.
The Office of the Attorney General is legally required to perform debt collection legal services for certain colleges and universities in the state of Virginia on delinquent student accounts. Often, overdue account collection fees dramatically increase the amount of money owed by students by up to 30%, and Miyares’ office says it “knows that’s wrong.”
“As someone who worked their way through college and still has their own student loans, I understand the strain student loans can put on working families. By working to reduce attorneys’ collection fees from 30% to 15% on accounts deemed overdue by the respective universities, we are making immediate internal procedural improvements that will help Virginians,” Miyares said.
The new policy will limit attorney fees assessed on student accounts to 15% on any new request referred by a university or public college for the recovery of a delinquent student account to the Office of the Attorney General, in cases where the OAG has the authority to do so. This is lower than the nearly 18% fee charged by the federal government for student loans in default.
In other cases, including where the college or university has established its own policy requiring higher attorney or collection fees, the Office of the Attorney General will encourage such institutions to reduce their fees to 15% and, in exchange, the OAG will reduce the contingency fee it charges for its legal services to 15%.
Going forward, the Attorney General’s Office says it will encourage universities to change their collection fee policies to match the 15% rate.
The office will also offer more generous payment plan options to help students avoid legal action or the entry of judgment against them.
Virginia is home to some of the best public universities in the country. This policy change helps students make public education more affordable and accessible to all Virginians.
Related: Student Debt Crisis Hits Black Borrowers Hardest
In addition to this immediate policy change, Miyares invites students who have had overdue accounts at a public college or university and whose accounts have been referred to the OAG for collection, to contact the OAG to discuss their situation and to consideration of whether further relief is appropriate in the circumstances.
For more context on this issue, check out VPM’s Dreams Deferred series.