Universities hold students' transcripts hostage over debt

American universities -- whose grads often owe six-figure debts that can't be discharged in bankruptcy, and that can even be charged against their Social Security checks -- are increasingly engaging in the (legal) tactic of refusing to provide transcripts to grad schools or employers as a means of extorting payment out of students who get behind. A good summary of what this means comes from NYU's Andrew Ross, a prof who helped start Occupy Student Debt: "It's worse than indentured servitude. With indentured servitude, you had to pay in order to work, but then at least you got to work. When universities withhold these transcripts, students who have been indentured by loans are being denied even the ability to work or to finish their education so they can repay their indenture." Dave Lindorff writes in the LA Times:

It's no accident that colleges are using the withholding of official transcripts to punish students behind in their loan payments. It turns out the federal government encourages the practice. Schools are not required by law to withhold transcripts, but a spokeswoman at the Department of Education confirmed that the department "encourages" them to use the draconian tactic, saying that the policy "has resulted in numerous loan repayments."

It is a strange position for colleges to take, however, since the schools themselves are not owed any money. Student loan funds come from private banks or the federal government. For federal Perkins loans, schools get a pool of federal money to apply to students' financial aid, and if students don't pay, that pool gets smaller. But the creditor is still the government, not the college. And in the case of so-called Stafford loans, schools are not on the hook in any way; they are simply acting as collection agencies, and in fact may get paid for their efforts at collection.

In Southern California, USC's website makes it clear that unmet loan obligations can prevent students from getting transcripts. As for the University of California, Kate Jeffery, director of student financial support for the system, says transcripts are withheld in the case of delinquent Perkins loans. She concedes it's a difficult issue but says that "it's the only tool we have to make them pay."

Holding transcripts hostage (via /.)

• [lknope]

  “it’s the only tool we have to make them pay.”

  You could bust some kneecaps to get people to pay as well, but that doesn’t make it right.

  • [Donald Petersen]

    Anyone got a better solution?  I’m not really qualified to opine, since my own college education (such as it was) was paid for in cash at the top of every semester by my Pizza Hut paycheck… but then I attended a cheap-ass community college in the very late 1980s, where classes were $5 per unit (up to a maximum of $50, after which additional units were free), and books and parking passes added up to the mid to high three figures every semester.  But then, that’s what I could afford.  I got accepted into USC’s film school, but even back then I doubted my ability to pay for it in the long or short run, so I just didn’t go.  Regretted that ever since.  Wasn’t until much later that I realized that nobody I rub elbows with pays cash for college, just like none of them buy homes or new cars with briefcases full of Benjamins.  Incurring student debt, in hindsight, would have been kind of the opposite of irresponsible.  I’m a dope, it is true, but I also had a profoundly craptastic “guidance counselor.”

    But still, the larger issue is the double-headed demon of Shitty Job Market and Insanely Overpriced Tuition.  And when you have this situation:
    

    For federal Perkins loans, schools get a pool of federal money to apply to students’ financial aid, and if students don’t pay, that pool gets smaller.

    …what’s the fair approach?  A graduate who falls behind in payment is shrinking the pool of available money for new incoming students, and the graduate is already in possession of his or her valuable education.  One can’t get blood from a turnip, it’s true, but since there are already so many limitations placed upon collection of delinquent student debt, what else can a school do?  Refuse financial aid to new students, who might conceivably be potentially (though certainly not necessarily) more likely to pay their own debt later on than some delinquent grads?

    I knew someone who died prematurely at the age of 38, still owing tens of thousands on his college loans to UC and Columbia, and he expired twenty years ago.  His heirs weren’t hit with the debt; it just went away.  I have no idea how rare or common that arrangement is today.  I do know that higher education is expensive as hell, and that a whole lot of people wouldn’t be able to go to college if easy-term loans weren’t available.  And I know that if too many people default on those loans, nobody will make those terms very easy anymore.  At least, the for-profit banking sector won’t.

    If I were Autocrat-For-Life, I’d fund all higher education through exhorbitant taxation (or at least fund my college loan system that way), so the kids don’t get financially destroyed at the very start of their adult lives, but short of that I don’t see a viable way out.  The private market would dictate that these kids began their pricey educations under no guarantee that there would be any high-paying jobs waiting for them at the far side, much like the market dictated that when I bought my house in early 2006 there was no guarantee that that house would still be worth what I paid for it in the next few years to come.  But I bought a mortgage I could afford at the time, managed to stay employed, and have so far managed to avoid foreclosure though many of my immediate neighbors have not.

    The thing is, I’m a long-employed 42-year-old grownup who dislikes debt, hasn’t ever financed a new car, and won’t even carry a revolving charge balance.  I can (just barely) take the financial hit that my unfortunate bet on the 2006 housing market has given me.  Nobody can reasonably expect new college graduates to take that kind of hit.

    So: what do y’all recommend?

    • [Robert]

      To reduce debt? Lower the cost of education to rational levels, and forgive a commensurate portion of the debt as having been irrationally charged. Accept that part of the government’s job — and hence part of the social contract of its citizens — is to improve the nation by educating its citizenry.

      • [Donald Petersen]

        Accept that part of the government’s job — and hence part of the social contract of its citizens — is to improve the nation by educating its citizenry.

