Colleges that lend directly to their students cannot later refuse to release students’ transcripts as a way of forcing them to make payments, the Consumer Financial Protection Bureau announced on Thursday, calling the practice “abusive” and a violation of federal law.

The loans made directly by a college, rather than a traditional lender, are used to pay for classes, but they don’t come with the same protections as federal student loans do. Hundreds of thousands of students at for-profit colleges have taken these loans, known as institutional loans, and some public and nonprofit institutions also offer them.

The consumer bureau’s ruling was aimed at stopping the colleges from withholding transcripts from students who haven’t repaid the debt. Some colleges refuse to release a student’s transcript until the full amount has been repaid, even when even when students had entered into a payment plan and is making regular payments.

Transcript withholding can make it difficult for students to get jobs even if they graduate, since they can’t prove to prospective employers that they have a degree. In some cases, graduates can’t take a job certification exam without a transcript, effectively barring them from employment in the field they went to school to study.

Without a transcript, students also can’t transfer their credits to another college if they want to pursue a different career or if they’ve finished a two-year degree and want to earn a bachelor’s degree.

The bureau said that blanket policies that use transcript withholding as a way to collect these debts are “designed to gain leverage over borrowers and coerce them into making payments.” 

“Faced with the choice between paying a specific debt and the unknown loss associated with long-term career opportunities of a new job or further education, consumers may be coerced into making payments on debts that are inaccurately calculated, improperly assessed, or otherwise problematic,” the bureau wrote.

If it finds that a college is violating the law, the bureau can sue for restitution on behalf of the students, as it did with the for-profit chain Corinthian Colleges, and can impose additional financial penalties.

“Everybody who was stuck behind an improperly withheld transcript is suddenly going to have access to all that opportunity.” Mike Pierce, executive director of the Student Borrower Protection Center, a nonprofit advocacy group focused on student debt, and a former assistant deputy director at the CFPB.

“This is a huge deal for everyone that took out a student loan from their school and has struggled to repay it,” said Mike Pierce, executive director of the Student Borrower Protection Center, a nonprofit advocacy group focused on student debt, and a former assistant deputy director at the CFPB. “Everybody who was stuck behind an improperly withheld transcript is suddenly going to have access to all that opportunity.”

The Career Education Colleges and Universities, which represents for-profit colleges, criticized the move.

“The Consumer Financial Protection Bureau continues to overstep its statutory authority with its transcript withholding directive,” Jason Altmire, the group’s president and CEO, said in a statement. “Instead of working with stakeholders through the normal notice-and-comment process, CFPB once again exceeds its authority without any accountability to the public by issuing non-binding guidance.

Related: Colleges are withholding transcripts and degrees from millions over unpaid bills

In general, institutional loans come with far fewer protections than federal loans. They can have double-digit interest rates, and colleges can demand payment while a student is still taking classes. Oversight is also minimal; the vast majority of states don’t track information about these direct school-to-student loans.

The bureau did not examine the practice of transcript withholding by universities for overdue tuition and fees, which has been outlawed in several states, but a bureau official did not rule out the possibility that the practice writ large could run afoul of the law. There are millions of students around the country who can’t access their transcripts because of debts as little as $25 that they owe to their colleges.

Pierce said he thought the ruling could have wider implications.

“It raises really important questions. What would the Bureau think of a school that is acting as a debt collector? Is that also an abusive practice?” he said. “As transcript withholding becomes a hotter issue in state legislatures and as state attorneys general start asking questions, they all look to CFPB to see what it thinks the law is, and often you see that state policy is made in the aftermath of these findings.”

 This article about transcript withholding was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education.

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Wayne Orr didn’t yet know that his foot was broken as he made his way back from Texas to his home in South Carolina, but he did know he couldn’t continue pressing the pedals on the tractor-trailer he had been driving.

A new driver only a few months past his training period, he had to sit out for six weeks without pay. Then, when his foot had finally healed, he discovered that his company, CRST Expedited, had fired him. Frustrated, and needing a paycheck, he found a new job driving for Schneider International, but was once again stymied. He said CRST threatened to sue Schneider for hiring him.

“I called CRST and they told me that they would not take me back and that I had to pay them $6,500 or I could never drive for another company, either,” Orr, who is 59, said.

He had signed a contract to work for CRST for 10 months in exchange for a two-week training course. If he didn’t last 10 months, the contract required him to pay the company $6,500 for that training.

Each year, thousands of aspiring truck drivers sign up for training with some of the nation’s biggest freight haulers. But the training programs often fail to deliver the compensation and working conditions they promise. And those who quit early can be pursued by debt collectors and blacklisted among other companies in the industry, making it difficult for them to find a new job.

At least 18 companies, employing tens of thousands of drivers, run programs aimed at qualifying trainees for a commercial driver’s license. Typically, to get free training, the new hires must drive for the company for six months to about two years, usually starting at a reduced wage.

The companies “sign them into this indentured servitude contract where they basically have to drive and be a profit source for the company,” said Michael Young, a Utah-based lawyer representing a former trainee in a lawsuit against C.R. England, a privately held trucking company in Utah that employs about 4,800 drivers.

With e-commerce leading Americans to expect quick delivery, trucking companies face pressure to haul more and do it faster. The American Trucking Associations, a trade association, has warned of a historically large truck driver shortage. But researchers and drivers’ representatives maintain that the high turnover occurs because too many large companies fail to make their jobs attractive enough. The industry has been plagued with class-action lawsuits about working conditions and wages, leading to hundreds of millions of dollars in settlements.

“That training program is like a money mill to them. They pretty much sell you a lot of dreams.”

Wayne Orr, former trainee in a company-sponsored truck driving program

Nine in 10 drivers leave their jobs within a year at large carriers like CRST and C.R. England, according to the trucking trade group. The companies need a constant flow of new recruits to keep revenue up. Without locking them into a contract, companies risk losing their newly trained drivers to those offering a higher wage.

“We think paying for C.D.L. school is a great benefit we can offer, but not one that we can afford to do if folks do not come work with our team or ultimately pay us back,” said TJ England, chief legal officer of C.R. England. “If people just want to go to a different company, that’s where we try to protect our investment.”

CRST, an Iowa-based company, would not answer specific questions for this article but said in an emailed statement that its training program “has brought thousands of drivers into the industry who may not otherwise have been able to obtain a commercial driver’s license.” As for Orr’s account, a spokeswoman would say only that it omitted key facts.

Related: ‘They just saw me as a dollar sign’: How some certificate schools profit from vulnerable students

The Hechinger Report interviewed more than 30 current and former truckers with knowledge of company training programs, including 15 who had gone through them. Almost all 15 left before their contracts were up, despite intending to stick it out. One was given only four days at home in the four months he drove for CRST, just a quarter of what he said was promised in his contract, according to a complaint filed with the Iowa attorney general’s office.

Others described weeks of unpaid time spent waiting for trainers. Many said they were never told that they would sit for hours, unpaid, while they waited for their trucks to be loaded and unloaded, or even for days to get a new assignment. Many drivers said they were told by the companies they would make more than they did. Since drivers are paid by the mile, the time spent waiting cut significantly into their paychecks.

In job advertisements and in their pitches to recruits, companies promise earnings of up to $70,000 in the first year and even higher salaries in the future. But the median annual wage for all truck drivers, regardless of experience, was $47,000 in May 2020, according to the most recent data from the Bureau of Labor Statistics. Only the top 10 percent of earners were making above $69,500.

Still, many are attracted to trucking despite its sometimes-punishing demands, seeing it as a possible on-ramp to the middle class. New drivers can train at independent schools, which can be expensive, or community colleges, which may take more time. Company training programs are a popular option for those eager for a paycheck right away.

Many large companies start classes weekly; keeping a constant flow of people is crucial. They deputize their drivers, offering referral bonuses for every new person brought on board, and employ recruiters to pursue anyone who has expressed interest. In a driver recruiter training manual filed as an exhibit to a lawsuit in 2021, CRST instructed recruiters: “Create urgency. Tell the applicant we have a ‘few’ spots open. Our school and orientation will fill up quickly.”

At most company schools, trainees typically spend two to four weeks learning in a classroom and in parking lots. Many former trainees said that the instruction was insufficient and that they spent little time in trucks.

Amy Jeschke attended C.R. England’s program in Indiana in 2019. She went out on the road only twice during her training, she said, and the rest of the time did maneuvers in a yard or memorized what to do on a pre-trip inspection.

“Honestly, we weren’t doing anything for most of the time,” said Jeschke, who is 46. “You’re lucky if you got in the truck once a day.

Joy Skamser, 44, who also attended C.R. England’s training program in 2019 and lives in Southern Illinois, said she felt unprepared to drive, despite earning her commercial driver’s license at the end of the training.

Related: Proof Points: Most manufacturing certificate holders don’t get jobs in manufacturing

TJ England said the company gave high-quality training to its students that includes time in the classroom, on the driving range and on the road, as well as skill assessments throughout. Students who fail the assessments are given additional practice, he said.

Once they have earned the license, drivers haul actual loads for their new employers. For typically four to 12 weeks, they are accompanied by a trainer. They earn a set weekly rate, varying by company but often $500 to $800, according to company websites. England said his company’s pay was $560 a week in 2019 and is about $784 today.

Trainers may be barely trained themselves, often needing only six months’ experience, and are allowed to sleep in the back while the new driver is alone in the cab, according to industry experts and many companies.

“We think paying for C.D.L. school is a great benefit we can offer, but not one that we can afford to do if folks do not come work with our team or ultimately pay us back.”

TJ England, chief legal officer of the C.R. England trucking company

Jeschke said she finished her training without being able to back up, a crucial skill for truckers. She said she once spent a week at a truck stop, unpaid, waiting for another driver because she didn’t yet have the expertise to pick up a load on her own.

Frustrated with the working conditions and the low pay, she and Skamser left C.R. England before their contracts were up and both went to work for another trucking company, Werner Enterprises, where they say they were more fully trained.

“I do not have words for how bad it was,” Jeschke said. “They do not care about drivers, only the loads.”

Skamser said that a debt collection agency is pursuing her for $6,000 that C.R. England says she owes for her training.

It’s reasonable for companies to want to recoup the cost of training an individual, said Stewart J. Schwab, a professor at Cornell Law School. Still, he noted, like noncompete clauses, these contracts can significantly restrict worker mobility and hinder competition. In 2021, Schwab worked on a proposed law about restrictive employment agreements, such as the ones trucking companies use, with the Uniform Law Commission, a nonpartisan organization that drafts laws for states.

The draft law calls for the repayment of the training cost to be prorated based on when an employee leaves and not to exceed the actual cost of the training.

Many major trucking companies don’t prorate their charges, meaning a driver who leaves on Day 1 after training would owe the same amount as one let go the day before fulfilling the contract. And companies are generally not made to account for how much they spend on the actual training. In 2019, a judge found that CRST charging $6,500 for its training “when in fact the cost was thousands of dollars lower, is a deceptive practice.”

