FDCPA Fair Debt Collection Practices Act on a table.
Last week City University of New York (CUNY) Trustees voted to stop withholding student transcripts as a debt collection tool. The move follows the State University of New York (SUNY) making a similar decision two weeks ago. Governor Hochul has also said she wants to end the practice at all New York colleges and universities. This follows from California, Washington, and Louisiana passing laws over the past two years that ban withholding transcripts. With similar legislation under consideration in Minnesota and Ohio. Secretary of Education Miguel Cardona also brought new attention to the issue recently; these moves are long overdue. They might prompt other institutions and states to follow suit.
Transcript withholding is a long-running practice that has been previsouly endorsed by the Department of Education (ED) that allows colleges and universities to withhold a student’s transcript as a tool to get them to pay debts owed to the institution, sometimes debts as small as twenty-five dollars. Institutions argue that withholding a transcript is one of the few tools they have to get students to pay back funds owed to the institution. The reality is that transcript withholding appears to be ineffective—even states where aggressive collection practices are allowed show only 7 cents on the dollar reclaimed as a result of transcript holds. Most importantly, transcript holds are likely to be counterproductive and have profound equity implications for the most marginalized and disadvantaged students.
(Verification is another rule that mainly affects already disadvantaged students)
Who is impacted by transcript withholding?
Students at community colleges are much more likely to be affected by transcript withholding than students who attend four-year institutions. Since Community Colleges serve far more first-generation students and students of color, it is also likely that the students who are most affected are much more likely to be from minoritized communities. These are the same students most likely to benefit from gaining a post-secondary credential. Transcript withholding prevents students from realizing the benefits of their education in multiple ways.
Students who cannot access their transcripts are usually unable to transfer credits to a new school to continue their education. If they want to continue their education, they often must start over, leaving any previous credits stranded at their prior institutions. Many jobs also require proof of post-secondary education that students cannot provide if they cannot access their transcripts. This reduces economic mobility for these students and potentially makes it harder for them to repay any debts owed to the institution blocking their access to transcripts.
Transcript withholding impacts millions of students
Transcript withholding affects a vast number of people; the best estimates available show that 6.6 million students have credits they cannot benefit from. Those are all people who might be able to re-enroll, complete credentials, or move into higher-paying jobs if fewer institutions withheld their transcripts. There is also innovative work going on that aims to support the need for institutions to recoup lost revenue while ensuring that students are not prevented from completing their educations.
Federal regulations might ban transcript withholding
If institutions are not willing to give up transcript withholding on their own, they may soon be forced to by federal regulation. Representatives on the Department of Education’s Institutional and Programmatic Eligibility Rulemaking Committee have proposed a regulatory ban on transcript withholding for all institutions who receive federal financial aid funds. The proposed rule is still just a proposal but will likely see significant support from students and student advocacy groups. Institutions and students would both be better served if institutions came up with more effective ways to recoup unpaid debts rather than continuing to prevent students from accessing their education records.