        That sounds great to me.  Now let’s get that passed as a constitutional amendment.  Or even as a nonbinding resolution.

      • [Gunker]

        Isn’t the problem that with the government in the business of student loans, there is a lot more money around. Supply and demand, and when there is demand waving dollar bills, the cost goes up.

    • [bobarctor]

       The reason higher education is so expensive is *because* of the easy terms. If the money wasn’t available, the schools couldn’t charge it. 

      Recommend: make the bankers eat their bad loans, so that the bankers of the next civilization can take their lesson from ours.

• [Just_Ok]

  Start charging potential employers a fee to see your transcript.

• [jdk998]

  Simply criminal. 

• [ChicagoD]

  Note to self: have transcripts sent before I stop paying on student loans.

• [Kirby_G]

  But if I make a logo for a company, they need to pay me before I give them the work.

  The argument is often made “But we need that branding to start the company and go out and make money so we can pay you!”.

  It just doesn’t work that way.

  • [amuseamuse]

     Do you charge 200k per logo?

    • [Kirby_G]

       I’m not sure what the amount of the transaction has to do with the obligation to pay it or not, but….

      I don’t, but others do (What do you think a Coke rebranding costs?) and I’ll bet Coke doesn’t ask them to to do work on spec and then wait to see if the project works out before they get paid.

      Seriously, what does the amount have to do with anything?

• [relawson]

  holding transcripts… that they probably need to show to get a job… to pay off the loan

  YEP! Sounds like typical university logic to me!

• [JProffitt71]

  Anyone else starting to feel drained and beaten down by everything that is going wrong with this society? I mean it’s just too much coming from every direction and the (public) consensus seems to be being glad it’s not you and carrying on. I feel like I’ve been reduced to a combination of pure hatred and numbness by a handful of horrible people, and that is what my life shall always be, inconsequential to these people and their shenanigans.

  This is kind of a general response to all the crap of late.

  • [EvilTerran]

    Everything is unsatisfactory. There has always been, and will always be, an unending dirge of cruelty, idiocy, and disaster in the world. Particularly in these days of instant global communication, when a real horrorshow is but a click away.

    It wasn’t so much of a problem when we rarely had to think beyond our tribe and our valley.

    • [Donald Petersen]

      That’s true.  Plus, we only had a decade or two to worry about anything at all before being (often violently) put beyond the cares of mortal life.

• [tedrock]

  Seems like a pretty straight forward policy  to me and totally in line with how loans are meant to work… And since loan scofflaws are allowed to keep their brains and the knowledge they have accumulated while in school, it would seem this loan system is more benevolent than loans for things like cars and houses.

  • [tedrock]

    And this argument is just hog wash….”It’s worse than indentured servitude. With indentured servitude, you had to pay in order to work, but then at least you got to work. When universities withhold these transcripts, students who have been indentured by loans are being denied even the ability to work or to finish their education so they can repay their indenture.” 

    In indentured servitude you get nothing before you pay for work. In the American University System you get something called KNOWLEDGE and even better, EXPERIENCE. 

    There is absolutely no way four to six years at a university is worse than indentured servitude… 

    • [ChicagoD]

      My main issue here is that the schools are acting on behalf of a third party that has its own remedies. If you owe the school money (what we used to call being “encumbered”) this is reasonable. But holding the transcript because a third party *says* you owe them money is too attenuated. The third party ought to pursue you on their own.

      • [LinkMan]

        The article says that when alumni fall behind on Perkins loans, the government reduces the amount of funds available to their alma mater for future Perkins loans.  So while it’s technically third party money, the school has a definite interest in seeing that Perkins loans are repaid (and alumni IMO have an ethical obligation to pay it forward and not ruin it for everyone). 

        In the article, they imply that the UC system only withholds transcripts for Perkins loans (although it sounds like USC is a bit more aggressive in employing the practice).

        • [ChicagoD]

          The moral obligation to pay loans is not at issue. We are talking about people who, for one reason or another, are in legal default. Presumably they do not have the means to make loan payments.

        • [Antinous / Moderator]

          Even death is no escape. http://articles.businessinsider.com/2012-04-25/news/31396579_1_student-loan-debt-keybank-credit-card-companies

        • [LinkMan]

          @ChicagoD:disqus   You don’t have to start making payments on a Perkins loan until 9 months after you’re no longer in any kind of school at least half time.  And if you’re truly unable to find any work you can still ask for a longer deferral or forbearance without triggering a default.   Is nine months long enough?  Maybe not.  Are the rules for getting deferrals too strict?  Perhaps (I don’t know enough about the subject to say).  But at some point there has to be some sort of consequence for default, otherwise the whole system falls apart.

          Like @boingboing-096f32c997988c54d6d7c09ff0be4d32:disqus  said above, what alternative would you propose?

        • [ChicagoD]

          @LinkMan:disqus  I think I have stated my solution repeatedly. Go to court. Go after their credit rating. Do the things that the law already says you can do. This is not a mystery. We have had law courts in this country since July 4, 1776. They have enforced loan obligations since pretty much that time.

          Make no mistake: I am well aware of the relative ease with which student loans can be modified, foreborn (?), and otherwise managed. Rest assured, your mortgage lender will not give you the options your student loan provider does. That being said, strong arming institutions not actually in privity to your loan contract is a ridiculous abuse of power.

