Graduation can be unachievable for students with institutional debt.

The Student Loan Fund is a student borrower-led organization that understands the negative impact all forms of student debt have on student borrowers, their families, and their communities.

The powerful advocacy and organizing of our members and student borrowers across the nation emphasize how the higher education financing system has burdened 46 million student borrowers with $1.8 trillion in student loan debt. But student loan debt is just one part of the higher education financing system that devastates students and their families. Institutional debt is a large part of the student debt crisis. 

Institutional debts are debts students owe directly to colleges and universities. They are usually under $5,000 and are typically the result of students exhausting student loan capacity. These debts can be for room and board, lab fees, and other university costs. They prevent students from registering for classes and allow schools to hold student transcripts for ransom until the debt is paid.

Cristher Estrada-Perez

This practice forces students to retake courses which depletes student financial aid. Unnecessarily retaking classes increases the likelihood of exhausting financial aid before graduation and increases total student loan debt.

Transcript withholding is an inequitable practice that disproportionately harms low-income students, students of color, and first-generation students. It prevents students from re-enrolling in classes, transferring to more affordable institutions, taking their licensure exams, and obtaining the employment needed to repay their debts.

This practice turns students into non-completers simply because they cannot pay. Student-borrowers who cannot complete their degree or licensure end up in economically precarious situations, forced to pay off their student loans and institutional debt without a degree, sometimes only earning minimum wage. Connecticut’s own Miguel Cardona, U.S. Secretary of Education, called for an end to transcript withholding, which he described as blocking student retention and completion.

What can colleges do?

Colleges can cancel institutional debt with money from Higher Education Relief Fund (HEERF) and the American Rescue Plan (ARP). They have chosen NOT to do that.

This practice is counterproductive to the sustainability of colleges and universities. Preventing students from accessing their transcripts reduces enrollment and tuition revenue for schools.

Colleges continue to raise the alarm on the student enrollment crisis but fail to see how their actions are directly responsible for that outcome. Practices like transcript withholding and continuous tuition increases have soured their relationship with students and eroded confidence in higher education institutions.

Half of the college students surveyed by Third Way and New America agree with the statement, “my institution only cares about the money it can get from me.” Every facet of the higher education financing system is predatory and takes advantage of student borrowers. Institutional debt and transcript withholding is a sinister part of this system.

We must end transcript withholding and hold higher education institutions accountable for their choices. It is not a radical idea as California, Washington, and Louisiana, have passed laws banning all or some transcript withholding. 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 stopped the practice. Student-centered re-enrollment policies are the solution!

We must end transcript withholding in Connecticut and prioritize our students.

Cristher Estrada-Perez is the executive director of the Student Loan Fund