Higher Education's Mean and Dirty Trick: Transcript Withholding

The COVID-19 pandemic has brought unprecedented challenges to college students nationwide. Last spring, most students had to shift abruptly online while a public health crisis raged and an unemployment crisis exacerbated the food and housing insecurity already faced by too many Americans. With the public health and economic crises not under control by fall 2020, being a college student has been, to put it mildly, challenging. It is not a surprise that there’s been an overall decline in undergraduate enrollment of 4.5 percent, including a more precipitous decline of 10 percent in the community college sector.

Not only have many students stopped out who were enrolled last spring, but according to a survey this summer from New America, approximately 9 percent decided to transfer to another college or university for this academic year. This crisis may lead to an unprecedented amount of student “swirl”—students who transfer in and out of a variety of institutions on the pathway to a credential. Layering the personal financial crises many Americans are experiencing onto that swirl, the higher education sector may reveal one of its dirtiest little secrets when students find themselves unable to transfer credits: transcript withholding.

The Student Borrower Protection Center recently shed light on how pernicious transcript withholding can be for those looking to re-enroll in higher education. Millions of Americans who have some credits but no degree are having their transcripts held hostage by their institutions due to unpaid financial obligations. One estimate says there are approximately 6.6 million Americans whose credits are stranded. These obligations can be anything from unpaid tuition to something as small and simple as a library fine or parking ticket. One recent survey found that 95 percent of responding colleges withhold transcripts for one reason or another. These institutional debts often prevent a former student from accessing their official transcripts, making them unable to transfer any credits to another institution. (And graduates can’t even prove to employers they have a degree.)

Institutional debts already penalize too many, forcing them to decide whether they should start over academically or prioritize freeing their transcripts over their own financial security and basic needs. The current economic crisis will only make it worse for many of the students who stopped out last spring—often due to financial considerations and having to work—and try to return in the future, only to find that some unpaid institutional debt that occurred during the height of the COVID-19 crisis is holding them back.

It doesn’t have to be this way. States have started to put laws on the books that prevent institutions from withholding transcripts. California is the vanguard when it comes to preventing transcript withholding. The state has a simple, clean law that forbids any California school from withholding a student’s transcript over an unpaid debt. Other states should follow California’s lead and prevent any institution from harming former students by keeping their academic records under lock and key.

The federal government can also help in this effort to prevent transcript withholding. The Education Department can—and should—strongly signal that it stands with students, not institutions, when it comes to transcript withholding. Currently, the Department explicitly states that institutions can withhold academic transcripts until a defaulted federal student loan is satisfied. This guidance should end. In addition, the Department could help answer questions about how widespread these practices are by making transcript withholding a reporting requirement, asking whether the institution withholds transcripts if the student defaults on a federal student loan and/or owes a sum to the institution. The Department can analyze and publish this information, and clarify that those institutions that withhold transcripts over defaulted federal loans should cease doing so and encourage institutions to cease the practice more broadly.

The Education Department should also revisit its 2019 borrower defense regulations, which explicitly allow colleges found to have defrauded a student to withhold the transcripts of any borrower who receives full forgiveness of their student loans. Especially after borrowers have been harmed from lies and misrepresentations by their schools, they should be given every opportunity to try to further their education elsewhere and find a job.

The Administration can also think more broadly about opportunities to provide incentives for more student-focused behavior. For instance, the Department of Veterans Affairs runs the Principles of Excellence program, which requires institutions to commit to certain policies and practices (like heightened transparency and an end to aggressive recruiting practices) in exchange for access to GI Bill dollars. An agreement to stop transcript withholding practices should be added to the Principles of Excellence.

Finally, colleges and universities, in a time of extreme economic crisis for many students, should not wait for states and the federal government to force their hands to do the right thing and not withhold official transcripts because of institutional debts. They should just do the right thing. This past year has already been so tough for so many. As the public health crisis wanes and more students—both current students and those who stopped out—look to transfer, institutions must at least give students the keys to their academic credits.

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