That finding came as part of a class-action lawsuit that Orr eventually joined. The suit, which contended that drivers were being overcharged for their training and paid less than minimum wage for their hours worked, was settled for $12.5 million in 2021.

Companies can come after drivers for money — or send them to debt collection — regardless of the reasons they leave or are let go. They also can try to prevent drivers from taking other jobs, as CRST did with Orr, researchers and drivers’ representatives say. Such actions effectively deny those who want to leave a company the opportunity to do so and pay off their debt.

A lawsuit filed in 2017 on behalf of drivers contends that eight companies, including CRST and C.R. England, are conspiring to block drivers under contract from changing jobs. Some companies refuse to release drivers’ records to prospective employers or send letters threatening litigation to competitors who don’t abide by a no-poaching agreement, the complaint says.

TJ England described the allegations as meritless but acknowledged that his company had “sued or threatened to sue some of our competitors for unlawfully interfering with those contractual relationships.”

He said his company’s competitors have “unfairly taken advantage” of the training C.R. England provides to its drivers.

Worried about being blackballed wherever he went, Orr took out a loan — the lowest interest rate he could find was 14 percent — and paid CRST. Through the class-action lawsuit, he was reimbursed for about two-thirds of what he had paid.

“That training program is like a money mill to them,” he said. “They pretty much sell you a lot of dreams.”

This article about truck drivers was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education.

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In the spring of 2021, $600 stood between Endele Wilson and his dream of achieving a teaching credential from Long Beach City College.

Wilson, 47, started taking courses in 2019, a few months before the pandemic hit and just before he lost his job as an elementary school music teacher. He took on multiple jobs as a musician, and an overnight shift at a gas station, to support his eight children.

When he was about 18 units away from completion, he got the bill that stopped him in his tracks. He didn’t qualify for financial aid, he said, because of low grades years ago at another community college. He was confronting $600 in unpaid enrollment fees — and couldn’t register for classes until he settled the balance.

The college would, effectively, force him to drop out.

“I didn’t know what to do,” Wilson recalled. “Even working two jobs, I don’t make enough money to do anything but survive.”

“Too many students are struggling with hardships that make even modest debts a barrier to enrollment in community colleges.”

Eloy Ortiz Oakley, chancellor, California Community Colleges

Enrollment at California Community Colleges has plummeted nearly 20% during the pandemic to about 1.3 million students from fall 2019 to fall of 2021, according to state data, leaving campuses worried about their future and potential students with fewer of the opportunities offered by higher education. Pandemic-related hardships have propelled many students to choose jobs over education and online classes have been barriers for low-income students without digital resources.

But new research suggests colleges’ own policies around unpaid balances may also be contributing to the decline while creating lasting financial harm for the institutions and students.

A report published Thursday by the Student Borrower Protection Center, a nonprofit advocacy group focused on student debt, attempts to quantify the scope of this problem. Using data from three California Community College districts and student demographic information, researchers estimate that, from July 2020 to June 2021, some 321,000 community college students accrued a collective $107 million in debt to their campuses.

Researchers projected estimates for the system based on the percentage of students affected in Compton, Lake Tahoe and Peralta Community College Districts. The report was provided jointly to The Hechinger Report and the Los Angeles Times.

In addition, The Hechinger Report obtained data from seven community college districts, representing 19 of the 116 community colleges in the California system. Though there is variation in what each district tracks, the data shows tens of thousands of students in debt to their community colleges, roughly in line with the researchers’ estimate.

The records obtained by The Hechinger Report include data on a range of institutional debts from colleges and districts including Evergreen Valley College in San Jose, the three-campus Contra Costa College District, the nine-campus Los Angeles Community College District and the three campuses of the Coast Community College District in Orange County. 

The pain from these debts is not felt evenly, researchers said.

“They impact low-income students at a much higher rate,” said Charlie Eaton, assistant professor of sociology at the University of California-Merced and co-author of the report. “These debts are widening inequalities in who gets a degree and it inflicts financial turmoil.”

Related: Public colleges shock students by sending them to costly debt collection agencies

When students owe money to their colleges — even small amounts — they can be barred from re-enrolling. Schools can refer students to state tax collectors to have their tax refund garnished or send them to debt collection companies, which often charge high fees. Colleges often don’t recoup much money and former students can have their credit destroyed.

Students accrue the debt for a number of reasons, according to experts and college officials. Sometimes, they enter into a payment plan for tuition and can’t keep up. Other times, they’ve paid tuition in full, but owe money for overdue parking, library or housing fees. Sometimes students owe a fine after failing to return a computer or calculator on time.

The number of students in this situation likely grew during the pandemic, Eaton said, although it’s difficult to know by how much. It’s not known how many students wanted to re-enroll but were prevented from doing so because of their debt. The California Community College Chancellor’s Office does not track this information. Nor does it keep tabs on what happens to a student in debt. It also doesn’t regulate how colleges handle unpaid fees.

Researchers estimate that, from July 2020 to June 2021, some 321,000 community college students accrued a collective $107 million in debt to their campuses.

Chancellor Eloy Ortiz Oakley acknowledged the problem.

“Too many students are struggling with hardships that make even modest debts a barrier to enrollment in community colleges,” he said, adding that he encourages colleges to use their federal relief money to clear student debt.

Oakley said that community college students who needed financial assistance during the pandemic are some of the “most deserving recipients” of federal relief.

“Helping community college students, many of whom are trained to be frontline pandemic fighters, continue their educations is a great investment for America,” Oakley said. “We also know that for every dollar taxpayers invest in community college students, they see a significant return on that investment over the life of the students.”

Community college tuition can be free for students in good academic standing who qualify for state and federal grants through the federal financial aid application called FAFSA. The California Promise Program waives enrollment fees, as does a Los Angeles-specific program.

But Eaton and his fellow researchers uncovered ways in which students can get tangled in financial aid bureaucracy. Some colleges allow students to enroll in classes before their financial aid has been approved and disbursed, they found. If they fill out the paperwork incorrectly, they can receive less money than expected and can’t bridge the gap.

Or, when students withdraw part way through the semester, schools must return their federal financial aid to the Department of Education and the students must repay their school, even if they only attended classes for a few weeks. The Department of Education currently offers waivers for this process, if a college can prove that a student dropped out for a pandemic-related reason, but available data show that many students haven’t gotten relief.

Related: Federal relief money boosted community colleges, but now it’s going away

Some 2,100 students in the Los Angeles Community College District who withdrew between fall 2019 and summer 2021 owed federal aid reimbursement money to their school, according to data from district officials. In total, students owe the district $10 million for all debts.

Compton College decided to clear 2,702 students’ debt during the pandemic, to keep them enrolled, said President Keith Curry.

The median debt forgiven was just $41.

“If you owe $41 and you’re not coming back to school because you owe $41, that’s problematic,” Curry said.

The problem of these institutional debts is particularly high at community colleges, but extends to four-year campuses, as well. The UC researchers estimate that 44,000 students from the University of California and California State University systems have accrued $78 million in debt since the start of the pandemic.

When Daisy Lopez began at UC Riverside in the fall of 2020, she and her family had just been evicted and were homeless.

Lopez, a first-generation college student, had on-campus housing, but spent a lot of time shuttling back and forth between Riverside and L.A., she said, because her family was having to move from motel to motel. She struggled with online learning and began to face severe health issues. She was hospitalized several times and missed classes. Her GPA dropped and she lost her financial aid. When she tried to register in the fall of 2021, it turned out there was a hold on her account for $5,654 – in unpaid housing costs.

The report said that at one UC campus, which it did not name, the share of undergraduates withdrawing with debt doubled from 2019-2020 to 2020-2021 and the amount of debt owed tripled. Additional information obtained by The Hechinger Report show similar pandemic-era growth in student debt at several other UC, CSU and community college campuses.

“If you owe $41 and you’re not coming back to school because you owe $41, that’s problematic.”

Keith Curry, president, Compton College

At Diablo Valley College, in Contra Costa County, for instance, the number of students with outstanding balances grew by 50 percent between 2019-20 and 2020-21, from fewer than 4,700 to more than 7,000. The median debt climbed from $21 to $138 in that time.

California has been at the forefront of policies to ease student debt burdens. In 2019, it became the first state in the nation to ban transcript withholding for unpaid balances – a policy passed or under consideration in at least nine states and advocated for by Secretary of Education Miguel Cardona. But the policy is of little help for students who want to continue their education at the school where they began or who cannot come up with the money to avoid being sent to a debt collector.

California’s public colleges and universities have wide discretion in how to handle student debt collection, and practices vary. Some try on their own to collect the debt. by contacting students. Others use private debt collection agencies. Some forward the debt to the state Franchise Tax Board to garnish tax refunds.

Related: Colleges are withholding transcripts and degrees from millions over unpaid bills

Although some schools paused the use of debt collectors during the pandemic, that practice can have “lasting effects on your ability to rent an apartment, to get a car loan, to get a credit card and to fully participate in the economy,” Eaton said.

Meanwhile, the Chancellor’s Office has continued running its tax-offset program. Participating schools send the office names of students with past due balances and the information is sent to the state Franchise Tax Board. Students can then have their state tax refund and any lottery winning garnished. According to the Chancellor’s Office, 21 districts, involving about 96,000 students currently participate in the program. Seven others are in the approval process.

Officials at Rio Hondo Community College in Whittier decided to pause participation in the tax-offset program for current students before the start of the pandemic and will not restart for at least three more years, said Stephen Kibui, vice president of finance and business. The campus typically gets back about 40 percent of what it’s owed after allowing for a 25 percent administrative fee, he said.

The college also previously worked with a debt collector, but scrapped that when the 33 percent fee was too high and students’ credit was being damaged.

For now, Rio Hondo is using federal relief money to waive current student debt, which Kibui says benefits both students and the college. The campus has lost more than 8,000 students since 2018-2019, with enrollment dropping from 33,500 to 25,000.

“The college is in dire need of students,” Kibui said. “We are not adding any financial hardships to any of our students.”

Several other community colleges and universities across the state have used their federal relief funds to forgive student debt, in hopes that students will stay enrolled or dropouts will return.

Long Beach City College, for example, has forgiven $2.1 million in debt for 7,990 students from spring 2020 to summer 2021, according to the interim executive vice president of student service, Dr. Nohel Corral. Individual debts forgiven ranged from $100 to $5,000.

The decision meant thousands were able to continue with their education. Endele Wilson was one.

For him, the timing was critical. If his debt were not forgiven, “I would have had to stop school,” he said. “It’s my hypothesis that if people stop for two semesters it’s not as easy to get started again – I could have easily been fully sidetracked.”