      • [tedrock]

        I understand this argument, however, the logic of this argument would necessitate a mechanism where the banks would gain possession of the transcripts. That is hardly a remedy and I fear it would make things much worse

        • [ChicagoD]

          Yeah. You know that banks can sue people who are in default, right? The transcript is irrelevant. They can sue, win, and pursue your assets. You cannot discharge the debt through bankruptcy. This just saves them from having to bother, which is complete B.S., since that’s the contract the signed when you got the loan.

        • [BBNinja]

          If you declare bankruptcy a lot of banks will forgive the loan or will agree to decrease the debt substantially just to get something.  It all depends.

        • [ChicagoD]

          @BBNinja:disqus  Of course, since student loans cannot be discharged through bankruptcy, this would be at the bank’s option. Which they could have exercised prior to the bankruptcy . . .

          No. The loan providers ought to be forced to proceed under the law the same way other lenders are. This messes up all the incentives.

      • [BBNinja]

        Well, yeah Student Loans are totally different but regular loans and bills I mean, you can usually negotiate to nothing due or significant decrease with a repayment plan.

  • [Joshua Ochs]

    For the TLDR crowd: You take a loan, you repay a loan. Can’t? You deal with the consequences of repayment.

    Apparently I’m turning conservative here in that I see some responsibility being called for. You got the benefit from it – the education. They can’t take that back, as they could with a physical possession. The only leverage they have (only!) is to take back the credentials they granted, and even then you have the diploma, the statement on the resumé, etc. The only thing left is the transcript proving that what you said is true, so they withhold that.

    These are some of the most generous loans in existence – extremely low interest rates, long payment terms, and people still aren’t repaying them. If your beef is with “six figure loans”, then look to the cost of higher education in general, not the loan. Fix the root cause, but as social-minded as I am, I don’t see giving out $100K for free with no expectation of repayment as a good model for society.

    • [ChicagoD]

      “You take a loan, you repay a loan. Can’t? You deal with the consequences of repayment.”

      My rejoinder: you make a loan, you take your chances with the party you made the loan to and enforcement mechanisms available at law. Can’t? Don’t make the loan. However, don’t strong arm a third party into doing your dirty work.

    • [Antinous / Moderator]

      I don’t see giving out $100K for free with no expectation of repayment as a good model for society.

      Funny, because many countries do provide for higher education at a reasonable cost.

      as social-minded as I am

      We must be using different dictionaries.

      Just as a matter of interest, did you take out loans or did your parents pay the whole thing?

      • [Joshua Ochs]

        I took out loans for the whole amount, and paid them in full. At what I recall as being sub-3% interest rates.

        Meanwhile, it’s interesting that you’re “social minded” but don’t mind draining these programs of the funds they need to make future loans, and support people not repaying loans, which then makes lenders less likely to make them. We had a housing lending crisis (which is far more than I want to rehash here), and as a result lending tightened up to an extreme. Before we had lots of bad loans, now we have lots of good, hardworking, solvent people who can’t get home loans, who can’t refinance, and are being punished – by extension – for the bad times that went before them. If we see a similar rollback and tightening here, it’s going to be cold comfort to the next generation of students that it wasn’t their fault they can’t get the loans they need for school.

        In short – pay your loans. You agreed to it to reach your dream, and if you don’t you’re ruining someone else’s dream. Simple enough for you?

      • [Joshua Ochs]

        I took out loans for the whole amount, and paid them in full. At what I recall as being sub-3% interest rates.

        Meanwhile, it’s interesting that you’re “social minded” but don’t mind draining these programs of the funds they need to make future loans, and support people not repaying loans, which then makes lenders less likely to make them. We had a housing lending crisis (which is far more than I want to rehash here), and as a result lending tightened up to an extreme. Before we had lots of bad loans, now we have lots of good, hardworking, solvent people who can’t get home loans, who can’t refinance, and are being punished – by extension – for the bad times that went before them. If we see a similar rollback and tightening here, it’s going to be cold comfort to the next generation of students that it wasn’t their fault they can’t get the loans they need for school.

        In short – pay your loans. You agreed to it to reach your dream, and if you don’t you’re ruining someone else’s dream. Simple enough for you?

        • [Antinous / Moderator]

          In short – pay your loans. You agreed to it to reach your dream, and if you don’t you’re ruining someone else’s dream. Simple enough for you?

          You’ve completely failed to address the fact that people can’t get work and don’t have enough money to live, that they get sick and are permanently ruined financially. So, yes, absolutely simple, but not in the sense that you meant it.

    • [Steve Pan]

       Woah woah woah, a compsci nerd who has trouble with empathy? Astounding.

      • [Joshua Ochs]

        Whoa whoa whoa, an internet commenter who resorts to ad hominems? Astounding.

    • [novium]

      Hahahahah. Low interest rates? Generous? You know, the whole repayment plan thing only works as far as the lender wants it to work. I’ve got a friend who tried to work with the loan companies for two years before they up and said, “nevermind. We’re calling in the whole loan now. What? You can’t pay? Well, that’s a 30% (of loan total) default fee, and a 25% collections fee, and while we’re at it, we’re going to bump the interest rate up to 35%.”

