Stranded credits stand between millions of former students and a college degree

A new analysis shines a spotlight on “stranded credits”—academic credits former college students have earned but can’t access because they have an unpaid tuition balance at their institution. Calling stranded credits “a particularly insidious but under-studied form of educational debt,” the Ithaka S&R report estimates that 6.6 million students nationwide have earned course credits that they can’t claim because their institution is holding their transcript hostage until they settle their debt. 

University Business notes that those unpaid balances to colleges and universities may add up to some $15 billion. However, the average unpaid balance that results in stranded credits is around $2,300. In its analysis—the first systematic investigation of its kind—Ithaka S&R also found that low-income students, adult learners, and students of color are the most likely to have unpaid balances. 

Transcript holds—while long considered the most effective way for colleges to collect outstanding  balances—actually “creat[e] 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 says. 

COVID-19 intensifying need for improvement

There are currently very few formal efforts to address stranded credits, but the economic strain, unemployment, and college enrollment challenges caused by the coronavirus pandemic may change that. “The economic, health, and geographic disruption caused by the pandemic has likely led more students to interrupt their education and leave college bills unpaid,” the report says. “Yet at some point, continued postsecondary education will prove critical both to those individuals as they look for work in a looser labor market, and to policy-makers who want to equip the nation’s workforce to drive the economic recovery.” 

Ithaka S&R calls attention to several nascent efforts to address stranded credits, including laws in several states that bar institutions from withholding transcripts. 

Some colleges and universities also are trying to make headway, offering incremental debt forgiveness for stopped-out students who re-enroll or emergency microgrants for students with small balances. That strategy, the report notes, may be especially effective for community college students with stranded credits, who have an average unpaid balance of just $631.

With the help of philanthropic funding, some local financial institutions also are stepping up, offering interest- and profit-free gap loans that enable former students to pay their debts and continue their education.

The report authors intend to explore additional solutions to the problem of stranded credits. The ideal approach will “focus on streamlining robust existing transfer ecosystems, will settle debts collectively, and will enable and not hinder greater educational access and attainment,” Martin Kurzweil, co-author of the report, told University Business.

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