The UC researchers’ report recommends that the state should require – and financially support – all colleges and universities to forgive these debts, arguing that it could have an enormous impact. When Lake Tahoe Community College District canceled pandemic debts for 457 students last year, it found that 152 of them immediately re-enrolled to resume their studies.

“If Lake Tahoe’s success was replicated statewide, tens of thousands of students would be re-enrolled,” the report concludes.

Some advocates say that schools should use this moment to rethink how they handle student debts, as federal relief money is about to dry up.

“See if you can come up with a more mutually beneficial solution than just saying, ‘This is a public debt, I’m sending it to collections,’” Jessica Thompson, vice president at The Institute for College Access and Success said. “Nobody wins and the person whose name the debt is in gets into a spiral that has repercussions that benefit nobody.”

She pointed to Detroit’s Wayne State University, which has seen success with its program that allows students with debts to re-enroll and forgives those balances after they complete a semester. Such a program benefits colleges as well, by helping them boost enrollment and, ultimately, bring in more money from the former dropouts.

“It turns into a self-sustaining way of dealing with this debt,” Thompson said.

Dr. Curry, who led the effort to forgive debts to Compton College, worries that the program cannot continue without pandemic-related funds.

“We never had the opportunity to pay off students’ debt” before the pandemic, said Dr. Curry.  “The question will be, can you sustain it? And also, what policy changes will you have over the next two or three years to ensure that this doesn’t happen to other people?”

For now, forgiveness has brought back many students who see completing college as one of their few options to advance.

Lopez, the UC Riverside student, had her debt lifted through federal funding. Her mom is dealing with homelessness and her own health isn’t perfect, but she is managing.

“I was struggling, honestly, and without it, if I still had the debt, I wouldn’t be in school,” she said. “I need college. Without it I would feel like I have nothing left for me, and no option to build for the life that I want.”

This story about college fees was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our higher education newsletter.

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After years of inflexible debt-collection practices that have burdened SUNY students with punitive payment schedules, high interest and crippling collection fees, New York State officials are promising change.

The board of trustees of the State University of New York system voted last month to review the way it collects student debt at all 64 SUNY campuses, and the interim chancellor, Deborah Stanley, pledged to make additional significant changes.

“Campus debt-collection practices that prevent students in good academic standing from registering for classes,” Ms. Stanley said in an email, “are an unfair means of pursuing payment and should be prohibited in the future.”

The change could mean an end to blocking students from re-enrolling if they owed money. This has often forced students to drop out — even for balances as little as $100 — although the chancellor has not indicated when the practice will end. The SUNY board’s resolution also stopped the practice of withholding transcripts from students who had completed courses but still had debt.

“We’re not saying that people shouldn’t have to pay their debt; we want to make it more manageable.”

Jamaal Bailey, New York state senator

Cary Staller, a SUNY trustee, said before introducing the resolution that the state system’s approach to collecting student debt contained some “awful practices.”

“I think this is overdue, quite frankly,” Mr. Staller said. “This is the ending of some dark days for SUNY, and I think it’s a really good step.”

The changes come in the wake of an article by The Hechinger Report and The New York Times last September that brought many of SUNY’s punitive debt collection practices to light.

Some legislators are also trying to amend the New York State Finance Law to reduce the penalties and fees that add to a student’s debt burden. The existing statute allows the attorney general to add a 22 percent collection fee for any debt owed to the state. It also allows interest to start accruing from the day a debtor receives notice of an overdue bill.

State Senator Jamaal Bailey has introduced a bill that would remove state-owned student debt from what’s defined as debt in the finance law; that law would no longer apply to overdue tuition and fees.

“We’re in a day and age when student debt is destroying people — it is crippling, it is debilitating,” said Senator Bailey, a Democrat who represents parts of the Bronx and Westchester County. “We’re not saying that people shouldn’t have to pay their debt; we want to make it more manageable.”

Even though the state finance law doesn’t require the attorney general’s office to add a 22 percent fee, the office typically does so as a way to cover the cost of collecting the debt.

Interest on overdue tuition at SUNY can balloon debts by thousands of dollars. Many students are still in debt long after paying off the original amount they owed because of mounting interest and the addition of collection fees.

In a lawsuit filed this month in the State Supreme Court in Albany, for example, the attorney general’s office charged a collection fee of $2,695 to a SUNY Purchase student who owed $12,073. Along with additional interest of $908, the student’s debt had grown by 30 percent in just over three years.

Attorney General Letitia James was involved in drafting the bill to amend the finance law. A spokeswoman said in an email that Ms. James “has been leading the effort to eliminate fees that have historically been levied on those in default,” adding, “We must do all we can to alleviate this burden, and we look forward to working with State Senator Bailey, the Legislature and the governor to see this through.”

If the city’s next budget includes funding to cover the cost of collection, it could mean that students wouldn’t have to pay the collection fee.

Still, advocates are concerned that Mr. Bailey’s bill doesn’t make clear what standard would replace the current one for additional fees and interest.

Gov. Kathy Hochul directed SUNY early last month to stop withholding transcripts from students simply because of unpaid debt, which has often prevented them from transferring to other colleges or getting jobs that might help them repay what they owe. The board’s Jan. 25 resolution officially ended that practice.

“I think this is overdue, quite frankly. This is the ending of some dark days for SUNY, and I think it’s a really good step.” 

Cary Staller, State University of New York trustee

And in December, Governor Hochul signed a bill that caps the interest rate at 2 percent after the attorney general’s office has obtained a default judgment. In the past the interest usually accrued at a 9 percent rate.

Trustees for the City University of New York, which has a separate governance structure unrelated to SUNY, voted this month to end a policy under which the 260,000-student public system had withheld transcripts and refused to verify enrollment for students who owed tuition and fees.

These changes are the latest in a string of student debt overhauls. Last fall the New York attorney general’s office changed its policy of suing students with overdue tuition exclusively in Albany, a decision made just days before publication of The Times’s article on the practice. Lawyers representing the attorney general’s office have begun to file suit in the counties where students reside, making it easier for them to defend themselves in court. Most cases filed in Albany had ended in default, as many students — some of whom lived hundreds of miles away — did not appear.

Advocates who have been pressing for changes to SUNY’s debt collection practices said the new policies and proposals would make a significant impact if put in place. But they also pointed to the high cost of tuition as a more fundamental problem. The gap caused by students’ inability to pay opens the door to private collection agencies, which can profit from student debt, they noted.

This is a hazard that disproportionately affects low-income students, said Carolina Rodriguez, director of the education debt consumer assistance program at the Community Service Society of New York. “No one,” she said, “should be making money off collecting student debt.”

This story SUNY student debt was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Try Hechinger’s Tuition Tracker tool to learn more about actual college costs.

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Amanda Belony was rushing to work when she saw a fat yellow envelope sitting on her kitchen table. She opened it and immediately noticed the New York attorney general’s official seal sitting ominously at the top of the page. The state had filed a lawsuit against her for unpaid college tuition.

Belony had registered for classes at the State University of New York at Plattsburgh in the spring of 2016, when she was 21, but she’d had severe health problems the previous semester and could no longer afford to live in Plattsburgh to finish her degree. Because she missed the withdrawal deadline for the spring semester, she said, she was charged for classes she never took, and now the state was suing her for $3,705.

The only way she could defend herself was to appear in State Supreme Court in Albany — 160 miles from her home in Brooklyn. Otherwise, the letter stated, a judgment would be entered against her.

Belony was working 10-hour days as a clerical assistant in a medical clinic at the time, making just enough to pay her bills and help her mother with the rent. Trips to the Albany court to try to defend herself would be expensive, and she worried she would lose her job.

“I remember looking at this document, with all this legal jargon that I didn’t understand,” Belony said. She needed just three credits to graduate, but until she settled the case, she couldn’t re-enroll to finish her degree in hopes of getting a better-paying job. “I didn’t have the money. I knew I needed a lawyer, and I knew I couldn’t afford one.”

Belony is one of close to 16,000 SUNY students taken to court by the state since 2013. Under a little-known state regulation, New York’s attorney general is allowed to sue students if a state public university claims they owe tuition — or overdue library fines or unpaid parking tickets.

Unlike almost all regulations governing the collection of debt, a quirk in the law allows the attorney general’s office to file suit in these cases exclusively in State Supreme Court in Albany, regardless of where the student lives or attended college. If a student from SUNY Buffalo, for example, which is 300 miles from Albany, doesn’t show up, a judge will rule in the state’s favor and declare the student in default. That can trigger the garnishing of wages and tax refunds.

A majority of these cases end in default, according to several lawyers who represent students, since most students can’t make the several trips to Albany that would be required before a trial is even set.

Attorney General Letitia James, who took office in 2019, has often spoken out in defense of students struggling with tuition debt; she has advocated for debt relief programs and has suspended SUNY debt collection during the pandemic.

Asked about the law that allows SUNY colleges to refer student debtors to her office, she said that the attorney general has “a legal obligation to collect student debt.”

Although she did not say why lawsuits had been used so often to do so, she said her office is working on ways to change debt collection practices.  Last week she sent a letter to legislative leaders proposing to work with them on overhauling the system. One suggestion was to give the attorney general’s office more flexibility in reaching settlements. 

“This work is far from over,” James said in an email, “and we look forward to working with legislators and policymakers to reform student debt collection practices in New York so that all students can achieve the goal of higher education without the crushing burden of debt.”

The State University of New York is made up of 64 schools, including community colleges and research universities, spread throughout the state. Nearly 400,000 students were enrolled in the SUNY system last year. Its stated mission of providing a high-quality, affordable education has attracted students from a range of socioeconomic backgrounds. Yet many students struggle to pay tuition, even with loans and scholarships.

New York is one of five states — in addition to Virginia, Ohio, Pennsylvania and Louisiana — that permit public colleges to send overdue debts directly to the state attorney general for collection. New York state regulations do not require the attorney general to take up lawsuits against students. A spokeswoman for the New York attorney general’s office said that before filing suit, the office sends the student three letters seeking payment.

“Litigation is an absolute last resort, as we give borrowers plenty of time to contest the debt at issue and ample opportunity to demonstrate any sort of hardship,” said Delaney Kempner, a spokeswoman for the attorney general’s office.

Court records suggest otherwise. Between November 2019 and March 2020, at least 110 students were sued within a year of when the college said they had incurred the debt. Some are sued immediately after leaving college. One student from SUNY Potsdam who, according to court records, owed money from the 2019 spring semester was sued for $2,435 in December 2019. 

The decision to file the lawsuits in State Supreme Court in Albany has been a considerable barrier for students who don’t live nearby. Buffalo, which is home to two SUNY universities that enroll close to 30,000 undergraduates combined, is four hours by car from Albany and six hours by bus. SUNY Fredonia, on the shore of Lake Erie, is five hours by car and more than seven hours by public transportation.

