The purpose of this disclosure is to explain how we make money without charging you for our content.
Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.
Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.
Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.
Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.
To find out more about our editorial process and how we make money, click here.
Derek Sykes should be finishing his last year at the University of Minnesota-Twin Cities (UMN). Instead, he is starting his third year of college after having to take last year off to work to pay off thousands of dollars in unpaid tuition and fees.
The summer before what would have been his junior year, Sykes withdrew from half of the classes he had enrolled in for the summer semester due to schedule conflicts with his job. As a result, he lost his financial aid eligibility and had to retroactively pay for his remaining credits out of pocket. He didn’t even realize he owed money until just before the fall semester started when the university dropped him from his upcoming classes. He received an email that he had an outstanding balance of $5,780.
“It completely took me by surprise,” he said. “The idea of having to repay financial aid, especially a scholarship, was never presented as a possibility. It wasn’t something that was really explained to us.”
While he waited to be approved for a private loan and worked to help pay off the balance, Sykes wanted to register at a community college to continue working toward his degree. “But I would have needed a transcript (from UMN) for that,” he said. “And because it was being withheld, it didn’t happen.”
Sykes is not alone. A new report from Ithaka S+R, a non-profit organization focused on improving higher education, has estimated that as many as 6.6 million students have “stranded credits” — referring to course credits students have earned but can’t access because they have unpaid debt at their college or university. The debts don’t have to be large; nearly two-thirds of colleges say they withhold transcripts for balances of less than $25. The study found that nationally colleges and universities could have as much as $15 billion in unpaid balances.
Many of the students affected end up with significant student debt without ever earning a postsecondary credential, which puts them at a heightened risk for defaulting on their student loans.
“Transcript holds have long been on the radar of advocates and community-based organizations as a major impediment to adults seeking to return to school and complete their degrees,” Martin Kurzweil, one of the authors of the study, wrote in an email.
Like Sykes, students with outstanding balances are often unable to register for additional academic terms or get access to their transcripts to transfer to a different institution to eventually graduate. For some students, stranded credits may increase both the cost of higher education and the time it takes to earn a degree. For others, it may mean dropping out of college altogether.
Withholding transcripts is a common tactic used by institutions to pressure students to pay outstanding balances for tuition and other fees. But the authors note that “the practice creates an obstacle and a paradox for students who need the transcript to continue their education or obtain a job that will help them pay off that and other educational debt.”
The report found that adult learners, lower-income students, and students from minority backgrounds are more likely to have unpaid balances at their colleges and universities, and they are therefore more likely to have stranded credits.
More than 3.2 million of the estimated 6.6 million students with stranded credits attend community colleges, which are more likely to serve students eligible for federal Pell grants. The average individual debt for all students was less than $2,400, and it was about $630 for community college students.
Those may seem like small sums given the total cost of a college degree, but for many community college students, that $630 can be the difference between continuing their education or not.
“Even as of 2018, 40% of Americans reported that they would struggle to pay an unexpected bill of $400,” Kurzweil said. Students who attended community colleges have lower average income and are far less likely to have earned a degree than students who attended four-year colleges, Kurzweil added. Plus, many have exhausted their federal financial aid eligibility or have other educational debt, which poses a challenge when trying to pay off balances to access their transcripts.
Adults who’ve lost jobs during the pandemic and want to go back to college for further education also could be blocked by stranded credits, the authors note. Likewise, students who had to abandon their higher education plans this year because of financial hardships caused by the pandemic may find they can’t access their transcripts when they try to re-enroll in the future.
“It is reasonable to assume that more of the most vulnerable students have left school with unpaid balances and therefore have stranded credits that will make eventually continuing their education more difficult,” Kurzweil said.
The report also recommended that it might be beneficial for institutions to forgive students’ outstanding balances if they were to re-enroll. They looked at promising outcomes of debt forgiveness programs at institutions such as Wayne State University in Detroit and Milwaukee Area Technical College. In addition, states such as California and Washington have recently introduced legislation that bans the practice of withholding transcripts in an effort to address the growing student debt crisis.
“When a student returns to the same school to which they owe an unpaid balance, the amount of tuition and ancillary revenue the school receives from the student is typically far greater than the amount of the unpaid balance,” Kurzweil said. That means forgiving the debts could bring in more money for the colleges while also allowing students to continue working toward a degree.
Kurzweil suggests that students who have unpaid debts should contact their school’s registrar to find out what their options are. A growing number of institutions have debt forgiveness programs and others are willing to negotiate to settle the debt, which they would otherwise have to write off. If students want to enroll somewhere else, “ask the registrar or your advisor if they are willing to accept an unofficial transcript to give you credit for your prior coursework,” Kurzweil recommends.
As for Sykes, he was eventually able to re-enroll at UMN, but it’s come at the cost of significant time and money. He said he considered not going back, and the entire ordeal took a significant toll on his mental health. “I should have been graduating like this coming spring of 21, but now I’ll be graduating spring of 22,” he said.
There is one upside to graduating a year late, however. “There is a silver lining — maybe my senior year won’t be during a pandemic,” he said.