FOR IMMEDIATE RELEASE: December 23, 2025

CONTACT: press@protectborrowers.org

December 23, 2025 | SACRAMENTO, CA — As reported in The Los Angeles Times, a new investigation reveals that 26 California colleges and universities claim to withhold academic transcripts from students who allegedly owe debts to the schools, despite this practice being outlawed by the California legislature in 2019. Another 18 California colleges and universities include ambiguous policies that could subject students to transcript withholding for owing an institutional debt. The investigation was led by researchers at the Higher Education, Race and the Economy (HERE) Lab at UC Merced in partnership with the Student Loan Law Initiative at UC Irvine, Protect Borrowers, Student Debt Crisis Center, NextGen Policy, and Young Invincibles.

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The investigation’s findings are available here: https://protectborrowers.org/resource/memo-investigative-findings-related-to-california-colleges-continued-use-of-unlawful-transcript-withholding-practices/

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“Our investigative findings speak for themselves. Despite transcript withholding being prohibited by law for 6 years now, 26 community colleges, enrolling tens of thousands of California college students, state on their websites that students who incur institutional debts can be subjected to this harmful practice,” said UC Merced Associate Professor of Sociology Charlie Eaton. “College leaders should take action to comply with state law. And policymakers should act to protect students by improving transparency, reporting, and oversight for these and other harmful debt collection tactics used by colleges.”

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“Our investigative findings raise major questions about whether colleges and universities across California may be violating state law by continuing to implement policies that subject students to harmful transcript withholding in order to collect on institutional debts,” said Protect Borrowers Policy Director Aissa Canchola Bañez. “Even if these schools do not actually withhold transcripts and merely have outdated policies on their websites, this still has a harmful chilling effect. Students who, after consulting these websites, might understandably believe these policies are in effect and, if they cannot afford to pay, will forgo their education. These findings underscore the need for more transparency and oversight into these institutional debt collection practices, and we urge policymakers in Sacramento to do just that.”

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“Withholding students’ transcripts is detrimental to their personal, educational, and professional lives,” said NextGen Policy Executive and Policy Associate McKenna Mustazza. “Rather than allow students to complete their degree and enter the workforce, when schools withhold transcripts, they are forcing students to retake classes—incurring more debt—or to delay graduating until they have saved enough money to release their records. This is why we need California policymakers to act to increase much-needed transparency and oversight into the institutional debt crisis across our state.”

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“These are debts that students never planned to owe, but end up derailing their educations,” said Katrina Linden, Western Regional Director at Young Invincibles. “When someone withdraws partway through the year because of a sick family member, a broken-down car, or changes in childcare, their schools return their federal financial aid to the government, then charge them for the returned amount. These unforeseen debts become a debilitating financial barrier to re-enrolling and graduating.”

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“Institutional debt is a hidden layer of the student debt crisis,” said Natalia Abrams, President and Founder of the Student Debt Crisis Center. “Students already struggling under the weight of federal and private loans are now being trapped by debts owed directly to their colleges, often for small unpaid balances or financial aid adjustments beyond their control. We need urgent oversight and transparency to ensure institutional debts don’t become yet another barrier keeping students from finishing their degrees and moving forward with their lives.”

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The investigation, led by the HERE Lab at UC Merced, included a comprehensive review of schools’ stated policies on their websites. The review identifies 26 schools that explicitly state they withhold students’ academic transcripts if a student’s account has a balance. It also identifies 18 schools that state they withhold academic records, generally, which may include academic transcripts. 

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In 2019, California banned the practice of withholding transcripts with the passage of AB 1313 (Rivas), which is codified in section 1788.90 of the California Civil Code. In 2021, the U.S. Department of Education emphasized the detrimental effect of transcript withholding policies on retention and completion, stressing that this practice drives inequitable outcomes and calling on schools to re-evaluate these long-standing policies. In 2022, the federal Consumer Financial Protection Bureau determined that these practices can also be “abusive” in violation of federal consumer protection law.

