Higher education institutions commonly withhold transcripts as a tool to get students to pay debts or fees owed to the institution. A 2016 survey found 64% of higher education institutions withheld transcripts for balances under $25. Research from Ithaka S+R estimated that roughly 6.6 million students have stranded credits at an institution due to an unpaid balance or outstanding debt. Credits become stranded when a student has completed the academic coursework, but their current or former institution will not provide a transcript or documentation showing those credits.
Additional research also has found students at community colleges, students of color and students from low socioeconomic backgrounds are more likely to be impacted by stranded credits. Stranded credit issues can also impact military veterans if billing or benefits issues arise related to the GI Bill.
When transcripts are withheld, students often are unable to submit academic documentation needed for further postsecondary education or employment that would help them repay their debt. Students who have transcripts withheld also are ineligible to receive additional federal financial aid. Colleges and universities argue that withholding transcripts is a key method to communicate and incentivize students to repay all debts owed to the institution. Institutions also assert that without transcript withholding, they will be forced to refer debts to third-party collections agencies, which reduces the amount of funds colleges are able to recover and may further negatively impact the debtor’s credit history.
In response to concerns about transcript withholding, some institutions and systems, such as the State University of New York and the City University of New York, have announced they will end these practices. Additionally, some institutions have used funds from federal COVID relief packages to erase or reduce outstanding debts for students.
In 2019, California passed legislation that prohibited higher education institutions from withholding a student’s academic transcripts because a student has an outstanding debt to the institution. Institutions also may not charge a higher fee or provide less favorable treatment for students who owe an outstanding debt. This legislation impacted both public and private institutions operating in the state.
At least four other states—Colorado, Louisiana, Maine, and Washington—have enacted legislation that would prohibit transcript withholding at higher education institutions. Washington’s law provides that institutions may not withhold transcripts if the transcript is requested for a job application, transfer to another college or university, financial aid application or application for military service. Maine’s law, passed in 2022, provides that two-year institutions may not condition the release of transcripts or diplomas on an outstanding debt of less than $500 or debts less than $2,500 at four-year institutions. The law also establishes terms related to repayment plans and requires an annual report regarding the release of transcripts and diplomas to be submitted to the legislature. In 2022, at least 11 other states are considering legislation that would prohibit or modify an institution’s ability to withhold a transcript.
- Most colleges and universities withhold academic transcripts for students who have outstanding or unpaid debts.
- At least four states have passed legislation that prohibits colleges and universities from withholding academic transcripts from students.
- In 2022, at least 13 other states are considering legislation that would prohibit or modify an institution’s ability to withhold a transcript.