Tlaloc Fierro spent only a couple of semesters at Eckerd College, dropping out in the spring of 2007. But the $500 debt they accrued while there — and the consequences of it — followed Fierro for years.
When Fierro moved from Florida back home to Dallas and enrolled at a local community college in the fall of 2007, they discovered that Eckerd was withholding their transcript, a common debt-collection tactic. Homeless at the time and couch-surfing with friends and relatives, Fierro was unable to come up with $500, and had to start their college career over.
“Five hundred dollars was what a semester of community college cost,” Fierro recalled. “I was focused on trying to survive.”
Fierro’s predicament isn’t unusual. Except in the 11 states that ban or restrict the practice, colleges routinely withhold transcripts from students who owe them money, sometimes for debts as small as a library fine or parking ticket. While some institutions will make exceptions for students who need a transcript for a job or license, more than a quarter won’t release a transcript under any circumstances until the debt is resolved, a recent survey found.
That’s about to change. Under a rule that takes effect July 1, colleges that receive federal student aid will be required to provide all students who request an official transcript with one that covers the payment periods for which they’ve paid in full. Though institutions still will be allowed to suppress grades from periods for which the student owes a balance, they’ll have to release a complete transcript if the debt was due to fraud or administrative error.
Supporters of the rule say those changes will make it easier for college dropouts to finish a degree and advance in their careers. They argue that colleges will benefit, too, since more people will have the means to repay their debt.
“Holding transcripts hostage traps students in a cycle,” said Sosanya Jones, an associate professor of higher education leadership and policy studies at Howard University. “To get out of debt, they need to get jobs or financial aid, but to get a job or financial aid, they need a transcript.”
But colleges say the new limits on transcript holds will deprive them of the little leverage they have to recover millions of dollars owed to them by former students. They warn that without being able to place such holds, they may have to resort to more aggressive tactics.
“By taking away this tool in their tool belt, it makes it difficult for everyone,” said Lori Hartung, president of the Coalition of Higher Education Assistance Organizations and a regional sales executive for Educational Computer Systems Inc., known as ECSI, which helps colleges recoup debts.
Credits as Collateral
It’s impossible to say just how much money college students and dropouts owe their institutions, but a recent survey by ECSI and Higher Ed Dive found that almost 40 percent of colleges manage delinquent balances of between $1 million and $5 million, and a third have balances over $5 million.
Statistics on the number of students affected by holds are even harder to come by; in one recent survey by the American Association of Collegiate Registrars and Admissions Offices, or AACRAO, only a third of respondents said they were confident in their ability to calculate — or even estimate — the percentage of students with a hold. One frequently cited report estimates that it’s around 6.6 million students nationally.
Holding transcripts hostage traps students in a cycle. To get out of debt, they need to get jobs or financial aid, but to get a job or financial aid, they need a transcript.
Though the AACRAO survey found that nearly half of colleges will place holds over any debt greater than $0, another survey suggests that a typical amount ranges from $1,000 to $3,000. Often, the debt accrues when students withdraw midterm and become responsible to their colleges for financial-aid funds returned to the federal government.
The vast majority of debts are resolved fairly quickly, before a hold becomes a barrier for a current or former student, according to studies by AACRAO and the Western Interstate Commission for Higher Education.
But when a debt lingers, students seeking to transfer to another college or start an internship or job may find their credits being held as collateral. Without a transcript, they may have to repeat coursework or miss out on a job or promotion.
That’s what happened to Onyekachi Okeke, who said she owes $8,000 in tuition to the City University of New York’s Hunter College. Before it ended transcript withholding in 2022, ahead of an expected state ban, Okeke would have to “beg the bursar” to temporarily lift the hold every time she needed her transcript for a scholarship or internship. Sometimes the answer was yes; other times it was no, she said.
By taking away this tool in their tool belt, it makes it difficult for everyone.
When that happened, “I would end up losing out on opportunities to apply for scholarships, internships, and jobs,” Okeke said.
Colleges often defend transcript holds as the gentler alternative to sending students’ bills to collection agencies, which would add fees and damage their credit. When students don’t respond to repeated reminders to pay, holds can be a last-ditch way to get their attention, to get them to call and maybe work out a payment plan.
Withholding a transcript can also discourage a student from taking on more debt that they’ll struggle to repay, Hartung said. In such cases, it “can be a benefit to the student consumer,” she said.
A Defensive Posture
With less than three months remaining until the rule takes effect, colleges are scrambling to find new ways to get students to repay their debts. Some are considering lowering the dollar threshold for registration holds, Hartung said. Others say they may send more students to collections sooner.
On professional email lists, there’s talk of taking a more defensive posture, demanding upfront payments in full or dropping students who haven’t paid earlier in the semester.
At Bay Path University, in Massachusetts, administrators are “thinking of taking a stern approach earlier than we currently do,” possibly unregistering students with unreconciled accounts, Stephanie King, executive director of student financial services, wrote on the Finaid email list last fall. The university is also developing a financial agreement that students will be required to complete each semester when they register, King wrote in an email in late March.
Concordia University Wisconsin, which tested a pay-in-full model last year and saw a 60 percent decrease in outstanding balances at the start of the semester, now plans to require upfront payment for all students in 2025-26, said Kevin Sheridan, the college’s assistant vice president for financial aid and student accounts. Students who don’t pay in full won’t be allowed to participate in sports or other extracurricular activities.
