Stranded credits are a big problem. Can colleges rescue students?
The growth of student loan debt gets continuous attention, but a related under-studied burden is shifting into the spotlight as recent research reveals just how widespread it is and how little is being done to address it.
Roughly 6.6 million students and former students may have stranded credits from courses they completed—credits they can’t claim because of the widespread practice of withholding transcripts when a student’s account has an outstanding balance. The new analysis, from Ithaka S+R, the research and strategic guidance arm of the nonprofit ITHAKA, also estimates as much as $15 billion in unpaid balances to colleges and universities.
The first systematic investigation of the scope and impact of stranded credits, the report comes at a key time, with COVID exacerbating the problem and intensifying the need for solutions. Many individuals in need of a job must find a pathway back to higher education, and colleges and universities need steady enrollment more than ever before.
While transcript holds are viewed by many higher ed leaders as the most effective way to collect on outstanding balances, “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 notes. Many institutional policies call for a hold on even a small unpaid balance. And with COVID-related financial strain on colleges, it’s possible they will be less lenient in removing holds for students who ask about their options.
Who is most likely to have an outstanding balance and therefore have stranded credits? Adult learners, lower-income students and racial and ethnic minority students, the research found.
Search and rescue efforts
Efforts to recognize the problem and assist with stranded credits can be viewed as both a challenge and an opportunity. Few formal programs are designed to help students access these credits.
A few states outlaw transcript withholding in all or in certain circumstances, and similar legislation has been proposed in a few additional states.
Some individual higher ed institutions have developed debt forgiveness programs to encourage a return to college for completion of a degree, and the report highlights nine such efforts. Others have emergency micro-grant programs for current students with good academic standing and relatively small unpaid balances.
In addition, regional debt forgiveness programs, such as in struggling urban metro areas, have been included as part of broader attempts to increase attainment and economic growth. And finally, some local financial institutions are stepping in to help former college students pay off their institutional debt and return to school.
The next step for the research team involves returning to the stranded credits findings and developing additional solutions—those that “will focus on streamlining robust existing transfer ecosystems, will settle debts collectively, and will enable and not hinder greater educational access and attainment,” says Martin Kurzweil, director of educational transformation at Ithaka S+R and a report co-author. “Part of the work will be vetting the concepts with various stakeholders and with experts.” The team anticipates releasing a new report that details each proposed solution by early 2021.
Melissa Ezarik is senior managing editor of UB.