      Add to that the fact that the extreme tuition inflation is in large part due to the fact that lenders carry no risk with student loans, and thus the supply of available money was increased which lead to skyrocketing tuition…

      • [Joshua Ochs]

        Mine (for the full $100K) were sub-3%, and that’s when mortgage rates and such were still in the 7-9% range. So yes, I saw that as a generous interest rate.

    • [David Witt]

      Try some research before you get on your high horse – student loans are the only debt that cannot be discharged by bankruptcy and the servicers have the power to garnish wages, so your argument is imaginary. 

      TL;DR – You don’t know what you’re talking about.

      • [Joshua Ochs]

        So remove the bankruptcy restriction (whenever you see “the only thing that can’t” it’s usually a bad sign – see HMO’s being the only entity immune to lawsuits). And if you have wages and are not paying your debt (the debt that presumably allowed you to get the job and wages) then yes, take some of that and pay it.

        TL;DR – if there are no consequences whatsoever for non-repayment, then there’s no reason for anyone to repay. So what’s your solution? Or is it simply “you don’t know what you’re talking about”.

    • [Sagodjur]

      We want you to run a mile in 5 minutes. If you fail to do so, we’re gonna cut off your feet. And then we’re still expecting you to run that 5 minute mile. And when you fail again, we’re just gonna keep cutting off another chunk of your legs.

      Sure, other people can just say that they can’t run anymore and get to quit running once they declare bankruptcy, but that isn’t an option here with this kind of loan.

      But don’t worry, we won’t cut off any more of your legs once you’re dead.

      • [Donald Petersen]

        Seriously?  If the school withholds your transcript you might as well be bankrupt, legless, or dead?

        Even if the career you want requires a transcript, isn’t it remotely possible that communicating with the loan servicer and telling them that all those job interviews you’ve got lined up will require access to your transcript (and not just your diploma, resume, and a handful of good references) might let them know you’re serious about paying back your debt?

        It seems to undereducated me that if you’re somewhat recently graduated, staring down a mountain of debt, and completely unable to gain sufficient employment to begin reducing your debt a bit along with buying food and shelter, then lack of access to your transcripts may not be the worst thing that could happen to you.  Unless you want to hide out in grad school until the outlook improves, and I can understand why lenders might take a dim view of that.

        Shit, now I just sound bitter because nobody lent me five or six figures to send me to college.

        • [Sagodjur]

           If a school withholds a transcript that you need to get a particular job that demands it, then yes, they are further hurting your chances of paying off your student loan debt.

          The legless part was a metaphor for being unable to get out from under your debt since it will balloon with penalties if you default.

          You apparently haven’t dealt with bureaucratic agencies much if you think you can reason with official policies for which the low-ranking person you get to talk to will be unable to make exceptions.

          If you can’t get the transcript to get a job in your field or a related one that pays enough to keep up on your loan payments loans and you’re relegated to working jobs outside of your area of expertise which may not require a transcript, then it is a very bad thing because not being able to get a good paying job completely negates the purpose of having gotten the degree (and the debt) in the first place.

  • [Marc Mielke]

    How the hell are they supposed to pay off the loans if they can’t get a job?

• [Aaron Klenke]

  It would be more clear to pass the transcripts to the loan holder (the banks) and let them deal with the students non-payment and I don’t see a problem that.

  “Do you want the thing you promised to pay for?  Pay for it.”

  • [Just_Ok]

    You want me to pay for it? Allow me to do what I was learning to do so that I could pay you.

    • [tedrock]

      No one is stopping you from doing the thing you were learning. You just can’t have your transcript. A transcript is not a resume. A transcript is not an interview. Having a transcript does not get you a job.

      • [Just_Ok]

        True, having a transcript does not get you a job, but not having a transcript might mean you cannot get a job in whatever it was that you were training/learning for.
        We’re only stopping you from exhaling, breathe in all you want. 

      • [Sagodjur]

         Apparently you’ve simply not applied for jobs that require official transcripts. They do exist. Try applying for a teaching job without providing a transcript that shows you’re qualified to teach in that subject.

• [ocatagon]

  Big deal. My transcript was held for a parking ticket. 

• [Joshua Ochs]

  I have deep sympathy for cases where people suffer through no fault of their own. Discrimination. Layoffs. Bad economy. Plain-and-simple poor. But my sympathy runs into a hard wall when you have control over your destiny and don’t manage it. Into that camp falls credit card debt (most cases), self-inflicted health woes (non-genetic obesity and diabetes looming large there), and just poor choices.

  This one falls in a gray area. Some people have just managed their finances poorly and I have little sympathy. Others graduated and found themselves in the worst job market in decades – those I have sympathy for. Even so, there must be consequences for an action – you don’t just get $100K for free and a kiss on the cheek. If that means you can’t get a transcript and have to explain the situation to an employer, so be it.

  Before you disagree (because I know this is unpopular), what do you propose as an alternative to ensure people repay the loan? I’m certainly open to suggestions.

  • [ChicagoD]

    The banks and Feds could sue people, as is provided under the law.

    See, what this does is dramatically lowers the incentive to work with borrowers in bad straights. You essentially place a lien on their educational history and wait for them to need it so badly that they prioritize payment to you over all others. That is not the deal either the borrowers or lenders signed on for. It is pure thuggishness.