Related: Public colleges shock students by sending them to costly debt collection agencies

In 2014, New York state enacted a consumer protection law that requires that debtors be sued in the county where they live. But medical debt and student debt are exempt from the law, despite objections by student advocates.

Still, the attorney general could decide to sue in counties other than Albany, which would make it easier for students to defend themselves.

“There’s no due process if they’re suing you in Albany,” said Johnson Tyler, a South Brooklyn Legal Services lawyer who says he gets at least one call a week from someone who wants to finish a degree but can’t because of student debt. “How can you have due process when you have to get on a bus and travel hundreds of miles away, and you have to go again and again and again?”

Earlier this year, Assemblyman Harvey Epstein, a Democrat from Manhattan,  introduced a bill that would require the attorney general to sue students only in the county or city where they live.

“It’s ridiculous that students are being sued in Albany,” said Epstein, who also questions the practice of lawsuits as a means of collecting student debt. “It may be more convenient for the AG’s office, but it makes it almost impossible for low-income students to defend themselves. They can’t get to Albany, they can’t get a lawyer. We are really disadvantaging people who are already disadvantaged.”

Kempner said that students who are sued have the initialoption of disputing their case electronically or by mail. But if the attorney general’s office decides to proceed with the case, the student or his or her lawyer must appear in Albany.

After several inquiries from The Hechinger Report and The New York Times about why students are sued only in Albany, Kempner said this week that the office plans to change the practice and file cases in different counties in the future.

The decision to sue in Albany has, over the years, put many students into default. Data provided by the attorney general’s office shows the high likelihood of default judgments: From 2017 through 2019, an average of 3,000 lawsuits were filed every year. Over those three years, an average of 2,500 lawsuits (filed in various years) ended with a default judgment.

Beyond that, many students say they were unaware that they had even been sued. Carlotta Summers, who attended SUNY Fredonia, came to realize she had been sued only when the tax refund she was expecting in 2019 never appeared. Her refunds were also taken in 2015 and 2018, but she said she assumed she had made a mistake in filing.

But after it happened for a third time, she called the Civil Recoveries Bureau, a part of the attorney general’s office, which told her that her refund had been withheld because she had been sued but wouldn’t say why. The court records weren’t online, and she said the county clerk at the Supreme Court in Albany wouldn’t send them to her. So her father sent a courier to Albany to get the court records. Only then did she discover that she had been sued for overdue tuition and that a default judgment had been entered against her when she failed to appear before the judge.

The university said she owed $7,000 from a semester she spent at the college in the spring of 2009, when she was 19. She was unaware that she owed money, and says her bill now stands at more than $20,000 because of interest and collection fees. She filed a motion to get the default judgment overturned, saying she would have appeared in court had she known she was being sued. The judge ruled against her, and she’s appealing.

A SUNY Fredonia spokesman said in an email that the university couldn’t comment on individual cases but that its student accounts office tries to contact students to resolve with payment plans, to avoid sending them to the attorney general’s office.

“The amount I owe is more than the amount I make per year,” said Summers, 31, who works as a teaching assistant while she pursues a career in film. “I worry about it all the time. I lose sleep over it. It’s the debt, but it’s also the fact that I’m being taken advantage of. It’s hard to fight a system that’s so big.”

Advocates say that Ms. Summers’s experience echoes those of other students overwhelmed by debt.

“In cases where students have fallen behind, you’re adding interest and fees on top of that,” said Anna Anderson, a lawyer at Legal Assistance of Western New York. On top of the original amount owed, as well as the interest and fees added by the college, the attorney general’s office can charge interest of up to 9 percent, more than twice the rate of federal student loans. Some students have seen their debt balloon by 40 percent or more in less than two years.

“You’re asking a student who had trouble paying their bills in the first place — maybe it was health issues or family issues or job loss — to pay more than they owed originally.”

Before the moratorium, the pace of lawsuits brought against SUNY students had been steadily increasing. From 2008 to 2012, the state filed an average of 1,250 lawsuits against students each year, according to data obtained through a FOIL request. From 2018 to 2020, the average was 3,000 a year.

The increased pace of lawsuits has dovetailed with the rise in tuition at SUNY colleges. At the same time, student loans and grants have covered less of the cost of attending. The total cost of attendance at four-year SUNY colleges for in-state students currently averages more than $26,000 per year.

“For the past decade, prices have been going up, but the amount of funding students get has stayed flat, and that leaves a gap in their bills,” said Beth Todd, director of student accounts at SUNY Potsdam. “It’s also a question of financial literacy. Students who withdraw don’t always understand that after four weeks of classes, they’re on the hook for the whole bill.”

Related: In Massachusetts, public colleges send debt collectors after nearly 12,000 students

Putting aside the issue of whether the debt collection efforts of the attorney general’s office are fair to students, they appear to have had limited success. For example, in the year leading up to the pandemic, the total amount owed was $242.7 million; only $11.8 million of that has been collected, according to data provided by the office.

The practice of suing students goes back nearly three decades, to a time when the state budget was under strain and efforts to collect debt were ramped up. In 1993, the state issued a regulation requiring all state agencies, including SUNY, to refer overdue debts to either a private collection agency or the attorney general’s office after 99 days. The debt also can be certified with the Department of Taxation and Finance so that tax refunds can be garnished.

SUNY then issued its own guidance mandating the referral of debts owed after a semester that are between $500 and $9,999 to a collection agency or the attorney general’s office. (Debts of  $10,000 or more must be referred to the attorney general’s office.) The state can then choose to sue a student to recover the debt. 

Like most universities, SUNY colleges will not release a transcript or allow a student to re-enroll if the student has an overdue balance. Once a debt is referred to the attorney general’s office, a student can no longer work with a campus financial aid counselor to find a solution.

Administrators at some SUNY campuses use alternatives to legal action. Students at SUNY New Paltz, for example, are sued at a lower rate than those at some other colleges with a similar-sized student population. About 75 New Paltz students have been sued since 2013, according to records obtained through a FOIL request.

The university manages to keep most of its collection efforts in-house, said Jeff Gant, vice president for enrollment management at New Paltz. It uses a data alert system to find students who are behind on their bills and notify the student’s financial aid counselor and academic adviser, who then reach out to the student. The school also offers alumni-funded completion grants, usually between $1,000 and $5,000, to help students who are close to graduating but have run into financial hardship.

“Our focus is less about debt collection and more about trying to make sure students never get in that situation in the first place,” said Gant.

Belony says she wishes she had had this kind of help.

She never found a lawyer who could represent her. Without her degree, she was consigned to a series of low-wage jobs with long hours. Her federal student loans also came due, and there were months where she barely made her rent.

“I was just really, really sad,” she said. “I always had it in my head that I was going to go to college. My mom was drilling into me the importance of college ever since elementary school. I think it was because she never got to go to college, and she had to work so hard.

“She never made enough money. Lots of nights we just boiled hot dogs for dinner. That was all we could afford.”

After Belony was notified about the lawsuit and realized she didn’t have a way to defend herself in court, she contacted the attorney general’s office several times to ask for a lower settlement.

“I was literally begging them. I told them I had no money,” she said. “I tried to ask, could I pay them maybe $500, or just let me finish school, and then I can get enough money to pay them.”

The attorney general’s office finally agreed to a $2,900 settlement, most of which was penalties and fines.

A spokeswoman for the attorney general’s office said it disputed some of Belony’s claims but couldn’t comment specifically because of privacy concerns.

After about a year of working at the medical office and searching for a better-paying job, Belony got hired as a salesperson at a luxury store at Kennedy Airport, where she could earn a commission on top of her hourly wage.

For two years, she made the hourlong commute each way and worked as many hours as she could get.

“I didn’t go out, I didn’t buy anything, I just worked and saved,” she said.

In 2019, almost four years after her last class at Plattsburgh, she finally paid off the settlement. A few weeks later, she sat for a three-hour online test and earned the three credits she needed to graduate. She’s now trying to repair her credit and take care of her mother, who just had a stroke. She’s also enrolled in a master’s degree program at New York University, using what is left of her federal student loans, determined to fulfill her dream of becoming a clinical psychologist.

“I wasn’t sure I was going to make it here. Sometimes I lost hope,” she said, sitting in her Brooklyn apartment, which she shares with her sister and niece. “But I just kept trying.”

This story about debt collection was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our higher education newsletter.

The post Why does New York state sue its college students? appeared first on The Hechinger Report.

Back when he was a sophomore at the University of Massachusetts Amherst, James Smith fell behind on his final housing payment after his family in Minnesota ran into financial problems. Smith said he promised to repay the university, but the registrar withheld his transcript anyway. 

“It was sort of like communicating with a brick wall,” he said. “I told them, ‘I’ll pay it when I can but I just don’t have the money.’ ”  

After UMass sent his $2,000 balance to a collection agency, Smith said he began receiving notices and phone calls informing him the collection fee would exceed his original balance. 

“It was certainly really frustrating when I was trying to pay what I owed, and essentially the debt had been doubled,” he said. “I thought it was just wildly predatory.” 

Public colleges in Massachusetts have sent to collection agencies the overdue accounts of 11,719 students, according to a GBH News-Hechinger Report investigation.  

Nearly half of those pending cases come from the state’s 15 community colleges, more than 3,400 from the five-campus UMass system and the rest from other public institutions including Salem State (894) and Framingham State (702) universities. 

Related: Public colleges shock students by sending them to costly debt collection agencies 

State law requires the universities and colleges to send out for collection outstanding debts more than 90 days past due. The practice boosts the overall debt, as in Smith’s case, and lowers personal credit ratings. 

“I think the numbers tell us that, all in all, our institutions are doing a pretty good job of trying to mitigate the number of students who actually get sent to debt collectors.” 

Nate Mackinnon, executive director of the Massachusetts Association of Community Colleges.

The minimum debt sent out for collection varies, but at some schools, like UMass Amherst, it can be as little as $100. 

UMass Amherst would not comment on Smith’s case, even though he signed a form the university provided to waive his protections under privacy laws, but said administrators work with students to set up payment plans.  

Two state schools, Holyoke and Springfield community colleges, have hit pause on sending debt for collection due to the pandemic. Others say referral to a collection agency is not ideal but is necessary, and are standing by the policy. 

“I think the numbers tell us that, all in all, our institutions are doing a pretty good job of trying to mitigate the number of students who actually get sent to debt collectors,” said Nate Mackinnon, executive director of the Massachusetts Association of Community Colleges. “Getting to the point of sending something to a debt collector is obviously our path of last resort.” 

He said the state’s comparatively low level of financial support for public universities and colleges ties their hands. 

“Ideally, we’d send zero students to debt collectors,” Mackinnon said. “Unfortunately, we are a high-cost state when it comes to community colleges and public education. We don’t enjoy the state’s support at the level that other states do.” 

