As institutions look to reduce obstacles that prevent students from completing their programs, one issue that has stalled at the federal level is making some progress at the state level: banning the practice of transcript withholding for students with unpaid institutional balances.
While states have been taking action in recent months to pass and implement new laws, the Department of Education (ED) has indicated a need for more serious federal evaluation of the issue.
When New York in May enacted a statewide ban on transcript withholding policies, ED Under Secretary James Kvaal praised the state’s effort to enforce policies that assist low-income students.
Colleges across the country are using HEERF to forgive unpaid debts, a practice that hurts low-income students and might keep them from using their degree. NY is doing even better by banning the practice of #TranscriptWithholding. More states should follow suit! https://t.co/uNYM8SYJSV— James Kvaal (@UnderSecKvaal) May 9, 2022
As a part of the Institutional and Programmatic Eligibility Committee work, conducted during ED’s negotiated rulemaking earlier this year, there was a concerted effort to get the department to explicitly address the issue of transcript withholdings.
While the committee did discuss a narrow limit on the practice as it related to regulatory language in the Certification Procedures issue paper, members did not reach consensus.
Marvin Smith FAAC®, executive director at UCLA’s office of financial aid & scholarships, represented four-year public institutions during the most recent negotiated rulemaking session, and said the committee struggled to find time to thoroughly discuss all of the issues at hand.
When the negotiated rulemaking session began, regulatory language concerning the practice of transcript withholdings was not a part of the agenda, so some committee members looked to have ED weigh in on the issue and amend the agenda.
Citing time constraints and potential limits in their authority, ED did not agree to have the additional topic placed as a stand-alone item for further discussion but did consider it as part of the discussion on the Certification Procedures issue paper.
“We didn't have time to, in my mind, address these issues, and I didn't think that the department wanted to,” Smith said, stressing that the negotiations as outlined were already at risk of being rushed due to the number of topics and the complexity of the policies at hand.
That’s not to say that transcript withholding policies are not important to address at the federal level. Smith said there needs to be more discussion on the issue because a sudden unilateral ban could lead to unintended consequences since schools would have to assess alternative collection practices.
One concern, that could have taken a significant chunk of the committee’s finite time, would be that schools, in response to a ban on the practice, would then rely on collection agencies to collect student debt. Smith said this sort of response would not be in student’s best interest and that ED would need to come up with ways to ensure that students were not left worse off by sudden changes in administrative policies.
As a means of preventing such a severe response, the American Association of Collegiate Registrars and Admissions Officers (AACRAO) and National Association of College and University Business Officers (NACUBO), created a detailed framework with which schools should approach the development of their policies and stressed that administrative-process holds should not be used in the case of “trivial or minor debt” compared to what the student has already paid to the institution.
Within this framework the usage of transcript withholding policies or “administrative-process holds,” are designed to motivate a student to complete a task, such as paying a bill, turning in missing documents or meeting other administrative requirements and not to be punitive.
Many different circumstances may lead a student to owe a balance to their school, and they may not always be within the student’s control. For instance, when students who rely on federal student aid withdraw during an academic term, they may end up with a balance due as a result of the return to Title IV funds (R2T2) calculation.
Ernest Ezeugo, policy director at Young Invincibles, also participated in the rulemaking process as a negotiator on behalf of students and student loan borrowers, and encouraged ED to look into its available authority in regulating transcript withholding practices.
Throughout the discussions, Ezeugo said he wanted there to be more seats designated for student voices but was overall heartened by ED’s consideration of the issue and their effort to include language in the proposed revision to the Certification Procedures issue paper.
“It certainly, I think, was a good effort by the department to really think about this problem,” Ezeugo said. “It certainly signals that the Department of Education understands that the practice itself needs some looking and they need some clarity around it.”
While it remains to be seen whether the federal government will take action in this arena, postsecondary institutions have taken their own steps to adjust the practice in ways that are more student-centered and allow for flexibility.
Jacqueline Kennedy-Fletcher, assistant vice provost and executive director of student financial assistance at Indiana University’s Office of Enrollment Management, recognizes the paradox that transcript withholding policies can impose on students.
“You want to have some type of instrument to force the student to pay you by not releasing their transcript,” Kennedy-Fletcher said. “But at the same time, by not releasing that you're inhibiting them from moving forward to finish their education.”
The issue has prompted Indiana University to evaluate its own practices and develop flexibilities to more delicately handle the issue, by creating a $5,000 institutional debt threshold below which students would not be subject to penalties such as registration holds.
“We do run a report of any student who has a balance of $5,000 or higher, that's preventing them from enrolling in school and we will look to see if they utilize all their aid options,” Kennedy-Fletcher said, adding that the office will then reach out to students and look for ways that they can go about helping them get below that threshold.
One restriction on this institutional debt policy threshold is that while balances allow students to stay enrolled, and graduate, they cannot use their transcripts to transfer if they still hold institutional debt. If a student graduates with institutional debt they will not be able to receive their diploma or transcripts until the balance is paid in full, but exceptions can be made for students who need the documentation in order to comply with a job offer.
Ezeugo said that most students starting out their higher education careers are not aware of these potential barriers to earning their degree and that it can be difficult to underscore the potential dangers while emphasizing the importance of staying enrolled to also maintain access to valuable resources meant to reduce housing and food insecurity.
In the meantime, federal pandemic aid has served as a useful resource for schools looking to reduce institutional debts. The Higher Education Emergency Relief Fund (HEERF) provided by the American Rescue Plan has enabled schools to cover students’ institutional debt, thus reducing the number of students who might be at risk of having a transcript withheld.
The use of funding has been a welcome move for student advocates.
“I think certainly institutions have levied pandemic aid in good ways,” Ezeugo said. “But knowing that those funds are temporary, I would hope the benefits of that are not temporary as well.”
Publication Date: 6/6/2022