Consumer law watchdog: Withholding transcripts can harm students

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Diving brief:

  • The Consumer Financial Protection Bureau recently said that he would consider the practice of colleges withholding student transcripts as a method of collecting their outstanding debt.
  • The agency said the use of such debt collection tactics “is particularly disconcerting” because they jeopardize students’ ability to get jobs or complete their degrees and thus hinder the repayment of what they owe.
  • Institutions have been criticized for not releasing transcripts of students who have nominal debts. U.S. Secretary of Education Miguel Cardona called colleges to drop transcript blocks, saying they disadvantage vulnerable students.

Overview of the dive:

The coronavirus pandemic has highlighted financial barriers for low-income and vulnerable students, one of which is transcripts.

Students generally need their academic records to transfer to other colleges or find higher-level university programs or employment.. However, many colleges have decided to withhold their transcripts if they have outstanding debts, even small amounts.

The consequences are visible. According to a 2020 report by research nonprofit Ithaka S+R.

Although transcript holds can be used to force students to pay debts they owe to institutions, they often fail. Colleges often collect a very small percentage of these debts owed to them. For example, Connecticut’s state college and university system essentially writes off outstanding student debt that is more than a year old at the end of each fiscal year, its chief financial officer said.

The CFPB noted in a statement on April 18 these transcripts have been used to attempt to collect a range of debts, from library fees to student loans. He said that by refusing to issue these transcripts, institutions are “preventing their students from accessing the very academic and labor market opportunities that higher education promises”.

The agency said the transcript risked students losing the opportunity to land jobs, transfer to other colleges or obtain required professional licenses.

“Some students suffering from these repercussions may find themselves financially worse off than if they had never attended school,” the CFPB said.

Amid pressure to end withholding transcripts, New York’s two public higher education systems have abandoned the practice. The State University of New Yorkthe largest comprehensive public higher education system in the country, and city ​​university of new yorkboth announced in January that they were ending the use of pending transcripts.

More recently, in Colorado, the Democratic governor this month signed a new law which largely prevents colleges from withholding student transcripts. Colleges cannot withhold these records for fees or other debt amounts. And even if students owe money on tuition, room and board, or financial aid funds, if they prove they are trying to transfer to a new college, applying for a job, or asking more help, colleges need to post their transcripts.

The CFPB statement comes as the agency has taken a more active role in overseeing higher education under the Biden administration. Republicans have taken note.

Two high-ranking Republicans in the House this month wrote to the US Department of Education’s Office of Federal Student Aid, accusing the agencies of collusion over federal student loan policies.

They asked for communications between the FSA and the CFPB since January 1, 2021, as well as information on loan officers issued by the agencies since August 31, 2017.

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