Advocates call this practice of withholding transcripts and referring unpaid balances to collection agencies the “transcript trap.” They say it forces students to stumble on their way to crossing the graduation stage because it undermines their ability to document the credits they’ve earned and find well-paying jobs so they can pay off their debts.  

When a GBH News reporter asked UMass System President Marty Meehan whether holding transcripts and sending balances to collection were effective ways of recovering owed money, the former congressman did not directly answer the question. He said only that UMass administrators are committed to negotiating repayment plans. 

Related: Colleges are withholding transcripts and degrees from millions over unpaid bills 

“They work things out with students and make sure that students are in a position that they can graduate,” Meehan said during an unrelated news conference at UMass Boston. 

The national picture resembles the state’s when it comes to collecting college debt. A pre-pandemic survey by the National Association of College and University Business Officers found nearly all schools — public and private — withhold student transcripts as a means of collecting overdue accounts and nearly all say they will eventually report that debt to a collection agency. 

It’s “just like a medical bill,” said Carly Eicchorst, a college administrator in Minnesota with nearly 20 years of experience in financial aid. “There’s exponential growth [in the balance] once the collection agency is involved.”  

Eicchorst, director of advancement operations at St. Olaf College, said a major problem is that the length of time colleges manage overdue balances varies from campus to campus. “It could be two months after you cease attendance. It could be two years after you cease attendance, and the students have no sense of that,” she said. 

While Eicchorst said she understands that colleges see holding transcripts and sending debt to collection as one way they can get what they’re owed, “there is just such a gap on the student understanding side.” 

Students may know the debt could balloon and appear on their credit reports, for instance, an issue that disproportionately hurts low-income students and students of color, she said. 

“They were already struggling to pay the bill, and now that it’s accruing it becomes impossible,” said Sosanya Jones, a Howard University professor who teaches courses on higher education policy.  

Jones said it’s hard to tell whether these transcript hold and collection policies are effective, but she’s skeptical. 

“In order to access that data, we would need institutions that come forth and actually open their books,” Jones said. “It doesn’t make a lot of sense to hold someone’s transcript hostage because then they’re not going to definitely continue to be enrolled in your college.” 

Related: Some colleges stop holding transcripts hostage over unpaid bills 

As some students struggle to make ends meet during the pandemic, researchers and administrators seem to agree: These policies are a bad look for higher education. 

Some schools are reversing course, including Southern New Hampshire University and Bunker Hill and Middlesex community colleges in Massachusetts. All three have announced they’ve stopped blocking transcripts and SNHU has begun releasing the academic records of more than 2,000 students who owed the nonprofit college unpaid balances that average $728. 

In Little Rock, Arkansas, Philander Smith College announced during graduation ceremonies that the historically black institution would forgive all outstanding balances for the classes of 2020 and 2021. President Roderick Smothers told graduates the move was “in the spirit of doing all the good we can.” 

“If you’ve got a balance, know that your balance is no more,” he said.  

Graduates put on their masks, stood up and cheered. Some danced around their socially distanced chairs.  

Sosanya Jones of Howard, a leading historically Black university, predicts more schools will follow suit because the policies create negative feelings about colleges “in terms of alumni, in terms of word of mouth.”  

“That’s a loss of advertising when you just have students who are locked out of the system,” Jones said. 

More than 36 million Americans have earned some college credits but haven’t finished their degrees. Researchers say a major obstacle is colleges withholding transcripts and sending out for collection relatively small debts.  

“It doesn’t make a lot of sense to hold someone’s transcript hostage because then they’re not going to definitely continue to be enrolled in your college.” 

Sosanya Jones, Howard University  

Smith is now a 49-year-old labor lawyer in San Francisco. When he first heard the GBH and Hechinger Report coverage about colleges withholding transcripts for relatively small debts, he said, it instantly brought back memories of his experience with UMass Amherst in the 1990s.  

In the end, he said, he never did pay off his debt to UMass — or the agency’s collection fee.  

Related: Colleges face reckoning as plummeting birthrate worsens enrollment declines 

At home in Minnesota for the summer back then, Smith recalled how he did some back-of-the-envelope math. “Okay, it’s gonna be at least 500 to 700 hours of work at what I was able to make at the time and, to do that, I would’ve had to drop out of school anyway,” he said. 

Instead, he decided to take an extra course each semester at the University of Minnesota and went on to graduate in five years at the top of his class. His major? Economics. 

“I was extraordinarily fortunate,” Smith said. “In the scheme of things, I had to make up my sophomore year. But from my own experience I know that there have to be other students out there who weren’t as fortunate, who had to give up on trying to get their degree.” 

This story about colleges withholding students’ transcripts and sending small debts to collection agencies was produced in collaboration with The Hechinger Report. GBH’s Diane Adame provided research assistance. 

The post In Massachusetts, public colleges send debt collectors after nearly 12,000 students appeared first on The Hechinger Report.

BOSTON — Alex Harris loves his job working with students on the autism spectrum — “my superheroes,” he calls them with a broad smile and a deep laugh — in the Boston Public Schools.

But the academic transcript Harris needs for a promotion and a raise is being kept from him by the private college he attended because of a balance he owes for expenses he didn’t know weren’t covered by financial aid. The original debt has since doubled, from about $1,500 to more than $3,000 with fees and interest.

“It’s crazy,” he said in a local park at the end of a long school day. “We have families who are trying to survive. We’re trying to participate in society. But how can we when people are literally holding us back?”

The institution blocking Harris from receiving proof of the credits he earned, Springfield College, said it tries to work out repayment plans for students with outstanding bills and holds back their transcripts only as a last resort. “This aligns with our Springfield College mission of service to others,” Stephen Roulier, vice president for communications and external affairs, said in a written statement.

Yet the college is a member of a state higher education association lobbying against legislation in Massachusetts that would end the practice of withholding transcripts — one of several such measures nationwide that universities and colleges are quietly trying to water down or block.

The practice “is a key tool in the process by which colleges and universities communicate with students about owed balances,” the Commission on Independent Colleges and Universities in New York wrote last month in opposition to a bill that would ban transcript withholding there as a means of collecting unpaid debts.

As many as 6.6 million students nationwide can’t obtain their transcripts because they have unpaid bills to colleges or universities, the higher education consulting firm Ithaka S+R estimates. These balances can be as little as $25, though they are usually higher; the average at community colleges is $631 and at universities and colleges overall, $2,335.

In addition to New York and Massachusetts, bans on transcript holds as a means of making students pay their debts have been proposed in Minnesota and Ohio. They’ve already passed in California, Washington and Louisiana; there, too, college lobbyists worked to thwart or water down the legislation.

“For those of you on the committee who are parenting, you know that sometimes you can do a lot to try to get someone to behave in a particular way, but it’s not until you have the big stick that you can bring somebody to a table,” Terri Standish-Kuon, president of the Independent Colleges of Washington, testified in opposition to a bill in that state intended to stop her member institutions from withholding transcripts students need to get jobs or transfer from one school to another.

Related: Colleges are withholding transcripts and degrees from millions over unpaid bills

In the end, the withholding ban was passed but colleges preserved their right to block students with overdue balances from reenrolling until they pay any money owed for tuition, room and board. 

“There was so much pressure to try to keep some tools in play,” said Washington state Rep. Vandana Slatter, who sponsored the measure. “I was surprised by the amount of resistance. [The legislation] seemed to me fairly straightforward.”

Colleges and universities there eventually “came around to recognize this as an equity issue,” said Slatter. “But in the beginning there was a lot of resistance, and we needed to have a lot of advocacy to take this bill across the finish line.”

The Association of Independent California Colleges and Universities wrote that, without the ability to withhold transcripts from students who owe money, colleges in that state would have no choice but to refer debts to collection agencies that skim 35 percent to 50 percent off the top — and the colleges would as a result end up with less money.

“For an institution, it means that for every $100,000 in debt they refer, they can only expect to recoup between $50,000 and $65,000,” the association wrote while the bill was up for consideration.  

Advocates for students say withholding transcripts to recover debts, which they call “transcript ransom” and “the transcript trap,” almost exclusively affects those with the lowest incomes, stopping them from taking their credits with them when they transfer or from getting jobs that would allow them to resolve their bills. Entire transcripts are held back even when students have paid for all but their last few courses.

“Give us our transcripts so we can earn the money to pay you off,” said Harris, 46, who delayed his education while raising a son as a single father. “I don’t understand what [colleges] are gaining from the situation, from holding people’s transcripts and stopping them from feeding their family or advancing in society.”

Kevin Thomas, a former legal services attorney turned New York State senator who has sponsored the bill to stop the practice there, likened it to “holding someone’s throat and cutting off their air.”

A proposal to restrict transcript withholding in Ohio is part of a larger economic development bill, on the grounds that the practice is stopping people from entering the workforce and earning what they need to pay their bills.

Related: Public colleges shock students by sending them to costly debt collection agencies

“It’s almost like a judge who puts a father in jail for not making child support payments: If the guy’s in jail, they can’t earn money to pay the child support,” said the senate sponsor, Jerry Cirino.

“I think the presidents of the private universities and colleges understand that by preventing limited distribution of transcripts for employment purposes, they’re not helping themselves eventually collect the debt,” Cirino said. “It’s Economics 101. And since all these universities and colleges teach economics, they should get this.”

“I don’t understand what [colleges] are gaining from the situation, from holding people’s transcripts and stopping them from feeding their family or advancing in society.”

Alex Harris, who is blocked from obtaining his academic transcript

Universities and colleges say it’s fair to expect students to meet their financial obligations. Public institutions in particular say they can’t afford to forgive such balances. And lobbyists for private colleges hint ominously to legislators that if they’re no longer allowed to withhold transcripts, they’ll have to refer delinquent accounts directly to collection agencies, which also add fees and interest that can quickly compound the total amount students owe, while battering their credit ratings.

“Institutions would be forced to take more draconian measures to receive repayment,” the Association of Independent Colleges and Universities in Massachusetts said in written testimony against an earlier attempt to ban transcript holds there, which died in committee. Those measures, AICUM warned, would include requiring full payment in advance at the start of each semester, blocking students with unpaid balances from registering for subsequent semesters and sending the debts into collection.

Yet institutions are already referring their students to collection agencies, often to the students’ surprise.

Massachusetts private, nonprofit colleges and universities disproportionately resort to withholding transcripts, new figures show, with 72,749 students or graduates affected, according to Ithaka S+R. That’s almost as many as in California, a state with six times the population.

A freshly introduced proposal in the Massachusetts Legislature would give students ownership of their college and university transcripts, though not of their degrees, if they still owe money.

So sensitive is this topic that, like Springfield College, most associations contacted did not respond or would only furnish nebulous prepared statements without answering follow-up questions.

Related: Colleges face reckoning as plummeting birthrate worsens enrollment declines

That’s because holding back students’ transcripts contradicts the carefully cultivated perception that the colleges are focused on their students’ success, said Erin Hennessy, vice president at TVP Communications, a national communications and public relations firm specializing in higher education.