  • [Antinous / Moderator]

    I have little sympathy.

    You could have reduced all of your comments to just this, because it’s the only valid point that you’ve made. You can’t empathize with anyone who doesn’t live your privileged life.

    • [Donald Petersen]

      I disagree; that’s not at all the only valid point he’s made.  Of course, I say that because he’s made many of the same points I made earlier, and who knows, my own points might be invalid as well.  Could be my only argumentative advantage is that I said outright that I paid for every cent of my own higher education with a $4.35/hr pizza-delivering job, and I mentioned that I think we should have state-funded education.  I hate to think that my opinion weighs more simply because I didn’t take on a student debt that I didn’t think I could afford, especially since age and experience have led me to consider that choice the biggest mistake of my life.

      But as long as private enterprise is funding college loans, how should their investment be protected to ensure that funding continues for future students, at the low rates and forgiving terms that current students enjoy?  I never believed in Reagan’s welfare queen, nor do I believe that most delinquent graduates are late on their payments simply because they’re too lazy or irresponsible or entitled to stay up-to-date.  But is it remotely feasible (let alone The Right Thing To Do) to simply forgive all delinquent student debt?  Or to allow the pools of aid for future students to dry up because past students have drained them dry without penalty?

      I’m waiting to hear a really clever solution that doesn’t completely convert our entire higher education system to a state-funded system, since (alas and alack!) that won’t happen in the foreseeable future.

      • [Antinous / Moderator]

        I’m waiting to hear a really clever solution

        We have an entire body of law devoted to debt. The issue here is that these loans exist in a twilight zone outside that law, wherein if you have absolutely no way to pay your debt, it can’t be discharged through bankruptcy or death.

        • [Donald Petersen]

          Now, now.  Brief Googling reveals that FSA loans are discharged upon death, as are loans through Sallie Mae (“the nation’s largest education lender”) and Wells Fargo, though these developments are pretty recent (2010).

          Still, that’s not much of any consolation.  I get the impression that the banks (or the schools) are resorting to these measures because more people than ever are defaulting (or becoming delinquent), and maybe they figure that this will at least prevent the merely forgetful and negligent from allowing themselves to get too delinquent, though as I alluded before in regard to blood and turnips, this will benefit nobody in cases where the graduates simply can’t pay anytime soon.

          I wonder if withholding transcripts is better or worse than garnishing wages or destroying one’s credit.  I honestly couldn’t say which would be a more effective recourse.

          All this has put me in the uncomfortable position of arguing on behalf of usurers and banks.  I’m gonna stop before I need a second shower.

        • [Joshua Ochs]

          Well, fine – THAT is a valid issue to discuss. But that’s not the thrust of what’s been debated down here in hundreds of comments. Everyone is focusing on the transcript issue, which is far less important.

          He was convicted of murder, arson, rape, armed robbery, and jaywalking. Hey, let’s all talk about the jaywalking!

      • [penguinchris]

        Witholding transcripts is better than garnishing wages or destroying one’s credit. Few job applications ask for transcripts, though I imagine it’s probably a thing in top-tier tech firms, and I do see it as something that more and more job applications will ask for once they realize they can (unfortunately).

        But I can see it potentially ruining someone’s hopes and dreams – if someone wants to go to grad school instead of getting a regular job, they won’t be able to without transcripts. Assuming this person could find a job in their field they could go back to school a couple years later, but most people in that situation don’t end up going back.

        I went to grad school already, and haven’t been able to find any job (much less one in my field) for the past two years. My plan at the moment is to go back to grad school for a PhD, but that won’t be until next year (Fall 2013) due to unfortunate timing on my part.

        I don’t have student loans to pay off. If I did, and if my transcripts were withheld as a result of me not being able to pay since I can’t find a job, I’d be well and truly fucked.

        I don’t know what the solution is here either, but it isn’t this. Well, that’s wrong – the solution is a mostly-state-funded system, as you say. But if we can’t even seriously suggest state-funded health care in this country, there’s no way we’ll ever get state-funded higher education.

        • [Donald Petersen]

          Very well said, Chris, but I have this quibble:

          But I can see it potentially ruining someone’s hopes and dreams – if someone wants to go to grad school instead of getting a regular job, they won’t be able to without transcripts.

          What percentage of people for whom grad school is a hope and dream put it off until several years after obtaining their baccalaureate degree, to the point where they’ve defaulted or become delinquent on their student loans?  It seems the thing to do is to get into grad school before the mandatory payments kick in.  Still, one can’t control all one’s circumstances, and it sucks hard when young people get saddled with such crippling debt before they’ve had a good chance to make dollar one in their chosen field.

          I’d happily double my own tax burden if the nation could get state-funded healthcare and education.  It saddens me that that attitude makes me part of a tiny and weird minority in the U.S.

    • [Joshua Ochs]

      My life is privileged, but it’s not like you’ve suggested a solution. Meanwhile, I paid off my $100K of loans, how about you?

  • [AlexG55]

    I suggest something like the system we have in Britain: Loan repayments are administered through the tax system, and they automatically take a percentage of your salary over a certain amount until your loans are paid off- though you can choose to pay more. Any debt you still have 25 years after you graduate is written off.

