During the 2022 session, several legislators supported bills that would allow students with institutional debt to access their withheld transcripts—a current practice used by institutions to encourage students to pay their debt. There is concern that the withholding of transcripts could harm a student’s ability to enroll in another institution to complete a degree or provide academic records to a potential employer. Either outcome could affect future earning and limit their ability to pay off the debt.

This issue was described in several papers written by Ithaka S+R. The first paper in the series issued in October 2020, “Solving Stranded Credits: Assessing the Scope and Effects of Transcript Withholding on Students, States and Institutions" provides an overview of the issue and identifies that those most likely to be impacted by these policies and practices are adult learners, lower-income students, and racial and ethnic minority students.

Virginia Public Media (VPM) also covered the issue in fall 2021 when it released a series called “Dreams Deferred: How an overlooked type of school debt is affecting thousands of students in Virginia." The series included eight articles specific to Virginia and included stories based on interviews with 20 students.

As a result of the increased concern both nationally and in Virginia, legislators introduced House Bill 732 (Carr) and Senate Bill 159 (Hashmi) during the 2022 General Assembly session that attempted to stop the practice of transcript withholding. The House Bill also required a report on student debt collection practices and policies. Neither bills passed the General Assembly, but similar language regarding the report was added in the budget to better understand the topic.

The specific language is included in the text below.

The Secretary of Education, in collaboration with the Office of Attorney General, Debt Collection Division, and with the cooperation and assistance of the State Council of Higher Education for Virginia and public institutions of higher education and their affiliated entities, shall evaluate and submit to the General Assembly no later than December 1, 2022, a report on student debt collection practices and policies at public institutions of higher education in the Commonwealth. Such report shall include, but not be limited to: (i) the age of the debt; (ii) the institutional practices or policies governing student debt and the ability of the student to receive a transcript; (iii) demographic factors of the student such as race, age, domicile, income, and whether or not the student is a first generation college student; (iv) the unique circumstances that led to the student's debt in the first place; (v) similar practices and policies in neighboring states;(vi) financial counseling students receive upon entering the institution; and (vii) financial counseling students receive when preparing to leave the institution.

This report is provided in response to the budget language and includes five sections that are intended to address the items outlined. The sections include:

• State debt collection requirements. This section provides an overview of existing state code requirements, entities charged with the guidance and regulation of state debt

• Institution policies and procedures. This section provides a summary of institution practices and policies related to student debt.

• Practices in other states. This section includes a summary of practices in other states and provides specific practices related to transcript withholding.

• Student data related to institutional debt. This section includes data related to the age of the student debt, student demographics and a description of unique circumstances related to the debt.

• Financial counseling and financial literacy practices. This section provides an overview of required counseling services and additional practices that institutions may provide.