In an effort to curb student debt, the University of Missouri (Mizzou) has taken a controversial step: placing limits on what students can charge on their university accounts.
Earlier this month, the university announced a new policy that will bar students from using a financing option known as “student charge” to make non-academic purchases. The restrictions, which are set to begin in August, are supposed to promote better spending habits, increase retention, and support students in making progress towards their degrees, according to a statement from Jim Spain, vice provost for undergraduate studies at Mizzou, in the Kansas City Star.
While well intentioned, Mizzou’s new policy may actually have the reverse effect for the most vulnerable student populations.
Student charge works like a credit card that has a $1,250 limit and doesn’t charge interest. Using their university ID, students can pay for purchases at on-campus stores and restaurants. Those charges are added to a student’s institutional account at the end of the semester.
Banned “non-academic” purchases include services at Mizzou’s recreation center, food at campus restaurants, and some items from the Mizzou general store such as clothing and cosmetics.
For students from wealthier backgrounds, Mizzou’s decision will be, at worst, inconvenient. But for students from low-income backgrounds, the ability to use student charge to buy a meal between classes or toiletries in an emergency when funds are low can create stability and reduce stress, which research shows can be critical to retention. Even the ability to buy university branded clothing can mean the difference between fitting in and feeling out of place, which also plays a role in student success.
To be sure, payment options that open a line-of-credit like student charge are not ideal for students who may not have good spending habits, especially not when outstanding balances are tied to enrollment eligibility and can even be sent to collection agencies. And there is something to be said for teaching students how to manage their finances in college, or protecting students from incurring too much debt.
But policies like Mizzou’s are put in place by colleges’ [administrators] who think—or would have us believe—that they have less influence over financial circumstances of their students than they actually do.
For example, if Mizzou intends to teach students better spending habits, it can and should use its capacity as a university to actually teach its students better spending habits. By incorporating lessons about finance management into enrollment and orientation, or requiring students to learn about good spending habits before they can use student charge, Mizzou can encourage students to be better with their money without putting student populations in jeopardy.
If Mizzou wants to increase retention, it should examine solutions that address the retention issues at their root. If overuse of student charge as a payment option is enough of a problem that it requires a policy solution, then it is also likely to be a symptom of a larger problem. Why are students unable to pay off outstanding student charge balances, which cannot be higher than $1,250, with remaining aid? A New America report suggests it could be because the aid is not there to begin with, citing Mizzou as a leader in the field when it comes to using merit to attract students from out-of-state instead of need-based aid to support low-income students.
And why are these balances creating holds that prevent students from enrolling?
If concern over enrollment holds prompted Mizzou to restrict what students can buy with student charge, it would make more sense to reclassify outstanding balances on student charge as debt that doesn’t produce financial holds, and find another way to encourage students to resolve debt other than locking them out of completing their degrees.
Any genuine attempt at increasing retention and promoting good financial stewardship to keep students eligible for enrollment and curb student debt must start with an exploration of why those problems exist to begin with, and must be centered around doing no further harm first. Anything less will result in bad policy and limited perspective, no matter how well-intentioned.
Ernest Ezeugo is a program assistant in the Education Policy Program at New America, a non-partisan think tank.