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These findings underscore the importance of ongoing efforts by state policymakers to increase transparency and accountability for schools’ financial interactions with current and former students. This year, the Institutional Debt Transparency Act (AB 850, Pacheco) would require regular reporting by schools about the debts owed by their students and the tactics they use to collect. This bill was proposed in response to a groundbreaking 2022 report by the same authors of this investigation, entitled Creditor Colleges, which estimated that over a two-year period, as many as 750,000 students accrued debts owed to their schools.

 

Background

California was the first state in the country to ban the practice of transcript withholding. Transcript withholding is a common practice that recently came under new scrutiny. When students owe their schools a debt, the school will generally withhold their transcript until the debt is paid. Although research is limited, one report revealed that these so-called institutional debts—debts owed directly to schools, which may result from hidden fees or even parking tickets, in addition to tuition—total $15 billion nationwide and affect an estimated 6.6 million individuals, but that the amount owed to trigger withholding can be as little as $25 or less.

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Even without withholding transcripts, schools use a variety of practices to collect debts. These account balances may result from unknown fees, but are often due to a misalignment between schools’ withdrawal dates and federal financial aid refund deadlines that can result in students’ Pell Grants or other financial aid being recalled by the U.S. Department of Education. When schools have to return these financial aid funds, they then charge the student for the returned amount. These balances may be a few thousand dollars, for which the student should never have been responsible.

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Schools collect these debts by placing enrollment and academic holds on students’ accounts, offsetting public benefits through California’s Franchise Tax Board Interagency Intercept Collection Program, and engaging third-party debt collectors to initiate collection lawsuits.

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Further Reading

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Coverage of the investigation in The Los Angeles Times: Why California colleges can no longer withhold transcripts over unpaid fees

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A study of California students’ institutional debt accrual during the early years of the COVID-19 pandemic: Creditor Colleges: Canceling Debts that Surges During COVID-19 for Low-Income Students

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A nationwide study found that nearly 6.6 million individuals owe schools $15 billion in institutional debts: Solving Stranded Credits: Assessing the Scope and Effects of Transcript Withholding on Students, States, and Institutions

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A policy brief by California academics estimates that state consumer protections for students who owe institutional debts could be revenue positive for institutions: Policy Brief

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Virginia legislature study of institutional debts at Virginia public colleges and universities reveals that debts are disproportionately owed by Black students, Hispanic students, and low-income students: Report on Student Debt Collection Practices and Policies at Public Institutions of Higher Education (2022 Appropriation Act, Item 128.C)

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Press release when AB 1313 was signed into law and transcript withholding prohibited: Attorney General Becerra and Assemblymember Rivas Bill to Prohibit Colleges from Withholding Transcripts as Debt Collection Tactic Signed into Law​

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About NextGen Policy

NextGen Policy is a nonprofit advocacy organization that breaks down barriers and rebalances power in the State Capitol on behalf of all Californians.Learn more at nextgenpolicy.org or follow us on social @nextgendpolicyca

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About Young Invincibles

Young Invincibles (YI) is a national advocacy and policy organization focused on amplifying the voice of young people in the political process at the local, state, and federal levels. YI focuses on issues impacting young adults ages 18 to 34 in higher education, health care, economic security, and civic engagement. Our offices include Washington, D.C., California, Colorado, Illinois, New York, and Texas. For more information, please contact Emma Bittner at (972) 510-3395 or emma.bittner@younginvincibles.org

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About Student Debt Crisis Center

Student Debt Crisis Center is a national advocacy organization with 2,000,000 supporters calling for fundamental reforms to student loan policies and an end to the student debt crisis. Learn more here.

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About Protect Borrowers

Protect Borrowers (formerly Student Borrower Protection Center) is a nonprofit organization led by a team of experts, lawyers, and advocates fighting to build an economy where debt doesn’t limit opportunity. We investigate financial abuses, take predatory companies to court, and push for policies to protect working people from debt traps. We aim to deliver immediate relief to families while building power, driving systemic change, and fighting for racial and economic justice.

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Learn more at protectborrowers.org or follow us on social @BorrowerJustice.

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