The Student Loan Fund is a student borrower-led organization that understands the negative impact of all forms of student debt on student borrowers, their families, and their communities.
The powerful advocacy and organizing of our members and student borrowers across the country highlights how the higher education finance system has burdened 46 million student borrowers with $1.8 trillion in student loan debt. . But student loan debt is only part of the higher education funding system that is devastating students and their families. Institutional debt is a big part of the student debt crisis.
Institutional debt is debt that students owe directly to colleges and universities. They are usually less than $5,000 and usually result from students exhausting their student loan capacity. These debts can cover room and board, lab fees, and other university fees. They prevent students from enrolling in classes and allow schools to hold student transcripts for ransom until the debt is paid.
This practice forces students to retake classes, which depletes student financial aid. Repeating classes unnecessarily increases the likelihood of exhausting financial aid before graduation and increases total student loan debt.
Withholding transcripts is an inequitable practice that disproportionately harms low-income students, students of color, and first-generation students. This prevents students from re-enrolling in classes, moving to more affordable institutions, taking their licensing exams, and getting the jobs needed to pay off their debts.
This practice turns students into dropouts simply because they cannot pay. Student-borrowers who cannot earn their degree or license find themselves in economically precarious situations, forced to pay off student loans and institutional debt without a degree, sometimes earning only minimum wage. Miguel Cardona, Connecticut’s U.S. Secretary of Education, called for an end to the retention of transcripts, which he described as blocking student retention and completion.
What can colleges do?
Colleges can cancel institutional debt with money from the Higher Education Relief Fund (HEERF) and the American Rescue Plan (ARP). They chose NOT to.
This practice is counter-productive for the sustainability of colleges and universities. Preventing students from accessing their transcripts reduces school registration and tuition costs.
Colleges continue to sound the alarm about the student enrollment crisis, but fail to see how their actions are directly responsible for this outcome. Practices such as withholding transcripts and continuously increasing tuition fees have soured their relationship with students and eroded trust in higher education institutions.
Half of the students surveyed by Third Way and New America agree with the statement that “my institution only cares about the money it can get from me”. All facets of the higher education funding system are predatory and take advantage of student borrowers. Institutional debt and withholding of transcripts are a sinister part of this system.
We need to end the withholding of transcripts and hold higher education institutions accountable for their choices. This is not a radical idea as California, Washington, and Louisiana have passed laws banning all or part of transcript retention. The State University of New York (SUNY), the largest public university system in the United States, and the City University of New York (CUNY) have ended this practice. Student-centered re-enrollment policies are the solution!
We need to end the withholding of transcripts in Connecticut and put our students first.
Cristher Estrada-Perez is the executive director of the Student Loan Fund
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