• [BBNinja]

  It seems like a no-brainer that these colleges would want to provide their students transcripts for potential employers because DUH! HELLO MCFLY! Job = Money.

• [bestaimee]

  Students get a 6 month grace period after they graduate when they aren’t require to repay anything, and can still get transcripts, in order to get a job.  Even so, the feds typically don’t report these cases at the university level until they are delinquent a sum total of 10 months or more.  If, after 6 months, you still don’t have the means to start paying you just call them and they will work with you.  If you provide documents for your living expenses and they see you don’t have the means to repay, your allowable monthly repayment amount can be zero dollars, yet you’re still in compliance b/c you contacted them; they’ll review your situation again in 3 to 6 months.  This also works if you’ve selected  a repayment plan but due to a change in finances you can no longer pay the amount you had formerly agreed upon.
  The student referenced in the story who went into default can be “rehabilitated” if he/she agrees to pay monthly, an agreed upon amount,  for 6 months consecutively.  They are then able to get a TRN and even take out more loans, if they haven’t reached the aggregate limit.
  I do not agree with how much debt students get into, I do think banking agencies are working towards all of us being in debt to our eyeballs our entire earning lives, but having worked in financial aid for a decade now (at a university) I have to call this out as being very biased, and quite frankly, just not true. 

  • [ChicagoD]

    No doubt that a person in this situation almost always should have reached out to the lenders and done something different. However, I can’t see how that makes it “just not true” that universities that are not owed money are acting as enforcement agents against their alumni for lenders that are owed money.

• [Daemonworks]

  Yet another reason I’m happy that I’m Canadian.

• [zartan74]

  Counterpoint to all the hand-wringing here:  Official transcripts aren’t needed to get jobs!!!

  Official transcripts are used for one thing: applying to other schools.  Seems to me like this is a reasonable way to prevent a student from running up MORE student debt than is already owed to the school withholding the transcript.  

  Having never been asked for one, nor heard of someone being asked for one, I can’t imagine this is much of an impediment to employment.  99.99% of employers will accept your word for your credentials, or the copy of the transcript you already have, and not require you to actually order a certified copy from the registrar of your school.  

  • [Steve Pan]

    Some federal government positions expect official transcripts if you move on to the next step during the hiring process. I know this because I’ve applied for a few positions.

    • [zartan74]

      Ok, maybe some government jobs require official transcripts, I can see that.  Still, though, almost none in the private sector do.

      • [Steve Pan]

         Keep on moving the goalposts, man. The feds are the largest employer in the US. Transcripts can mean the difference between a GS-5 or GS-7, which translates into a more money/better shot at getting the job.

      • [Sagodjur]

        Educational institutions, whether public or private, will require transcripts for teaching positions in my experience.

      • [Jer_00]

         Every single job I’ve had has required me to have a transcript sent to them by the schools I claimed to have degrees from on my resume.

        Every. Single. Job.  Public sector and private sector.  I’ve had a lot of jobs in the last 20 years since I graduated with my undergrad degree.

        My first job right out of college was an insurance company that recruited me from my college.  My manager knew that I attended that college.  Didn’t matter – HR required an official transcript from the college to put in my file to show that I really did graduate with a BS from there.  They were (and are) one of the largest employers in Columbus Ohio.

        Just because your limited experience in the workforce hasn’t had you run up against this particular hurdle yet, you shouldn’t assume that it isn’t actually a hurdle.

  • [ChicagoD]

    That is absolutely not accurate. It is not the uncommon for first jobs to want a transcript. You have no other credential for follow-up. I have accepted the “unofficial” version that students sometimes get, but you absolutely will prove that you have the degrees you claim and are licensed, as required.

    Not every profession or job requires this, but saying that none do is wrong.

    • [zartan74]

      So you’re agreeing that the transcript issued to students upon graduation is typically sufficient, right?  Therefore this policy is unlikely to matter to the vast majority of job-seeking graduates.

      I’m sure there are exceptions, but they’re probably few and far between.

      Again, though, you are ignoring the key point, which is that ALL higher education institutions require official transcripts, so this prevents heavily-indebted students from racking up MORE debt.  The policy is probably doing many people a favor – they are prevented from wasting even MORE money on higher education they can’t afford, but they are able to apply for the vast majority of jobs since jobs almost never require officially-sealed transcripts.  Sounds like good policy to me.

      • [ChicagoD]

        If they are not qualified or do not qualify for loans, don’t admit them, or don’t give them loans. Don’t use the registrar’s office at an institution that has been paid in full as the gatekeeper. Even if, in fact, it does some people “favors” that is not how the system was set up.

        And I said that *I* have accepted some unofficial transcripts, not that they are typically accepted. We also require a degree beyond the Bachelor’s and a license, and don’t accept unofficial versions of those.

• [William C Bonner]

  Has something recently changed in this situation?

  20 years ago when I graduated college, I couldn’t get my transcript sent out unless all of the bills to the university were up to date. 

  The university itself wasn’t in charge of my loans, so that wasn’t an issue in itself.

  • [ChicagoD]

    That is the change. I had to pay a $3 parking ticket and find a library book to get my diploma. The difference here is that the school is not owed a penny. A bank is.

