Hoosiers with college debt could regain access to transcripts under new bill

A bill under consideration in the Indiana General Assembly would enable thousands of Hoosiers students to re-enroll at a postsecondary institution and complete unfinished degree work by helping them regain access to their college transcripts.

The measure, authored by Sen. Spencer Deery, R-West Lafayette, would prohibit universities from withholding a transcript if the student pays at least $100 toward the debt within the last year, or enters into a repayment plan.

Currently, Indiana colleges can refuse to provide transcripts to current and former students based on debt the individual owes the institution.

“The problem is widespread,” Deery said. The bill is under consideration in the Senate Education Committee and could advance to the full chamber this week. “I want to get at those scenarios where individuals are trying to get back into their education journey and can’t do so.”

He emphasized that his proposal does not forgive debt, but instead changes how universities can leverage transcripts in order to collect the money students may owe the institution. The bill does apply to private postsecondary educational institutions, however.

An estimated 750,000 adult Hoosiers have some college credit but no degree.

Withholding transcripts 

Students who withdraw from classes after they’ve taken out federal loans or received a Pell Grant are responsible for repaying the school back without assistance from other federal loans or grants.

But Deery said many students who want to continue their education have trouble clearing those debts.

“That debt is being held as collateral for the money students owe,” he said last week while introducing the bill to the senate education committee. “The intent of this bill is to try to provide some checks and balances on the way in which that’s done, in order to try and minimize disruption to students getting back into education.”

College transcripts outline attempted and earned credits, as well as classes taken, degrees earned and whether the student graduated. The document is required if a student transfers to a different institution. Without it, students often have to retake classes — costing more money and adding additional time towards degree completion. 

Withholding transcripts has been a common way for most higher education institutions to incentivize students to settle outstanding balances. Forty-three states, including Indiana, still allow the practice.

An estimated 138,000 Hoosiers owe an average of $2,800 to higher education institutions, according to the nonprofit higher education research group Ithaca S+R. The research suggests that when individuals are denied access to a transcript, it can cause previously earned credits to become “stranded” at the student’s prior institution. 

That further impedes college completion and job placement, especially for low-income and minority Hoosiers, and additionally makes it harder for former students to pay down debt.

Jason Bearce, vice president of education and workforce development for the Indiana Chamber of Commerce, said that while some states have banned transcript holds altogether, Deery’s bill “offers a middle ground option.” 

“This removes the transcript roadblock while still giving colleges leverage to settle an outstanding debt,” Bearce said. “We believe this approach is both practical and reasonable and consistent with our priority of reducing barriers to educational attainment and economic mobility.”

Ivy Tech leads the way

Deery’s bill mirrors a similar policy already in effect at Ivy Tech Community College, which is so far the only public educational institution in Indiana to lift its transcript-hold policy for students in debt to the school. 

Under a previous policy at the state’s largest public postsecondary institution, some Ivy Tech students who wanted to transfer to another school were unable to do so; their transcripts were withheld because they still owed money to the college.

As of 2021, Ivy Tech locations no longer withhold transcripts from students who owe money. When the school’s new transfer release policy took effect, more than 80,000 students at the college’s more than 20 campuses around Indiana regained access to their records.

The school made the change after successfully obtaining outstanding payments through tax intercepts. The alternative collection method, permitted by existing law, allows universities to intercept the tax rebates of those who owe them money. 

Mary Jane Michalak, Ivy Tech’s vice president of legal and public affairs, said the college is able to collect about $4 million a year through tax interception.

Currently, an indebted student or former student can access their transcript regardless of how much they owe. If they make $50 payments each month for at least six months, they can additionally avoid the tax intercept process.

Deery said he believes the existing process is “a much more effective way for a university to get repaid.” 

He also noted that students who request additional transcripts after they have been “unfaithful” to the debt repayment plan outlined in his bill will need to pay another $100 towards their debt.

It’s not clear where other Indiana colleges and universities stand on Deery’s proposal, though.

Officials with the Indiana Commission for Higher Education told the Indiana Capital Chronicle that barriers to accessing college transcripts holds back “many Hoosiers” from continuing their studies or securing gainful employment, “but to what extent and magnitude is unknown.”

“The Commission looks forward to working with state lawmakers and stakeholders to consider options that balance the best interests of these affected students and that of the institutions,” a CHE spokesperson said in a written statement.