A new national ban on most transcript withholding took effect this month. The policy, which was announced in fall 2023, is intended to ensure students can access their academic records and minimize the number of credits which are stranded. The new rules direct institutions not to withhold transcripts for any academic terms in which a student received federal financial aid, if the student has fully paid or has a payment plan in place for any unpaid balance. This national ban comes on the heels of regulations adopted by at least eleven states to curtail this practice. With support from Lumina Foundation, Ithaka S+R has partnered with AACRAO to understand the steps institutions have been taking to prepare for the policy change, what their biggest concerns are, and what lessons can be learned from similar state policies.

In the first report from this partnership, we present survey findings that address how institutions have been preparing for the ban and what issues they are raising. Institutional administrators in states with pre-existing bans are overwhelmingly confident they can comply with the new federal policy. However, administrators in states without bans are less confident and are concerned about the added workload of creating partial transcripts, the ability of their student information systems to handle partial transcripts, and the negative impacts on students that can result from inaccurate academic records (e.g., incorrect financial aid calculations, admissions decisions, or transfer credit decisions). Of course, institutions can avoid many of these issues by simply issuing full transcripts to all students regardless of the presence of an unpaid balance. However, administrators are concerned that such a shift in institutional practices will limit their ability to use transcripts as a lever to ensure student payments.

Ninety percent of institutions in states without bans are planning to change their policies or practices to comply with the new federal rule. For example, institutions are considering increasing their communication regarding unpaid balances to students via text messages and during academic advising sessions as well as making the issue of unpaid debt a mandatory topic to be discussed during orientation and financial aid advising.

Importantly, 14 percent of institutions are considering or planning to increase the use of drop-for-non-payment practices to encourage students to resolve unpaid debts. In other words, an increased number of students with past due balances or unpaid fees may be dropped from their classes during their academic term, derailing their academic progress. This increase would be on top of the roughly 50 percent of institutions that currently use this practice. Fortunately, evidence from the states that implemented bans over the past several years shows that only eight percent of institutions complying with state bans have seen an increase in the number of students dropped for nonpayment. We are encouraged to see that 70 percent of institutions newly facing a ban are planning to increase efforts to help students avoid an unpaid balance in the first place which may help minimize anticipated negative effects on students.

You can read our first report to learn more about how institutions are shifting policies and practices to come into compliance. Following roundtable discussions this summer, we will release a second report that provides additional survey data and insights into what steps institutions have been taking to comply with the new rules.