• [stegodon]

  This is very topical for me right now. I graduated from the University of Iowa (well, a couple times, but, finally) in 2005. I left with a “UBill” of +/- $400 from the University Bookstore. I received a bill in the mail stating as much and paid the amount in full. Done deal, or so I thought. Two months ago, in the process of applying for a new job, I was asked to provide a copy of my transcripts. I submitted the form online to the university and received a letter two weeks later stating that I owed $300 for some unspecified charges and that my transcripts could not be released. After arguing the point with the registrar’s office I eventually conceded and ponied up the dough (I kept my check number, the name of the person that processed my request, the date and time of our conversation, etc). I got my transcripts after a couple more weeks. The position I had applied for, of course, was filled in the meantime. Last week I got a bill in the mail from UI with a POSITIVE balance of $300. I paid a bill that didn’t exist, just like I’d thought. I’ve called and related this information and I’ve been told that I erroneously sent the check (even with all the information I kept regarding the transaction) to which I responded, “Then why did you cash it?” Anyway, I’m still waiting for my check.  I find it hard to believe that this kind of incompetence could exist in the private sector. /rant

  • [Donald Petersen]

    I find it hard to believe that this kind of incompetence could exist in the private sector.

    Oh, it does.  Any bureaucracy, public or private, can engage in similar shenanigans.  I’ve gone through similar things with AT&T and Verizon (as a customer) and Time Warner (as an employee).

    Government has no monopoly on incompetence.

• [Jim Davison]

  If this were a car, no one would balk at a the car being repossessed. But you can’t repossess a service already rendered as with education. Yes, the college is not the one owed money, but all colleges have a vested interest in loans getting repaid even if the money is not owed to them directly because a healthy, functional student loan system with a decent rate of repayment is essential to their being able to offer their services to all students. If loans aren’t repaid at a high enough rate, they become more expensive, or scarcer, or both, meaning access to Higher Ed for everyone gets more limited and the economies of scale that make our research institutions possible start to deteriorate.

  As such, I don’t see that colleges’ “complicity” with the debt collection process is particularly egregious at all. As long as the debt collectors are reasonable in allowing transcripts to be released when required to get a job, i.e., that which is necessary to repay the loan (and my anecdotal  experience with students who have been in this situation has shown that they are reasonable in this way) then I’m not sure I see the problem.

  • [Sagodjur]

     If the institutions have a vested interest in the welfare of their students, whether prospective, current, or graduated, and were interested in mitigating this situation, they’d lower tuition so student loan amounts weren’t so high. 

    • [themoreyouknow]

      Tuition is still FAR BELOW the actual cost of attendance for students. Through donations from organizations and alumni, they try to keep it as low as possible. Many colleges and universities hold an event (usually in the late winter/spring) signifying that if student dollars alone were used to run the institution, they would run out by that point. Now we can argue if the money is being used in the best way (i.e. student activities, top ranking professors, etc) but that’s for another forum.

• [BombBlastLightingWaltz]

  Got to love the Fiat leanding/borrowing by your US government, who could print their own money. For whatever reason, and its 100 year old reason, continues to borrow from the Federal Reserve and continues to erode the American way of life. Former President Jefferson knew this.  

  God bless America.

• [Jonathan]

  Don’t want to pay the loan? Don’t sign. Go to an inexpensive community college. Learn online. Go to a less-expensive trade school. Take a lower-level job, internship, or apprenticeship that offers you a glimmer of a chance of upward mobility. Travel cheaply. Gain life experience. Volunteer.

  If student loans could be discharged through bankruptcy, students would be highly incentivized to declare bankruptcy as soon as they had their diplomas in hand! Banks/govts wouldn’t grant student loans as easily, interest rates would skyrocket, and the situation would be much, much worse than it is now.

  Socializing higher education is an option. However, it may mean that the overall quality of higher education would suffer. Interesting that the most prestigious university in America was also America’s very first corporation.

  My only complaint is that most people are targeted for student loans juuuuuust as they cross over into technical adulthood. Then, as soon as they move into the dorms, the credit card companies are standing in the stairwells.

  Irony is (and I say this somewhat facetiously as I know there are countless serious students) that the Bachelor’s in Bong Building that many universities offer isn’t a real education, but being compelled to repay a debt over many years is.

  A one-semester Debt Awareness class in sophomore year of high school might be the start of a solution.

  • [Steve Pan]

     newsflash: when you went to college (and you probably did if you’re posting here the state paid 70% of everyone’s bill). For me, they picked up only 10% of the tab. Socialism seems to be fantastic as long as you’re the one to enjoy it.

    • [Jonathan]

      I didn’t go to college. It’s a reasonable assumption to make about someone posting here, but not accurate in this case.

  • [Sagodjur]

    Maybe you’re not aware of who attends community colleges, but its often poor people for whom the cost in not relatively inexpensive. It’s just relatively inexpensive for middle class people who didn’t have to worry about going to community college or who did so back when it was a couple hundred a term instead of $1500 a term.

• [Severian12]

  Let’s see if I have this right.

  A fractional reserve bank, which is given power by the state to print money out of thin air based on existing reserves, is telling state institutions to withhold transcripts from citizens for loans that the banks may have had no business making in the first if so many people are in dire straits trying to pay back said loans.

  State-enforced servitude is so fucking Roman. I thought we’d progressed beyond all that. Guess not.