“If you are going to position yourself as the small liberal arts college that is student-centered, but then at the end of four years, after the commitment of a significant amount of time and resources to that institution, say to a student, ‘You can’t have your transcript until we get the $75,’ there is a gap in that perception,” Hennessy said.

AICUM wouldn’t discuss the issue. The New York independent colleges association did not respond to a request for comment. The president of the Inter-University Council of Ohio wrote that his organization “supports efforts to give colleges and universities flexibility to work out payment plans with students who have failed to pay their tuition and fees,” adding: “We aren’t making additional statements at this time. Thank you for your understanding.”

Behind the scenes, however, higher education lobbyists have been working to slow or stop legislation that would bar them from withholding transcripts.

“There’s sort of a knee-jerk reaction that we’re seeing from colleges that this is one of the tools that they have,” said Melanie Kruvelis, a senior manager of policy and advocacy at Young Invincibles, a national organization that supports the New York transcript withholding ban. They are “reluctant to let go,” she said.

“It’s not until you have the big stick that you can bring somebody to a table.”

Terri Standish-Kuon, president, Independent Colleges of Washington

In Ohio, a proposal that would have stopped public universities from withholding transcripts from students who owe money has been amended. The revised version would continue to allow schools to stop a student from obtaining his or her transcript, but would let a prospective employer request one if it’s needed for the student to get a job.

“Somewhere along the line it changed,” said Piet van Lier, senior researcher at the progressive think tank Policy Matters Ohio. “We were advocating for it to be stronger, but it got weaker, and we did not see any testimony or hear any testimony publicly from the stakeholders saying that it was a bad idea. So clearly a lot is happening behind the scenes.”

The law that took effect in Louisiana last year gave public universities and colleges the option of ending the use of withholding transcripts to collect debts, but private universities and colleges lobbied successfully to be exempted, and none of the public university or college systems in Louisiana has so far changed its policies, the consulting firm HCM Strategists found.

The New York State proposal passed the senate but the assembly version is stalled in committee.

And before colleges and universities got a total of nearly $63 billion as part of two federal Covid-19 pandemic relief packages — half of it to pay their own bills — a Student Borrower Protection Center demand that they be forced to at least temporarily stop withholding transcripts went nowhere.

Related: Some colleges stop holding transcripts hostage over unpaid bills

Transcript withholding, and the unwillingness to abandon it, “makes us question the mission of our universities and why they’re supposed to be there in the first place,” said Luz Rivas, a California assemblywoman who sponsored the bill that banned universities and colleges from withholding transcripts there.

The University of California System and the state’s private colleges pushed back against the bill, Rivas said.

“I did listen to their concerns, but I felt that our higher education institutions should be focused on how to best serve our students and help them succeed,” she said.

Lawmakers and advocates are increasingly questioning arguments like the one made by the private colleges in New York that withholding transcripts is a “communication” tool, said Seth Frotman, executive director of the Student Borrower Protection Center.

“That was one of the most comical — if it wasn’t so disturbing — pieces of justification for some pretty outrageous tactics that I’ve seen in my day,” Frotman said. “What you see time and time again is schools making dubious allegations that foreshadow doomsday if they’re not able to engage in these really disturbing practices.”

But he said there’s momentum for reform.

“Change starts slow,” Frotman said, “and then it all comes at once.”

This story about colleges withholding students’ transcripts was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education, in collaboration with GBH Boston. Additional reporting by Kirk Carapezza and Meredith Kolodner. Sign up for our higher education newsletter.

The post Colleges fight attempts to stop them from withholding transcripts over unpaid bills appeared first on The Hechinger Report.

Richard Fishburn never imagined he’d one day be facing down debt collectors — all because he decided to return to college.

An Army veteran who had worked his whole life, Fishburn enrolled at Cleveland State University in Ohio in 2016. But in his third semester, when the back injury he sustained in the Army flared up, his advisers encouraged him to take time to heal so he wasn’t in excruciating pain sitting in lecture halls.

That decision proved costly. Although he withdrew from classes, Fishburn said he still received a bill for tuition without any explanation as to why he still owed money. When he tried to reenroll, he was told he needed to pay in full. Cleveland State had added $600 in collection and late fees and eventually, as required by state law, had passed the debt on to the state attorney general’s office, which then sent it to a for-profit debt collection company and then to a private law firm. At each step along the way, interest was tacked on. His original bill of $2,447 ballooned to more than $4,250.

Fishburn, 34, can’t imagine when he’ll have the money to pay off his debt, and until he does, he can’t go back to college. He has been unemployed since his last job in television and film ended and the pandemic began. His wife is working, but with three young children and a mortgage, they have nothing left over to chip away at a debt that is now 74 percent more than what he originally owed.

To the surprise of many students and parents, public colleges in every state in the country except Louisiana use for-profit debt collection agencies to retrieve overdue tuition, library fees and even parking fines. (Louisiana, like several other states, sends students’ debts to the attorney general’s office, which can charge fees as high as 33 percent of the original bill.) Many universities add late fees to students’ bills, and when debt collectors add another 30 or 40 percent, students can end up owing thousands of dollars more than they did originally.  

As tuition has risen astronomically, one child care or medical crisis can push students over the edge and force them to choose between household bills and tuition payments. The extra fees and interest can make it impossible for them to get back on track, ruining their credit and imperiling their financial futures.

Public colleges have sent hundreds of thousands of students around the country to private debt collection agencies, and the spiraling debt held there now totals more than half a billion dollars, a Hechinger Report investigation has found through more than 60 inquiries with agencies in every state and more than 120 inquiries with individual institutions. For many students, the financial burden makes it impossible for them to return to college and earn degrees that could get them good jobs. State officials often bemoan a lack of college-educated workers for their economies, yet very few states track this problem. Most states cannot provide figures on how often their colleges use these companies, how many students are affected or how much in additional fees and interest is being charged. 

More than 36 million adults in the United States have earned some college credits but haven’t finished their degree, and experts say the barrier is often financial.

“Think about when you’re 18 years old and what you don’t know about managing debt. We had a lot of students who owed us these past balances … but they’re caught. They can’t enroll until they pay the debt, and they can’t get aid until they enroll.”

Dawn Medley, associate vice president of enrollment management, Wayne State University

“It’s overwhelmingly low-income students who are disproportionately being caught up in this vicious cycle,”said Juana H. Sánchez, senior associate at the public policy group HCM Strategists. “I don’t know that anyone is winning. The third-party collection agencies that are expanding their client base, they may be the only winners here.”

University administrators say they’re in a tough position. They say that with states regularly cutting education funding, they need the private agencies to retrieve as much money as they can. But there is also evidence that public colleges can do better financially if they keep students out of the hands of debt collection agencies; setting up payment plans, for example, means students are better able to pay what they owe and stay enrolled, which means tuition dollars keep flowing.

Administrators and government leaders pushing for reform also note that the stated mission of public universities is to provide an affordable education. If tuition were affordable, they say, students wouldn’t be stuck in the vise of debt collection agencies in the first place.

Some argue that private companies shouldn’t be able to profit off students’ financial woes.

Debt collection written into state law

In some states, the law requires that public colleges use collection agencies if a debt goes unpaid for too long.

In Ohio, public universities are required by law to send student debts to the state attorney general’s office after 45 days if the accounts are overdue. The state can then add a 10 percent fee. If a student cannot begin paying back the debt within four months — regardless of the reason, such as a job loss or a medical crisis — it usually goes to private debt collection agencies, which can increase the bill by another 21 percent. If the debt goes unpaid for 18 more months, a student could be charged as much as 35 percent more than the original debt.

The law was meant to ensure that public universities, and other state institutions, were collecting money owed and not passing on the costs to other taxpayers and students. Officials now say an unintended consequence is that the law has kept some low-income students from earning degrees.

In Ohio, more than 157,000 former public college students, who altogether owe $418 million, have debts that have been sent to private collection agencies or outside law firms

More than 157,000 former public college students in Ohio, who altogether owe $418 million, have debts that have been sent to private collection agencies or outside law firms and are struggling to pay back those debts. With few exceptions, they cannot reenroll in college or obtain their transcripts until they pay the entire amount.

Related: Hidden Debt Trap: Uncovering the billions of dollars in student debt you’ve never heard of

Recognizing the depth of the problem, Ohio’s higher education chancellor, Randy Gardner, an appointee of Republican Gov. Mike DeWine, earlier this month issued new guidance allowing colleges and universities to slow down the debt collection process. The new approach also clarifies that colleges may offer debt forgiveness to students who reenroll, a practice several colleges in Ohio have already adopted.

It’s unclear how many students will be affected by this new debt forgiveness pathway. Because the original law hasn’t been changed, students at colleges and universities that want to maintain the status quo can still end up with debt collectors pursuing them and with bills far beyond their original amount.

Someone like Jenny Jones, who found herself facing debt collectors last year when her daughter was set to graduate from Ohio State University, could have benefited from the relief program.

Jones’s daughter had taken summer classes in 2018 at the University of Cincinnati, near home, to make sure she could graduate in four years. Jones thought she could use Parent Plus loans (federal loans parents can take out to cover college costs for their children) to pay the tuition. She found out belatedly that the loans couldn’t be used for summer classes at the university.

Her principal balance of $2,712 grew to more than $4,600 by December of 2019. Jones’s own student loan payments are more than her mortgage, and with three kids to support, she was stuck.

Public colleges have sent hundreds of thousands of students around the country to private debt collection agencies, and the spiraling debt held there now totals more than half a billion dollars.

“I just felt this panic, like, oh, God, I don’t have that much money,” she said.

To top it off, just weeks before graduation, Jones, who is now 46, was told that her daughter couldn’t receive her degree, because the University of Cincinnati wouldn’t release an official transcript until Jones paid the debt. Frantically, she tried to negotiate a payment plan but couldn’t. In the end, she put the remaining balance on a credit card, which she is still paying off.

“I don’t dispute that I owed UC the tuition,” Jones said. “What I took exception to was the fact that these different agencies can almost double the amount that I’m supposed to pay.”

The university said it could not comment on specific students but said that it provides payment plans.

‘I really regret going back to college now’

Most states don’t have a timeline for repayment inscribed in law as Ohio does, but many public colleges impose their own deadlines along with additional fees and interest.

Missouri State University in Springfield, for example, sends about 1,100 students’ debt to collection agencies every year; the current total is about 7,300. At Hillsborough Community College in Florida, about 3,990 students are involved with debt collection agencies. Florida allows universities to use debt collection agencies that charge an additional 20 to 25 percent on top of the original bill. Debt collection agencies that contract with community colleges in California can add 39 percent. At some Kentucky public universities, the bill can grow by upward of 40 percent.

