The Herald Bulletin

January 29, 2013

Owe Ivy Tech money? Say goodbye to that tax refund

College using tax intercept program to collect debts

By Dani Palmer
The Herald Bulletin

ANDERSON, Ind. — If you owe Ivy Tech money, it’s likely not going to be a new TV you’re getting with that tax refund check.

The statewide community college of more than 30 campuses has implemented a tax intercept program this year.

“This is the first time the college has participated in this program,” Chief Financial Officer Chris Ruhl said, although the option has been available for years.

Ivy Tech Community College is losing out on about $12 million every year because of student-owed money — about 1.5 percent of the college’s general fund. Ruhl said the college uses collection agencies, but only recovers about $1 million a year through that method.

From the college’s budgeting standpoint, there’s a direct impact on provided services and the ability to grow offerings.

“Every dollar paid here is put back into academic services,” Ruhl said.

The tax refund offset program, used by the state in collecting back child support, will be a “significant tool” as Ivy Tech will be asking the State Department of Revenue to divert part or all of a tax refund to cover debts owed by students.

Once debtors are notified, they’ll have 30 days to appeal.

Because the college already offers a low-cost quality education, Ruhl said the debts rarely result because of issues like bounced checks and overdue tuition bills.

“The wrinkle here is related to how federal financial aid is applied,” he said.

Three-quarters of the money owed is related to some type of financial aid, such as Title IV programs like the Pell Grant. For example, if students drop a class before attending 60 percent of the 15-week period, they’ll owe the federal government money, which in actuality means they’ll owe the school money because Ivy Tech has to pay it back.

Ruhl added that federal money is “not free money” because there are expectations, such as keeping grades up. If a student doesn’t meet those, there will be academic effects and financial consequences. He said the college does work with students on payment plans and discuss financial aid options and responsibilities during orientation. Staff also try to alert students early about deadlines.

“There’s a lot of communication throughout the year to keep folks informed,” Ruhl said. But he added more transparency and simplicity is always good.

In further strife to avoid overdue bills, Ivy Tech will be limiting federal money forwarded to students with efforts like monitoring bookstore credits to better pay out what is actually needed.

Already students aren’t allowed to register for classes if they owe money. They can’t graduate, either — even if it’s just a parking ticket or library fine.

Ruhl said other institutions have reported success with tax intercept programs — Purdue University uses it — and that Ivy Tech believes it will be beneficial.

Find Dani Palmer on Facebook and @DaniPalmer_THB on Twitter, or call 640-4847.