Colorado lawmakers want to prohibit withholding transcripts to collect debt. Eli Imadali for Chalkbeat

Colorado lawmakers want to limit a practice in which colleges withhold transcripts from students because they owe money.

Those debts are sometimes for minimal fees, such as parking tickets, library fines, or a few hundred dollars for a final college tuition payment. Under an amended bill, schools wouldn’t be allowed to collect debt from students who need those transcripts to continue their education, apply for financial aid, get a job, or enter the military.

Proponents say withholding transcripts from students keeps them from opportunity. Opponents say holding back transcripts gives schools a mechanism to recoup crucial funds from students.

Three Democratic Colorado lawmakers are sponsoring the proposal: state Rep. Jennifer Bacon, of Denver; state Rep. Naquetta Ricks, of Aurora; and state Sen. Brittany Pettersen, of Lakewood. The bill passed the House Education Committee on a Wednesday party-line vote. Democrats all voted in favor of the proposal, Republicans against.

“Each withheld transcript could be a student losing the opportunity to pursue their chosen career path, denied access to social and economic mobility through higher education, or even denied access to the American Dream,” Ricks said.

The bill would also create a way for students to submit complaints about problems they experience with schools. Schools would need to share with students the debt they owe and ways to pay that debt. Additionally, schools would need to report starting in July 2024 how many students they are withholding transcripts from and how many students they sent to collections. 

A 2020 study by Ithaka S+R estimated about 6.6 million students nationally are impacted by “stranded” credits, or credits they can’t access due to debt. Those students owe schools nationwide billions for sometimes small amounts. Transcript withholding is one of the most popular ways to recoup that debt, according to the report.

The study also says students “bear financial and academic burdens that are disproportionate to the often small debt they owe.” Ithaka is a national research firm with a focus that includes higher education.

An Ohio study showed schools collect less than 1% of their operating costs annually. The report also shows students of color, those who are the first to go to college, and older students often are impacted disproportionately by the practice.

Recently, some states and colleges have banned the practice, including California and the City University of New York. Last year, U.S. Secretary of Education Miguel Cardona called for higher education institutions to stop transcript withholding.

But state Rep. Colin Larson, a Littleton Republican, said he worries that not collecting the money owed to schools would cause spikes in tuition. A fiscal analysis shows the bill wouldn’t cost schools additional money, but would affect how much they collect from students. The exact amount is unclear.

The Ithaka report also says schools and states that put this policy into place anticipate financial losses.

State Rep. Mark Baisley, a Roxborough Park Republican, said he’s heard school leaders argue they might lose millions if they’re not allowed to collect on debts in this way.

“This takes away the most effective route of saying, ‘we provided the service. We need to get paid for that,’ “ Baisley said. “This seems like an enormous loss to higher education.”

Republicans also questioned why a bill would be needed when schools can eliminate this practice on their own. But, Bacon said, while schools have made efforts to create payment plans for students so the debt isn’t as burdensome, schools haven’t gone far enough. And, other debt collection methods are available to schools if the state limits this option, she said.

New Era Colorado Campaign Director Morgan Royal said she wants the bill to create conversation around how to support students. The progressive nonprofit organization seeks to get young people involved in politics and tackles issues such as voting, student debt, and climate change.

She said transcript withholding keeps students from finding work or going back to college for job training that would eventually lead them to pay the colleges back.

“By eliminating this, it will help get students into a better position where they can repay their debts,” Royal said.

National and other state nonprofit organizations, attorneys, and students also spoke in favor of the bill during Thursday’s committee. 

Kim Johnson, an Arapahoe Community College student, wrote to the committee that her transcript from Emily Griffith Technical College was withheld over a $128 bill. She stopped going to college for two semesters because she couldn’t enroll at school without her transcript.

“That may not seem like a large sum of money, but for me it was a month’s worth of groceries on my shoestring budget,” Johnson’s letter said. “Instead of finishing my degree, I spent that time doing my best to save and pay off the debt.”

Only one group, the Colorado Association of Career Colleges and Schools, which represents seven private trade schools, argued against the bill. The association argued requiring students to pay back debt through this method prevents sending them to collections.

Higher education reporter for Chalkbeat Colorado in partnership with Open Campus.