Related: Colleges are withholding transcripts and degrees from millions over unpaid bills

Sam Houston State University in Texas sends overdue accounts to private debt collection companies after about six months, according to the university’s public information officer. Currently, more than 2,200 students owe a total of roughly $5 million. These students cannot reenroll until their debts are fully paid.

Brendan Mullican, a former student at Sam Houston State, served in the Navy for four years, including in the Middle East during the 2003 Iraq War. The first in his family to go to college, he used the GI Bill to pay for classes that earned him a bachelor’s degree in 2013. Mullican got a job, but his employer said he needed additional accounting courses if he wanted to move up in the company.

Determined to get a better-paying job, Mullican continued taking classes while he was working. He kept track of his bills, which showed a zero balance after three semesters, when he stopped taking classes. A year later, he got a bill from the university for $9,760. After he disputed the bill in an email exchange with university administrators, communication ceased, he said, and Mullican assumed the situation was resolved. Instead, the university referred the debt to a collection agency without telling him, he said. He got a bill from the agency in 2017 informing him he owed $12,689.

Mullican, 36, says there’s no way he can pay that amount, but until he does, the college won’t let him reenroll and won’t release his transcript for the three semesters he completed.

“It just seems unethical,” said Mullican. “I really regret going back to college now. I can’t believe they would treat me that way. They say they do things to help vets, but it seems like it’s just a lie.”

A spokeswoman for Sam Houston State said she could not comment on individual students because of federal privacy law, but said that in general, students are responsible for all tuition and fees.

Some institutions, such as Northeastern Illinois University, the University of North Dakota and Gwinnett Technical College in Georgia, have decided not to charge students any extra fees, even when they send overdue balances to debt collection companies. Administrators say keeping the bill at its original amount makes it easier for students to set up payment plans and reenroll.

In Ohio, some state legislators, both Democrat and Republican, are working to ensure that students don’t end up with extra fees. But the proposals have met with opposition from some conservatives in the Republican-controlled state legislature. Some public university leaders oppose the change, too. And private debt collection agencies stand to lose millions of dollars if collection efforts are kept in house at the colleges.

Currently, six collection agencies in Ohio have contracts with the attorney general’s office. The largest is National Enterprise Systems Inc., which this year had 40,000 students and more than $95 million to collect, according to the Ohio attorney general’s office, potentially bringing up to $20 million in revenue to the company.

Between 2019 and the first quarter of 2021, state records showed that the company’s lobbyists met several times with the attorney general’s office about what was listed in public records as “collection decisions.”

Margie Brickner is the CEO of Reliant Capital Solutions LLC, which stands to make up to $3.5 million from student debt this year, based on figures obtained from the attorney general’s office. She donated $95,000 to the state Republican candidate fund between 2017 and 2020, according to public records kept by the Ohio secretary of state. She also contributed $4,000 to a candidate committee for Dave Yost, the current attorney general, in the lead-up to his election in 2018.

National Enterprise Systems did not respond to several requests for comment. A representative for Margie Brickner and Reliant said they declined to comment.

Related: Left in the lurch by for-profit college direct loans

The attorney general’s office itself also receives significant revenue when student debts are sent to its staff for collection, even before they go to the private agencies. The law allows a 10 percent additional fee, and as of this spring, there were about 385,000 students whose debts totaled more than $740 million.

On average, the office collects about $50 million each year, according to a report by Piet van Lier of Policy Matters Ohio, a nonprofit research institute; that could mean $5 million in revenue.

Debts sent to the attorney general’s office disproportionately came from campuses with a higher percentage of Black and Latino students, according to the report.

As in other states, efforts to reform this system in Ohio have been fueled by concerns about population decline and job losses. About 1.3 million Ohioans have completed some college but haven’t gotten a degree. State officials worry that businesses will shy away from the state without an increase in the number of college graduates.

“I don’t know that anyone is winning. The third-party collection agencies that are expanding their client base, they may be the only winners here.”

Juana H. Sánchez, senior associate at the public policy group HCM Strategists

“Some people are saying that’s the problem with our country — people want something for nothing,” said Thomas Lasley, CEO emeritus of the advocacy group Learn to Earn Dayton and a former dean at the University of Dayton. “It seems to me to be ludicrous that we make students who are struggling to finish their degrees incur even more charges and late fees and debt.”

Lasley said he was pleased with the new guidance from Gardner, Ohio’s higher education chancellor.

Related: How a decline in community college students is a big problem for the economy

Rep. Tom Young, a Republican, also sees that announcement as a good first step. He wants to make sure students have incentives to finish college and remain in Ohio, to build up the workforce. He emphasizes that his goal is not debt forgiveness but scaling up the programs that allow students to go back to school and earn their degrees.

“We want Ohio to be a place that can attract and keep businesses. The challenge we have is that sometimes life happens to people,” he said. “They leave school for some reason, and the debt continues to increase.”

Some argue that the new guidance will help only a small minority of students and that more sweeping change is needed.

“I don’t dispute that I owed UC the tuition. What I took exception to was the fact that these different agencies can almost double the amount that I’m supposed to pay.”

Jenny Jones, mother of a student who took classes at the University of Cincinnati

 “Ohio is one of the worst states in terms of college affordability, and that is a connected component and why this particular policy and practice is egregious,” said Prentiss Haney, a co-executive director of the Ohio Organizing Collaborative, a grassroots community organization.

“There’s an incentive for the debt collection agency to lobby and make sure those debts are referred to them, instead of an incentive for university to keep debt,” Haney added.

The search for solutions

Even as several universities have expressed concerns behind the scenes about losing revenue, some say using collection agencies isn’t necessarily more effective than other ways to collect the money.

For example, in the fall of 2018, Wayne State University in Detroit started a program called Warrior Way Back. Former students who owe up to $1,500 are allowed to reenroll, and for each semester they complete, one-third of their debt is forgiven.

University administrators say the program has actually helped financially: Wayne State has gained $1.5 million in tuition from these students, after taking into account the debt it forgave.

“Think about when you’re 18 years old and what you don’t know about managing debt,” said Dawn Medley, the associate vice president of enrollment management at Wayne State, who created the program. “We had a lot of students who owed us these past balances — they may have had veterans’ benefits or remaining federal aid money, but they’re caught. They can’t enroll until they pay the debt, and they can’t get aid until they enroll.”

The program, and similar ones at institutions like Ivy Tech Community College in Indiana, requires extensive financial counseling and academic guidance to ensure that students can pay going forward and are on viable career paths.

Even before Ohio announced the new guidance, Cleveland State University had started forgiving up to $5,000 in exchange for reenrollment and course completion. Administrators there say they hope the forgiveness program can keep students from being sent to the attorney general’s office in the first place, so that fees and interest don’t pile up.

“Our program helps,” said Dean of Admissions Jonathan Wehner, Cleveland State University’s vice president of enrollment management and student success, “but really the dialogue we need to have is about affordability, and how we make sure that every student who could benefit from a four-year degree can get a four-year degree.”

Wehner and other university officials say they try to accommodate students as best they can, given the constraints of the law.

But even though Cleveland State has one of the most generous debt forgiveness programs in the state, it doesn’t help Fishburn. Students like him whose debts have already been sent to collection agencies are not eligible for the program.

So for now, he is still in limbo.

“The fact that they’re passing this debt around just makes no sense to me,” Fishburn said. “Someone’s profiting on it, for sure. It just seems like a giant scam to me.”

This story about debt collection was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our higher education newsletter.

The post Public colleges shock students by sending them to costly debt collection agencies appeared first on The Hechinger Report.

Institutions of higher education like to boast of their diversity initiatives, showcasing the diversity of their student bodies on slick websites. Beneath those smiling testaments to multiculturalism is the likelihood that many students of color, often from low-income backgrounds, will have to interrupt their education several times. Every time a person drops out there is a risk that the college will be owed a fee. The school can then withhold the student’s transcript until the debt is paid in full. This ransom approach to debt collection undermines the egalitarian rhetoric: Millions of Americans cannot reenroll in college because of an outstanding debt owed to a college they previously attended.

The debt could be due to unpaid tuition, on-campus parking tickets, books, fines or fees. In essence, colleges and universities are holding transcripts hostage.

An official transcript is the proof of academic completion that a student needs in order to transfer credits or apply to graduate school. A person unable to access her academic record cannot pursue any degree, and her academic progress is halted. The implications of this ransom approach to debt collection can reverberate for years — if not generations. Our most vulnerable students need help overcoming this policy to relaunch their academic careers and build a solid foundation to create the life opportunities many take for granted.

In my work at College & Community Fellowship (CCF), I meet people every week whose college dreams are on hold because they owe money to a college they once attended. We help women who have had contact with the justice system get into college and stay there. Academic counselors at CCF usher students through whatever obstacles are preventing them from succeeding. Onerous parole stipulations, lack of child care, housing insecurity and gaps in technology are common barriers to academic success for justice-involved women.

Sometimes CCF has to pay a would-be student’s college debt so we can obtain her transcript and begin strategizing the optimal route to her academic success.

We realize that the households we serve are often caught between the criminal legal system and poverty. A person remanded to jail while charges are pending often cannot pay rent and loses everything. Most women released from custody won’t own even a fork, let alone have housing, when they return to society. The majority of justice-involved people are relegated to the lowest rung on the economic ladder, which  enhances the risk for future contact with the justice system. Education is the most reliable remedy for poverty and ongoing contact with the justice system.  

If colleges no longer had the power to hold transcripts hostage with impunity, we would be much closer to ensuring equity and opportunity to people from marginalized communities.

Denying an education to these women because of previous student debt ensures that they will languish in the past. One of our students had incurred over $50,000 in student loans to pay tuition for 3.5 years of college. An addiction made it impossible for her to complete the last twelve credits to earn her degree. Imagine the fortitude required to endure the indignity and trauma of an arrest, getting sober, repairing relationships. She found steady employment to bring those student loans out of default so she could sit in a classroom again. Submitting her readmission application was her reward for three years of relentless adversity. The triumph was short-lived; the university would neither allow her to reenroll nor provide her transcript because she owed $1,100.

She had 108 earned credits but could not benefit from them until the $1,100 was paid. A college degree can boost lifetime earnings by up to $600,000.

Related: Colleges are withholding transcripts and degrees from millions over unpaid bills

CCF does not have infinite funding, but we are proud to include Second Chance Scholarships in the array of services available to the women in our community. The scholarships pay the transcript ransoms so these women can return to college, get their educations and occupy the spaces where decisions are being made.

The financial hold on this student was particularly challenging to overcome. Nearly six months elapsed between the approval of her Second Chance Scholarship and our ability to obtain a verified bill from the school with payment instructions.

The bill itself was laden with fees that had little to do with tuition. It included fines and interest, which had ensured that the debt kept growing.

