Students urge Legislature to ban colleges from withholding transcripts over unpaid debt

An unpaid bill of less than $150 stunted the start of Cynthia Aguilar-Arizmendi’s career.

Aguilar-Arizmendi, 24, graduated from the University of Oregon with a communications degree in spring 2020, just as the world was shutting down due to the pandemic. She lost the jobs she held on campus and in the community as businesses shuddered. And as she started to apply for fellowships and jobs post-college, Aguilar-Arizmendi ran into a new problem: employers wanted her official transcript from the university.

But Aguilar-Arizmendi couldn’t access the document, she said, because she owed the university a debt.

“I had to choose between being able to eat, or getting my transcript to prove to employers that I had completed my courses,” Aguilar-Arizmendi said. She spent her first summer after college unemployed.

Aguilar-Arizmendi spoke to lawmakers during a hearing Thursday in support of a bill co-sponsored by Sen. Michael Dembrow, D-Portland, which would ban Oregon colleges and universities from withholding student transcripts for debt collection.

Just days before the meeting, the University of Oregon scrapped this policy at its own institution, spokesperson Kay Jarvis said. Senate Bill 424 would force other Oregon colleges and universities to do the same beginning in the 2024-25 school year.

The Oregonian/OregonLive found that three of the state’s public universities are currently withholding the transcripts of more than 20,000 former students over debts as little as $5. Thousands more students are likely impacted by the practice at other public and private universities and community colleges throughout the state.

“I missed out on several opportunities because I could not provide a piece of paper with an official stamp of approval,” Aguilar-Arizmendi told lawmakers. “To say that this practice teaches the importance of paying off debt is predatory.”

Colleges around the country use holds on student transcripts as a means to compel payment for overdue balances. A 2020 study from the American Association of Collegiate Registrars and Admissions Officers found that 95% of nearly 300 public and private schools surveyed withheld undergraduate transcripts, typically due to unpaid debt, and that public schools were more likely to employ the practice than private schools.

Several schools told The Oregonian/OregonLive that they do afford some flexibility to students and will release unofficial transcripts or send a transcript directly to an employer, even if the student has unpaid debt.

Withholding transcripts can hinder students’ academic and career trajectories, ability to access financial aid and have a “detrimental impact” on their mental health, Veronica Dujon, director of academic policy and authorization for the state’s Higher Education Coordinating Commission, told lawmakers Thursday.

A limited survey from higher education research group Ithaka S+R found that students with so-called “stranded credits” are more likely to be from underserved communities, low-income students, students of color and community college transfer students.

A handful of states including Washington and California have already banned transcript witholding. The Higher Education Coordinating Commission does not know how many of Oregon’s 24 public community colleges and universities are using transcript holds, Dujon told the committee.

Oregon State University told The Oregonian/OregonLive that the school is currently withholding the transcripts of more than 13,212 former students over debt as little as $5. Southern Oregon University has been using the practice for more than 40 years, spokesperson Joe Mosley said, and is currently withholding 1,880 transcripts. Oregon Institute of Technology in Klamath Falls is withholding more than 5,000 transcripts.

Representatives from public universities and community colleges mostly expressed support for abandoning transcript withholding, but asked the committee to give them more time to get rid of the practice.

Susan Walsh, provost and vice president for academic affairs at Southern Oregon University, told the committee that abruptly abandoning transcript withholding might increase unpaid balances at schools because students have less incentive to establish a repayment plan. The burden of paying unrecovered costs gets shifted onto taxpayers and students who pay higher tuition, she said.

She requested that schools get until fall 2025 to adopt new practices that could help avoid a surge in their own debt – like expanding financial education for students and reducing the amount of debt students can rack up in good standing.

“Universities do not want this legislation to effectively result in tuition increases for all students due to large accumulation of former students’ unpaid debt,” she said.

Brent Wilder, president of the private school focused Oregon Alliance of Independent Colleges and Universities, submitted written testimony urging the committee to leave transcript holds up to each individual institution. Debt collection is not a one-size-fits-all process, Wilder wrote.

Andrea Retano, a horticulture graduate student at Oregon State University, told the committee that she hasn’t been able to access her transcripts to apply for scholarships. Retano has a fellowship that covers her tuition, but hundreds of dollars in student fees and health insurance get billed to her student account, she said. She applies for scholarships to help cover her living expenses and extra school fees, but the applications often require transcripts, which she said she can’t access when she has an overdue balance.

When a transcript hold kept her from applying for a scholarship last fall, Retano said she had to take out student loans to cover her expenses. She worries a transcript hold could also keep her from applying for doctorate programs as she nears the end of her graduate studies.

“My ability to not pay my fees because of my situation or my family or my socioeconomic status should not be the major determining factor of getting into a PhD program or being able to compete for scholarships among my peers,” Retano told lawmakers.

Oregon State is planning to phase out its administrative holds by fall of 2025 and expand financial education for students, spokesperson Steve Clark said. Registrar Rebecca Mathern said that current students who are making scheduled payments to the school are not subject to a hold on their transcripts, and that the school will send transcripts directly to prospective employers even if a student has a hold on their account, although they won’t release transcripts directly to those students.

The school does not release transcripts for former students who owe a debt but are trying to enroll in another school, Mathern said, because they don’t want students to incur more debt.

Mathern echoed Walsh’s sentiments that schools need time to set up a new structure that prevents students from racking up debt they can’t pay.

“Sometimes the transcript is sort of like that hook to say, ‘Hey, we know you owe us money,’” Mathern said. She added: “If we lose that ability to have that conversation with a student then we’re forced to say, ‘Well, what do we do? Do we send that student to collections?’ And we don’t want to do that, right? We all recognize that doesn’t feel like the right thing to do.”

The University of Oregon and Oregon Health & Science University both ended transcript withholding this month and will release the transcripts of students with past debt. Some 333 former OHSU students had transcript holds as of Jan. 19th, spokesperson Franny White said. The University of Oregon did not immediately provide data for how many students’ transcripts were withheld before it changed policy on Jan. 23.

“Better late than never,” Aguilar-Arizmendi said about the University of Oregon’s policy change.

This story was brought to you through a partnership between The Oregonian/OregonLive and Report for America. Learn how to support this crucial work.

Sami Edge covers higher education for The Oregonian. You can reach her at sedge@oregonian.com or (503) 260-3430.