  • [Sagodjur]

     Greed never goes out of style.

  • [themoreyouknow]

    Students complain they don’t get enough loan money. Then they complain when they have to pay back the large amount. It’s about being responsible for the choices they made. Perhaps we should only let people who can afford college go?

• [aunthillary]

  I’m kinda flabberghasted by a lot of these comments! Any first world country should be able to provide education for its people. If the populace absolutely *have* to invididually pay for their university education, it should be affordable. If it’s more than can be reasonably expected from a *poor student*, they should have access to loans that are set up to allow them to draw a decent income before having to pay the loan.
   
  Do any of you honestly think these students all sitting around saying “Well, i *could* just pay these loans, but i’d rather spend all my money cocaine and hookers! Hooray! Transcripts be damned!” The courses shouldn’t have cost so much. They shouldn’t have had to resort to loans. The loans should not have to be paid *at all* until they get a decent paying job, after they graduate.
   
  I feel really bad that these kids were tricked into thinking they were living in a first world country, and have to suffer poverty because of it.

  • [Joshua Ochs]

    Cocaine and hookers no, but I’ve cringed at the amount of entertainment equipment and lifestyle stuff that friends buy even as they still are racking up additional debt. Sadly you can’t assume responsibility is uniform.

    Meanwhile, the cost of education is really what we should be talking about. But no, we’re discussing transcripts and who is evil for thinking loans should be paid.

• [jhertzli]

  Prior to 1998, student loans were bankruptable. The very next year a long-dormant student protest movement came back from from the dead, filling a much-needed gap in political discourse. The non-bankruptable nature of student loans is a recent and regrettable innovation. It’s not a traditional feature of capitalism.

  As for withholding transcripts, it sounds like a reasonable alternative to bankruptcy. If a car can be repossessed for non-payment, it makes sense to repossess degrees … especiallysince part of the worth of a degree is as a signal of reliability. If someone defaults on a student loan, it makes sense for the reliability signal to be revoked as his/her reliability is now in doubt.

  Meanwhile, I suspect President Romney will be able to cut off the oxygen supply of Occupy Wall Street by simply restoring pre-1998 bankruptcy law. He won’t get any credit, of course, just as Nixon didn’t get any credit for stopping the draft.

• [jhertzli]

  Prior to 1998, student loans were bankruptable. The very next year a long-dormant student protest movement came back from from the dead, filling a much-needed gap in political discourse. The non-bankruptable nature of student loans is a recent and regrettable innovation. It’s not a traditional feature of capitalism.

  As for withholding transcripts, it sounds like a reasonable alternative to bankruptcy. If a car can be repossessed for non-payment, it makes sense to repossess degrees … especiallysince part of the worth of a degree is as a signal of reliability. If someone defaults on a student loan, it makes sense for the reliability signal to be revoked as his/her reliability is now in doubt.

  Meanwhile, I suspect President Romney will be able to cut off the oxygen supply of Occupy Wall Street by simply restoring pre-1998 bankruptcy law. He won’t get any credit, of course, just as Nixon didn’t get any credit for stopping the draft.

• [blissfulight]

  I have a solution:  cancel a few Pentagon weapons programs and end one of the multiple wars we’re engaged in (Afghanistan?).  There should be enough money to significantly offset student loans for a year, and reduce college expenses for everyone.  Too simple?  

• [themoreyouknow]

  This is about being responsible. There are literally thousands of colleges. There are a vast number of majors and specializations. No one is forcing you to take out more debt than you can handle and major in something that you will not be able to find a job in or make the kind of money needed to pay back said loans. There are people clamoring that everyone needs a college education but they are unwilling to put money into education. It can’t go both ways.

• [Michael Langford]

  I think a school refusing to provide a transcript is grounds for a injury equal to cost of tuition, feeds and other attendance based costs, including loan interests. I hope some lawyers get some huge settlements to end this horrid, self-defeating practice.

  While the knowledge is valuable, the credentialing is what you paid for the school for.

• [Michael Langford]

  I think a school refusing to provide a transcript is grounds for a injury equal to cost of tuition, feeds and other attendance based costs, including loan interests. I hope some lawyers get some huge settlements to end this horrid, self-defeating practice.

  While the knowledge is valuable, the credentialing is what you paid for the school for.

  • [themoreyouknow]

    But that’s the point. The student HASN’T paid for it. Not yet. It’s like saying you should be able to walk out of a restaurant after eating a good meal without paying for it. Because you’ve got places to go and a trivial thing like owing money shouldn’t stop you from leaving. 

• [Gyrofrog]

  I know UT Austin was doing this years ago, and not just over tuition loans, but unpaid fees.

• [Rachelle S]

  Its reading things like this that make me glad to live in New Zealand :D interest free loans, average loan ends up being $15-20,000

• [BBNinja]

  I have in fact had to present transcripts before for a job.

• [zartan74]

  Was the transcript required to be sent directly from the registrar to the employer?  Or did you just show them your copy of your transcript?

• [penguinchris]

  Good point, I think most employers would be OK with a second-hand copy. What this really prevents is people going back to school.

• [Ultan]

   Many employers, particularly for state or federal jobs, require a certified copy of the transcript sent directly to them by the school’s registrar.