In another case, a student was denied her transcript for a fine she didn’t know she owed. She had paid her tuition and completed a semester before she was incarcerated. Her student aid did not reflect any irregularities, so we contacted the bursar’s office for the bill. She owed $82.50 for overdue book. Many students like her are unaware of any outstanding debts until their transcript requests are denied, and arcane rules about what fees can be added to debts make them challenging to contest.

These women and their valuable perspectives need to be included in our discussions about race, poverty, mass incarceration and social reforms. But they cannot elevate class discussions when they cannot even make it back into the lecture halls.

If colleges no longer had the power to hold transcripts hostage with impunity, we would be much closer to ensuring equity and opportunity to people from marginalized communities.

Our student with the $1,100 balance will finally be back in the classroom this fall. The university that had rejected her for that old debt will come to know what I know — a brilliant, dedicated student brimming with potential.

Her son will watch his mother balance her adult responsibilities with the rigors of college study. His own future will become more secure when she earns that diploma, and her university will become one student closer to achieving true diversity in its alumni community.

Stacy Lyn Burnett is a formerly incarcerated college student, a writer and a partnership strategist for College and Community Fellowship, a nonprofit that enables justice-involved women to earn their college degrees.

This story about student debt was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Hechinger’s newsletter.

The post OPINION: Stop holding college transcripts hostage over unpaid debt appeared first on The Hechinger Report.

James Smith missed his final housing payment to the University of Massachusetts Amherst when he spent a year there in an exchange program on his way to a degree at the University of Minnesota.

Strapped and with his family struggling financially at the time, he promised to pay off the $2,000 balance as soon as he could. But then collection fees were added and, because of a clerical mistake, he was charged an additional amount owed by another student with the same name.

Smith gave up. In response, the university refused to release his transcript showing the credits he had earned and paid for during his time at UMass. To make up for them, he had to take a crush of extra courses back in Minnesota — the maximum allowed without requiring additional tuition — until he had enough to graduate.

“It definitely made for a pretty horrible year and a half,” Smith said about the impact of a policy he called “both stupid and shortsighted.” In the end, he said, “UMass never got its money, and I had to repeat a year of college because I was broke.”

Stories like this are emerging nationwide in response to reporting about the long-standing but little-known practice under which students are prevented from obtaining their credits and degrees because they owe even small amounts of money to the universities and colleges they attended.

Critics call it “transcript ransom.”

Nearly all higher education institutions withhold transcripts from students who have even the smallest of balances, according to the higher education consulting firm Ithaka S+R, which has estimated that about 6.6 million Americans are blocked from obtaining their transcripts or degrees because of unpaid bills.

Related: Colleges are withholding transcripts and degrees from millions over unpaid bills

But some institutions are changing this policy as they recognize the huge impact — and very bad optics — of withholding transcripts, a practice that almost exclusively affects low-income students. Anger over this has only grown at a time when many families are suffering through the financial fallout of the Covid-19 pandemic.

In the most significant development, Southern New Hampshire University has now stopped blocking transcripts; it says it is has begun releasing these records to the 2,257 students from whom they were withheld over the last year alone because of unpaid balances that average $728.

SNHU has an enrollment of around 150,000, most of it online, a spokeswoman said, which makes it one of the nation’s largest single nonprofit providers of higher education.

Southern New Hampshire University has stopped withholding transcripts for unpaid balances, a policy it said affected 2,257 students in just the last year who owe an average of $728.

The university doesn’t know how many students in all have been blocked from obtaining their transcripts over the years, though the registrar, Deanna Bechard, said there are four file cabinets in her office filled with degrees awaiting payment. Under the change in policy, all will now be sent out as soon as graduates’ addresses can be found.

Since the start of the pandemic, “we were getting more and more concerns from students because they owed money, and how can they pay us if they can’t get a job,” said Bechard. “As we thought about the student experience, we were thinking, these poor students went through four years of their education, and now they can’t get their diploma because they have a balance?”

As for whether withholding transcripts encouraged people to pay their debts, Bechard said, “It was marginally successful and ‘marginally’ is probably a strong word. The only thing it really did was prompt a conversation between the student and our accounts receivable department. It didn’t make them write a check.”

Philander Smith College in Arkansas announced during commencement ceremonies that it would forgive all outstanding balances for the classes of 2020 and 2021 — which came to about $80,000 — avoiding students’ degrees from being blocked.

“If you’ve got a balance, know that your balance is no more,” the president, Roderick Smothers, said. He said the gesture was “in the spirit of doing all the good we can.”

Related: Some universities’ response to budget woes: Making faculty teach more courses

In Massachusetts, where transcript withholding has come under particular scrutiny, the chairman of the Board of Higher Education is publicly questioning the policy, and the board has ordered state colleges and universities to report back about how many students are affected. Data previously obtained from the institutions by The Hechinger Report and GBH News shows the total is 97,145.

“Some of these students are in difficult personal situations,” the chairman, Chris Gabrieli, said. The fact that so few of these balances have been paid off “does not inspire one that the hold process is a powerful tool. I think it’s the other way around,” since blocking transcripts often prevents would-be graduates from transferring, going on to graduate school or getting the jobs they need to pay their debts. “Students should be able to have their transcripts they need to advance their agenda.”

“As we thought about the student experience, we were thinking, these poor students went through four years of their education, and now they can’t get their diploma because they have a balance?”

Deanna Bechard, registrar, Southern New Hampshire University

Gabrieli, who is also a lecturer at the Harvard Graduate School of Education, wondered aloud why entire transcripts are being withheld if students owe money only for a single course or a semester, or for library fines or parking tickets.

“It’s an odd thing to say their fully paid-for past semesters aren’t theirs,” he said.

One Massachusetts school, Bunker Hill Community College, dropped its transcript withholding policy in response to the reporting by Hechinger and GBH. Another, the University of Massachusetts Boston, said during the investigation that it held transcripts for overdue balances in any amount; afterward, however, it said the policy had changed, and it would withhold transcripts only for unpaid bills of $1,000 or more.

Related: Flagship universities fail to enroll Black and Latino high school graduates from their state

A measure working its way through the Massachusetts legislature would give students ownership of their transcripts if they owe money to a public university or college. California last year became the first state in which public and private higher educational institutions were banned from holding back the transcripts of students who have unpaid debts. A new Washington State law requires that students who owe money be allowed to get their transcripts in order to apply for jobs. And a coalition of advocacy groups in New York is pushing for legislation there like California’s.

One Michigan resident was inspired by this burst of attention to resume his fight with his former university over a debt it said he owed for a course he never took.

Desmond Wright-Glenn registered for the course at Wayne State University in 2016 but then learned that, after fees he hadn’t known about were added, his scholarship wouldn’t cover the full cost. Wright-Glenn concedes that he never canceled his registration, but also says he never logged into or attended the course. Still, he was charged for it in full, and when he couldn’t pay, his transcript listing all the other classes he’d completed was withheld.

“Other than that transcript, I had no way of substantiating that [education] other than my word,” said Wright-Glenn, who had hoped to go to graduate school. “It shut me down. I at that point was living paycheck to paycheck and didn’t have $1,400 to give them” — the amount the university said he owed.

His career plateaued, he said; even to get promoted at the long-term care company where he worked, he needed to provide his transcript.

Seeing news coverage of other students trapped in the same situation, Wright-Glenn, now 36, sent emails about his case in late March and early April to every member of Wayne State’s board of governors, his legislators and the governor of Michigan. A few days later, he got an email from the university bursar’s office telling him that his bill had been rescinded and his transcript would be released to him.

“I basically had to repeat my sophomore year of college because of this.”

James Smith, whose transcript was withheld by the University of Massachusetts Amherst over an unpaid bill

“I’m not sure whose ear I got in,” Wright-Glenn said. “I think it wasn’t a good look. Maybe someone said, ‘Did this seriously happen, and are we seriously charging someone for nothing?’ ”

Although its administrative procedures manual says that balances are never written off, a spokesman for the university said exceptions “are sometimes made on a case-by-case basis.” He said transcripts are released upon request to prospective employers even if there is a hold on a student’s account.

Now, in addition to finally applying to graduate school, Wright-Glenn is considering starting an advocacy organization for other students who can’t get their transcripts. He’s already toying with a name: Free the Grades.

“I feel like I won, but then there are 6.6 million other people out there who haven’t won, who don’t have my tenacity,” he said.

Related: How a decline in community college students is a big problem for the economy

Other students have stepped forward with similar accounts. One who was studying toward a degree to become a special education teacher had her transcript blocked when her financial aid ran out and she couldn’t pay for a summer course she’d taken.

“My life has been at a standstill for years,” she said. Meanwhile, “I’m still paying student loans for a degree I’m not allowed to have.”

That’s a story Vivé Griffith hears often as director of outreach and engagement for the Clemente Course in the Humanities, which offers free classes nationwide to low-income adults to encourage them to go, or go back, to college. Many are prevented from doing so because they have unpaid bills and can’t obtain the transcripts listing the credits they’ve already earned.

“These are people who are 35 or 45 and they went to college when they were 18,” but never finished, Griffith said. “They leave us, and they’ve got confidence and skills about continuing on in school, and then they hit a complete dead end.”

In many cases, students want to pay their debts but can’t. The money they owe started to pile up during a financial emergency or because of unanticipated expenses.

“It’s an odd thing to say their fully paid-for past semesters aren’t theirs.”

Chris Gabrieli, chairman, Massachusetts Board of Higher Education

“It’s important to recognize that there’s a difference between willingly and knowingly accruing debt versus something happening,” Griffith said. Besides, she said, “people are much more likely to get this debt paid back if they can get degrees and make more money.”

Bechard, at SNHU, pointed out that “even reversing this policy is not wiping the balance these students owe. It’s giving them an opportunity to get a job to pay the bill.”

Smith, now 49 and a lawyer in California, still reflects on his experience with UMass.

“I recognize I’m a lot luckier” than many others who have been through the same experience, he said. “I didn’t have to drop out of school. I didn’t have to take a hiatus. I was able to finish and get a degree. But I basically had to repeat my sophomore year of college because of this.”

Universities’ blocking of transcripts appears financially self-defeating and sometimes reads like bureaucratic parody.

Thomas Tarowsky went back to the campus of his alma mater, West Virginia University, for a meeting in 2014 and got a $20 parking ticket. Soon after that he received “a rather terse and pedantic letter” from the university telling him his academic transcript would be withheld until he paid the fine.

Tarowsky was 65 at the time and a retired college dean.

A WVU spokeswoman said it “value[s] each member of our university family” and invited Tarowsky to get in touch about his case.

For his part, Tarowsky said that not only has the ticket remained unpaid, “but I have not and will not contribute to the alumni association.”

This story about colleges withholding transcripts was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education, in collaboration with GBH News. Additional reporting by Kirk Carapezza. Sign up for our higher education newsletter.

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