young woman working on a laptop and looking frustrated
Over six million former students cannot access their college transcripts because their former school is holding the copy for ransom as a debt collection tactic. Many of these will receive a significant reprieve next year thanks to recently released regulations by the Department of Education, which will prohibit colleges and universities from withholding student transfers in most cases.
College transcripts are vital documents for students, employers, and colleges. Students need transcripts to show what they have studied and how well they have performed. Employers want transcripts that confirm that potential employees have the skills and qualifications they list on their resume. Colleges need them to determine if a new student should receive transfer credit and if they are eligible for certain types of financial aid.
Many colleges and universities prevent students from accessing their academic transcript if they owe a debt to the school. These debts can be the result of something as minor as a library fine or as large as an unpaid tuition bill. Many schools also prevent students from continuing classes until they can repay a debt, causing many students to drop out of college before completing their degrees.
The new regulations require colleges to issue transcripts for the semesters the student received federal grants, loans or work-study funds and paid back what he owed to his school. The only credits a college or university will be allowed to withhold from transfer are those from a semester for which the student still owes money. For example, suppose a student has completed 60 credits of coursework and then withdraws owing a balance of $500 for a semester in which he completed six credits. The school must issue the student’s transcript showing the 54 credits completed and paid for while receiving federal financial aid.
The regulatory changes will take effect on 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, almost every college and university. Eleven states (New York, California, Colorado, Maine, Minnesota, Washington, Ohio, Illinois, Indiana, Connecticut, and Oregon) already prohibit the transfer in all or most cases. Research from the Student Borrower Protection Center (SBPC), has shown that about a quarter of students live in states that already ban the practice.
The regulatory improvements come after several years of research on the issue. The work of Ithaka S&R, a higher education research firm, illuminated the enormity of the problem created by transcript withholding. This The research also helped shed light on the equity issues at play. Students who are minority, first-generation, or from low-income backgrounds are more likely to end up unable to demonstrate that they have earned college credit due to transfers.
Many of the debts that lead to dropouts and blocked transfers are for a few hundred dollars or less. Often these commitments 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. Likewise, students who can’t access their transfers typically can’t transfer credits to a new school to continue their education, forcing them to start over, leaving any hard-earned credits stuck at their previous institutions and, again, spending money that could be used to service their debt.
Ithaka’s research also showed that using transcription bonds as a collection tool is largely ineffective. Schools in general collect less than seven cents on the dollar for the debts for which they withhold transfers.
Schools have said they use transcript cases to avoid more aggressive forms of collection efforts, including sending former students directly to collection agencies. Hopefully, colleges will avoid more aggressive tactics and instead use regulatory changes as an incentive to find more effective and innovative solutions.
An example of an innovative approach is the Ohio Comeback Compact, which will forgive up to $5,000 in debt owed by students at participating colleges if they re-enroll at one of those schools. Initial results from this pilot show that re-enrollment efforts are good for both students and colleges. The project returned students to full degrees and provided participating colleges with a net revenue gain of $180,000, as tuition paid by returning students exceeded what the colleges would have recouped 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, the researchers pointed to 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 these students, the university has seen a net return of $1.6 million since the program began
The Institute of Political Higher Education 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 act less as a constraint on colleges’ collection efforts and more as an opportunity to innovate and grow their enrollments.
On top of me forty million Americans have completed some college but not a degree, there are forty million reasons to focus on rewriting collections.
