Aisha is stuck. She has a college-level education but can’t prove it—because her alma mater won’t release her transcript because of old debts. And without a college credential, she can’t move up at her current employer or find a better-paying role on the open market. In other words, the kind of job that would enable her to pay off her debt and get ahead.
It’s a constant struggle, she says, when “you are really worth quite a bit more, but being stuck because of the missing transcript.”
This kind of Catch-22 is common. Institutions often place transcript holds for unpaid debt, creating a situation in which students have earned academic credits or a degree but can’t access them. This phenomenon, known as stranded credits, is caused by many things, including seemingly innocuous fees such as library fines and parking tickets. These debts are then exacerbated when institutions apply additional fees and interest. An even bigger challenge is a misalignment between the way institutions distribute financial aid and the federal government’s rules for returning funds when a student withdraws from a course.
The end result: Over 6 million students have stranded credits—and they are disproportionately first-generation students of color and those from low-income backgrounds. Stranded credits block students from receiving financial aid, transferring, or otherwise moving on in their academic career. And they also keep them from pursuing much-needed career opportunities.
In other words, stranded credits are not just an education issue. They’re a job issue. My research collaborators and I recently spoke to students affected by stranded credits, in addition to scouring social media to find accounts of how stranded credits have impacted students’ lives. What we found were shockingly similar and heartbreaking accounts of learners who could not return to higher education or advance in their careers because of old debt.
This was the experience of Derek:
“I have been passed over for several job opportunities simply because I did not have an undergraduate degree, even though I do have the business acumen and experience. It’s just that it’s something that has held me back from achieving and applying for positions that I am definitely qualified for, based on my experience.”
Both Derek and Aisha identify as Black, and like many of their peers in the study, they felt that stranded credits limited their promotion and earnings potential, locking them into a low socioeconomic level.
That is linked to increased financial stress and even mental health challenges, such as depression and anxiety. And like student loan debt, stranded credits reinforce the racial wealth gap. In short, stranded credits are both a cause and symptom of inequity in higher education.
Students who belong to several marginalized categories—students of color, first generation, and low-income—are at the greatest risk for falling into a hole of debt that was nearly impossible to climb out of without assistance. This is especially likely to happen in the wake of major life changes like job loss, pregnancy, or divorce.
Perhaps the most troubling finding from our research was the lack of institutional compassion. We found several accounts on social media of students trying to create payment plans to settle institutional debt so that they could re-enroll or at the very least, secure a transcript or evidence of a degree. However, some institutions took an ‘all or nothing’ stance and were unwilling to work with students to identify a solution.
Fortunately, most of the students we interviewed were enrolled in a college debt relief program and they credited these programs for their progress towards a college degree. Those programs are designed to help students move past the gridlock of stranded credits create while they settle their institutional debt.
Higher education needs more debt relief programs like that in order to begin to break the gridlock of stranded credits. These programs should include support for re-enrollment, or releasing transcripts and degrees so that students can transfer, apply for scholarships, and prove their qualifications for jobs. What else can institutions and policymakers do?
- Review current response protocols for students with unpaid balances, and consider how to be more flexible and compassionate in helping students resolve stranded credits.
- Think about the limits of debt relief programs for the neediest students and consider forgiving the debt.
- Expand orientation events and curriculum to include more education about financial aid, institutional debt, and resources for students who encounter financial hardship.
- Include more training and resources for student advisors about financial aid and the options students have when they are unable to pay.
- Improve communication and coordination between financial aid, the registrar, and student support services in order to identify and support students who may be at-risk for financial instability.
- Address systemic underfunding of institutions that advance equity by serving the neediest students. The focus should be on creating capacity for institutions to be more flexible and supportive in how they help students address their debts, including offering debt relief programs and student-tailored payment plans.
- Implement restrictions on how institutions treat institutional debt, providing protections for transcript and degree release.
- Consider and guard against the unintended consequences of such bans to ensure students are not negatively impacted in another way.
We need to rethink the way we treat institutional debt, so that we aren’t locking learners out of the very opportunities they need in order to earn more and pay off those debts. Most important, we shouldn’t be locking people out of the opportunities they need in order to build a more stable life.
Sosanya Jones is an associate professor at Howard University and co-author of “Stranded Credits: A Matter of Equity.”