“Often, it’s not that students aren’t able to pay — they just ignore our texts and emails,” Sheridan said. Cutting off their access to sports “tends to get freshmen to call mom and dad and get things moving.”
Concordia will also be counseling students against enrolling if they really don’t have the means to pay, said Sheridan, acknowledging that such a move “sounds ridiculous” given the enrollment challenges facing colleges.
“I call it financial-aid literacy,” he said. “We want them to make the best decision” according to their financial circumstances.
Meanwhile, colleges have questions — lots of them. After AACRAO and the National Association of College and University Business Officers held a webinar on the rule in November, participants submitted more than 200 questions, according to Wendy Kilgore, AACRAO’s senior director of research. A second webinar in March drew 2,000 registrants and 1,300 participants at its peak, said Robert Moran, executive director of the Coalition of Higher Education Assistance Organizations.
Colleges want to know if the rule is retroactive, how it will interact with state laws limiting or banning transcript holds, whether they can withhold transcripts from students who are delinquent on a payment plan, and how exactly they’re supposed to create — and annotate — a transcript with missing credits, Kilgore said. Colleges expect to receive further guidance from the U.S. Department of Education this spring, she said.
In the meantime, colleges should be reviewing their current policies and procedures with their general counsel, and ensuring that their messaging to students is consistent across departments, Hartung said.
Millions in Losses
Moran, who spent two decades as an aide and policy adviser to members of Congress and two undersecretaries of education, traces the movement to end transcript holds to the early 2000s. That’s when the Lumina Foundation and other advocacy groups shifted their attention from college access to college completion, setting lofty attainment goals that hinged on re-enrolling adults with “some college, no degree.”
When research revealed that 30 percent of current and former students had holds on their transcripts, consumer groups began pushing for an end to the practice, said Moran, who now works as a lobbyist. Their first win was in California, which abolished all transcript holds in 2019.
At the time, many California colleges warned that the change would cost them millions. The California State University system predicted losses in the hundreds of thousands annually; the University of California system expected losses as high as $12 million a year.
In the years since, the Cal State system has indeed seen past-due balances balloon, from $28.5 million in 2018-19, the year before the ban took effect, to $39 million in 2020-21, largely because of an increase in institutional debt, according to Amy Bentley-Smith, the system’s director of strategic communications and public affairs. (The UC system said it hasn’t tracked its losses.)
But that hasn’t stopped other states from following California’s lead. Since 2019, 10 additional states have passed full or partial bans, according to Brittany Pearce, a program manager with the research nonprofit Ithaka S+R. Some require colleges to release transcripts only under certain circumstances, such as when one is needed to obtain a job or join the military.
The federal government has been slower to act and, until recently, actively encouraged transcript holds. A shift began in early 2022, when the Consumer Financial Protection Bureau announced it would begin investigating transcript holds as part of its oversight of colleges that extend private loans to students. A few months later, the agency declared that institutions with a “blanket policy” of withholding transcripts were “engaged in abusive acts or practices.”
Then, in October of last year, the Education Department released its new rule, requiring colleges that participate in federal student-aid programs to certify that “they will provide an official transcript that includes all the credit or clock hours for payment periods in which the student received Title IV, HEA funds and for which all institutional charges were paid at the time the request is made.”
Edward Conroy, a senior adviser with the education-policy program at New America who has been tracking transcript holds, sees that mandate as a reasonable compromise. Students still won’t have access to credits they haven’t paid for, but they’ll at least be able obtain a redacted transcript.
But colleges say that parsing transcripts, as the rule requires, will be difficult, if not impossible. Their systems aren’t set up to distinguish between credits that are paid for and those that aren’t. While some colleges plan to seek system upgrades, others say they’re leaning toward ending transcript holds altogether.
That’s essentially what happened when Colorado passed a partial transcript-withholding ban in 2022, according to Carl Einhaus, senior director of student success and P-20 alignment for the Colorado Department of Higher Education. Without an easy way to determine whether a transcript request was covered under the law, many colleges opted “to just release it.”
Einhaus said that the while the federal rule may represent a good compromise, “it will be difficult for institutions to operationalize.”
The Upside for Colleges
Even so, student and consumer advocates see benefits not only for debtors — and for states, which could reap a more credentialed work force — but also for colleges, which may gain more transfer students.
Those advocates suggest that rather than rushing to more punitive approaches to debt collection, colleges should consider completion programs like Wayne State University’s Warrior Way Back program or Ohio’s College Comeback Compact. Such programs allow dropouts who owe money to a university to re-enroll and have their debt forgiven over time. A recent analysis of Ohio’s program found that participating colleges received more money in tuition revenue than they forgave, and significantly more than they would have collected from the re-enrolled students. But such programs haven’t been rigorously evaluated and could be difficult to scale up.
At the very least, advocates hope colleges will find better ways of reaching students with outstanding debt, so they don’t learn about the hold when they try to transfer, as Fierro did.
Fierro repaid the $500 they owed to Eckerd College in 2009, but by then, they weren’t in a position to resume their education. As is the case with many would-be adult learners, “life got in the way,” Fierro said.
Fierro finally earned an associate degree in peace and human rights, with honors, in 2022. They now work as a community outreach organizer with Texas Appleseed, a nonprofit focused on social, racial, and economic justice. But they wish it hadn’t taken so long to finish a degree.
“It would have been easier if I had been able to get my transcript from the get-go,” Fierro said. “It just created this whole domino effect.”
