U.S. Bans Withholding of Transcripts

Transcript withholding has been a practice in which, educational institutions, have some leverage on redeeming unpaid financial balances. This practice has had consequences, as it restricts students from pursuing further education, applying for specific jobs, or even transferring their earned credits to other institutions. In recent years, numerous states have recognized the injustice of this practice and have enacted their own bans. 

The new rule, as outlined by the U.S. Education Department, is more expansive than what was initially proposed in May. It essentially prevents institutions from withholding transcripts for terms during which a student received federal financial aid and subsequently paid off the associated balance. Research conducted by Ithaka S+R, a research and consulting group, indicates that approximately six million students have been affected by what they term “stranded credits” due to transcript withholding. 

Martin Kurzweil, the vice president of educational transformation at Ithaka S+R, has praised this policy change, emphasizing its potential to benefit a wide range of students. However, he also acknowledges that the implementation and interpretation of the rule by institutions may vary. For some, compliance with the new regulation may be administratively challenging. 

This ban on transcript withholding is just one part of a broader set of regulations announced by the Education Department, which seeks to enhance oversight of institutions and strengthen its tools for holding colleges accountable. Under these new rules, colleges will be required to commit to not withholding transcripts for course credits that were funded by federal money, in order to maintain access to federal financial aid. 

Education under secretary James Kvaal stated that this change is aimed at ensuring that students receive credit for their completed education and helps them with transfer opportunities and job applications. 

While this policy change has been welcomed by many advocates, including Edward Conroy, a policy fellow at New America, there is still ongoing examination of the regulatory text to determine its precise impact. Conroy believes that for many students impacted by transcript withholding, this rule will provide a solution to a significant portion of their problem. 

The speed with which the Education Department has addressed the issue of stranded credits and transcript withholding is notable. It demonstrates the salience of this issue and the urgency to rectify the unfairness associated with it. 

The American Council on Education, a lobbying group, has expressed cautious optimism about this new policy. Emmanual Guillory, their senior director of government relations, highlights the variation in how institutions approach transcript withholding and suggests that more member feedback is needed to fully assess the impact. 

In general, the Education Department anticipates that these new regulations, set to take effect on July 1, 2024, will offer better protection to students and taxpayers in the event of college closures, as well as discourage risky behavior. 

The concern over abrupt college closures is of particular interest to the department, as such closures can leave students unable to complete their academic programs elsewhere and can result in significant costs for taxpayers. The department has sought over $1.6 billion in liabilities from closed institutions from 2013 to 2022 but collected only a fraction of that amount. 

To address these issues, the department is taking various measures, including changes to eligibility criteria for institutions seeking federal financial aid. It is also requiring institutions to provide clearer information on financial aid offers, ensuring students fully understand the costs involved. 

It’s worth noting that the discretionary nature of some of these regulations has raised concerns among experts. The potential for uncertainty and inconsistency in enforcement may pose challenges for institutions in the future. 

In conclusion, the federal policy change regarding transcript withholding is a significant milestone in addressing a long-standing issue that has affected students and institutions. The new regulations are set to take effect in July 2024, and their full impact on students and institutions will become clearer as they are implemented.

By Cat Hollands, Capture Client Trainer, Capture Higher Ed