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Transcript Withholding Holds Back Workers and Wages

Recently, U.S. Department of Education Secretary Cardona issued an important call to end the practice of transcript withholding . The CFPB is also examining the practice of transcript withholding as a debt collection practice.

Millions of students seek postsecondary degrees in the hope that advancing their education will lead to better job opportunities, higher earnings, and greater economic security for themselves and their families. But many institutions of higher education are precluding students from making professional and educational gains by withholding their official transcripts to collect education-related debts. Perversely, this practice might have the effect of prohibiting students from obtaining the jobs that would allow them to pay down their debts. Transcript withholding can have dire consequences for students trying to begin their careers or finish their education.

Schools withhold transcripts for a range of debts, spanning from library fines and parking tickets to student loans used to pay tuition. Transcripts provide essential documentation of students’ post-secondary educational history, such as information about courses taken, courses completed, grades, credits earned, an individual’s majors or minors, and graduation status. Transcripts can be required by prospective employers, professional associations, and other colleges and universities seeking to verify an individual’s education history.

By refusing to release official proof of studies completed, colleges, universities, and non-degree-granting institutions are keeping their students from the very academic and labor market opportunities promised by higher education. Students might lose the opportunity to find a job or obtain the occupational licenses required to benefit from their education. They might also find themselves excluded from further education by losing the ability to re-enroll at their school or transfer to another in order to complete their higher education or might need to retake duplicative courses. Some students suffering these repercussions might find themselves financially worse-off than if they had never attended the school in the first place.

Withholding transcripts as a debt collection tactic is particularly perplexing, as it can undermine rather than enhance a student’s likelihood of repaying. Depriving a student of an official transcript can prevent them from finishing their degree, getting a job, or getting a raise. Those earnings could be used to pay off debt that a person owes to their school, while withholding the transcript can keep them stuck in a cycle of collections while denying them a path to employment, earnings, and successful repayment.

Schools’ Debt Collection Practices

Recently, the Consumer Financial Protection Bureau (CFPB) announced that we will begin examining schools’ in-house lending programs, where schools extend credit directly to students or their families to fund undergraduate, graduate, or other forms of postsecondary education.

CFPB actions have previously showed abuses at schools that engaged in institutional lending, leaving many students burdened with debt and subjected to strong-arm collection tactics. Particularly because schools have not historically been subject to the same servicing oversight as other lenders and servicers, the CFPB is concerned about students’ experience with institutional loans and the unique debt collection actions that only schools can take against their students. The CFPB’s examiners will look at a range of institutional lending practices, including transcript withholding.

If you are having an issue with your student loan or debt collection, you can submit a complaint to the CFPB online or by calling (855) 411- 2372.

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