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Let’s Ban Colleges From Withholding Transcripts Over Late Fees and Bills

If borrowers can’t afford payments on student loans issued by their college, many schools withhold the students’ transcripts making it harder to get a job.

Written By: Michael P. Lux, Esq.

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At some point, it was decided that it is acceptable for colleges to withhold official transcripts for students with unpaid fees.

At first glance, such a system might make sense. If you don’t pay for your education, maybe you shouldn’t get your transcripts?

If we subject this policy to a little bit of scrutiny, and things become clear. Colleges hold transcripts hostage and the former students trying to find a job are put in an awful position. Regardless of how dire your financial circumstances are, if you don’t pay up, good luck finding a job.

This draconian system isn’t just bad for borrowers. Employers lose out on the chance to get good employees. More people are relegated to poverty, and the economy suffers.

Alternative Ways for Schools to Collect Debt

Before discussing the issues with the colleges withholding transcripts, it’s worth covering the many threats a school can make to collect a debt.

Schools may be able to do any of the following:

  • Charge late fees for failure to make a timely payment,
  • Provide negative credit information to the credit bureaus,
  • Hire a debt collection company,
  • Charge the cost of debt collection to the former student,
  • Sue the former student in court, and
  • Garnish the wages of the former student.

In short, colleges have many options to collect unpaid fees and other debts. They don’t need to be able to withhold transcripts.

However, graduates may desperately need an official copy of their transcript.

Official Transcripts are Essential

There are two primary reasons a former student would request an official transcript.

  1. They need official records as part of a job application.
  2. The official transcript is necessary for further studies.

People trying to get a job or further their education shouldn’t have their former school standing in the way. The purpose of college is to prepare students to enter the workforce or prepare them for more specialized education.

Students do have the right to access their academic records under the Family Education Rights and Privacy Act (FERPA), but this right does not extend to the official transcripts.

Many employers and colleges require sealed copies of official transcripts to prevent fraud. If the college refuses to provide an official transcript, opportunities for struggling former students may be lost.

Why Can’t Former Students Just Pay Their Fees?

Schools are not just withholding transcripts over petty fines like an overdue library book. In some cases, students can’t get a transcript because they have fallen behind on a student loan issued by the school.

In the case of school-issued student loans, the school is also functioning as a lender. Unlike any other student loan lender, the school can withhold proof of education to collect the debt. The United States Department of Education, the largest provider of student loans, doesn’t even have this ability.

Yet Another Way to Stack the Deck Against Poor People

If you are from a wealthy family, this is a minor issue. Unpaid fees are merely an oversight and are usually easily corrected.

The hardest hit are those who could barely afford college–the people dependant on student loans to pay tuition. They may legitimately not be able to afford their student loans. Paying student loan bills isn’t an option if you can barely afford to put food on the table.

Schools should try to lift up these students. Train them to succeed and then celebrate their success. American high schools perpetuate the idea that if you study hard in school, you can have success in life. We attend college with a dream of a better tomorrow.

Instead, colleges send former students into the world with a mountain of debt and no way to prove their credentials to prospective employers.

Withholding transcripts isn’t a reasonable way to collect a debt. It is cruel, and it should be illegal.

Transcript Withholding is a Widespread Issue

No record exists that chronicles all of the official transcripts withheld due to unpaid fees. However, based upon the limited data available, it is clear that the problem impacts many Americans, likely numbering in the millions.

In my home state of Ohio, the Attorney General is responsible for collecting the unpaid debts of Ohio’s public colleges. One researcher found that there were nearly 400,000 open university accounts with the Ohio AG’s Office, or nearly one account for every 30 Ohioans. Across the country, this issue likely impacts millions of Americans.

Making Withholding College Transcripts Illegal

In 2019, a new law was enacted in California that prohibited colleges from holding transcripts hostage.

The law probits:

  • Refusing to provide a transcript because a current or former student owes a debt,
  • Charging a higher fee because of a debt, and
  • Using transcripts as a tool for debt collection.

Illinois and New York have recently passed similar legislation. The federal government should implement similar rules for colleges across the country.

This restriction would cost taxpayers nothing and help many Americans find jobs. One small change has a meaningful chance to pull many out of poverty. It would be a win for all Americans.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

1 thought on “Let’s Ban Colleges From Withholding Transcripts Over Late Fees and Bills”

  1. I experienced this with Rocky Mountain College of Montana recently. They put a hold on allowing me to order an official copy of my transcript. It is required by my current employer. The best part? The Perkins loan the college sites as the reason for the hold had been paid off 2.5 years ago!


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