New Rules Mean Millions Of Students Can Prove They Went To College

Over six million former college students cannot access their college transcripts because their former school is holding the transcript for ransom as a debt collection tactic. Many of them will get a substantial reprieve next year thanks to regulations recently released by the Department of Education, which will ban colleges and universities from withholding students’ transcripts under most circumstances.

College transcripts are vital documents for students, employers, and colleges. Students need transcripts to show what they have studied and how well they performed. Employers want transcripts to confirm that potential employees have the skills and qualifications they list on their resume. Colleges need them to determine whether a new student should get transfer credit and if they are eligible for certain types of financial aid.

Many colleges and universities block students’ access to their academic transcript if they owe a debt to the school. These debts can be the result of something as insignificant as a library fine or as large as an unpaid tuition bill. Many schools also block students from continuing classes until they can pay off a debt owed, leading many students to leave college before completing their degrees.

The new regulations require colleges to release transcripts for semesters the student received federal grants, loans, or work-study funds and paid off everything they owed to their school. The only credits a college or university will be allowed to withhold from the transcript are those from a semester for which the student still owes money. For example, say a student has completed 60 credits of classes and then withdraws while owing a balance of $500 for a semester in which they completed six credits. The school will have to release the student’s transcript showing the 54 credits they completed and paid for while receiving federal financial aid.

The regulatory changes will go into effect July 1, 2024. While not an outright ban on the practice, these changes will apply to all schools whose undergraduate students receive some kind of federal financial aid—that is, nearly every college and university. Eleven states (New York, California, Colorado, Maine, Minnesota, Washington, Ohio, Illinois, Indiana, Connecticut, and Oregon) already ban transcript holds in all or most cases. Research by the Student Borrower Protection Center (SBPC), has shown that approximately a quarter of students live in states that already ban the practice.

The regulatory improvements come after several years of research on the subject. Work by Ithaka S&R, a higher education research firm, illuminated the vast scale of the problem created by transcript withholding. This research has also helped shed light on the equity issues at play. Students who are minoritized, first-generation, or from low-income backgrounds are more likely to wind up unable to prove that they have earned college credits due to held transcripts.

Many of the debts that lead to dropouts and blocked transcripts are for a few hundred dollars or less. Often these holds prevent students from accessing higher paying jobs or completing their degrees—ironically, both solutions that would make them better able to pay off their debt. Similarly, students who cannot access their transcripts usually cannot transfer credits to a new school to continue their education, forcing them to start over, leaving any hard-earned credits stranded at their prior institutions and, again, spending money that could have gone towards servicing their debt.

Ithaka’s research has also shown that using transcript holds as a collection tool is largely ineffective. Generally, schools collect less than seven cents on the dollar for the debts for which they withhold transcripts.

Schools have said they use transcript holds to avoid more aggressive forms of collection effort, including sending former students directly to collection agencies. Hopefully, colleges will avoid more aggressive tactics and instead use the regulatory changes as motivation to find more effective and innovative solutions.

One example of an innovative approach is the Ohio Comeback Compact, which will forgive debts of up to $5,000 that students owe to participating colleges if they re-enroll at one of those schools. Initial results from this pilot project indicate that re-enrollment efforts are good for students and colleges alike. The project has brought students back to complete degrees and has provided participating colleges with a net revenue gain of around $180,000, as tuition paid by returning students has exceeded what the colleges would have netted from collection efforts.

The Ohio Comeback Compact is not the only effort of its kind. In a recent webinar hosted by the Chronicle of Higher Education, researchers highlighted a similar project at Wayne State University called the Warrior Way Back program, which was a precursor to the work in Ohio. By forgiving debts owed to the school and re-enrolling those students, the university has seen a net return of $1.6 million dollars since it began the program

The Institute for Higher Education Policy has created a calculator that can help schools determine what kind of return on investment they might see from forgiveness and re-engagement programs. The benefits of these programs suggest that the new regulations may function less as a restriction on colleges’ collection efforts and more as an opportunity for them to innovate and grow their enrollment.

With over forty million Americans having completed some college but not a degree, there are forty million reasons to focus on re-enrollment over collections.