What are Stranded Credits and Why Do They Matter?

It’s usually straightforward. When students successfully complete a college course, they receive credit for the course and those credits are reported by the Registrar on their transcript or record of coursework, grades, and degrees awarded. Students request that the Registrar provide them with an official transcript to document their coursework or graduation when they transfer to another institution, or apply for scholarships or employment.

“Stranded: left helpless or without transport.”

If, however, a student has “unfinished business” with the college – perhaps they still owe tuition money, have outstanding parking tickets or library fines – the college can withhold the official transcript until those issues are settled.

Those credits earned by the student are now effectively “stranded.” The student cannot access an official copy of their transcript and cannot officially report their credits or degree to others. Those credits are “left helpless” and cannot be “transported” to another institution.

According to Ithaka S & R Research, a New York based non-profit promoting innovation in higher education, an estimated 6.6 million students in the United States may have stranded credits for unpaid tuition balances room and board, parking tickets or library fees (sometimes as little as $25.) 95% of schools use transcript holds.

A hold, sometimes called an administrative hold, has been placed on these transcripts because it is the most effective way to get a conversation about repayment started, but it generally occurs only after the school has attempted to reach out to the student through email, phone, text and regular mail. It is a final step designed to force students to settle their accounts with the school.

There is no federal policy regarding withholding of transcripts, although 8 states have laws prohibiting or limiting schools’ ability to withhold transcripts. Those states are California, Colorado, Illinois, Maine, Minnesota, New York, Ohio, and Washington.

What does this mean for students?

Students who can’t pay their fees are essentially in limbo. They have no way to document previous learning to other institutions or to employers. A student who withdrew from or dropped out of college may be unaware of the hold on their transcript until they attempt to transfer, apply for a job or promotion, or seek a mortgage – sometimes several years later.

The student may never complete college, may need to start from scratch and retake courses at another institution, take longer to finish a degree, forfeit a promotion or scholarship, and the unpaid balance may show up on the student’s credit report. Some students may spend years attempting to repay what is owed.

The impact of transcript holds and stranded credits can be far-reaching and unfortunately, is inequitably distributed and low income students are impacted most.

Is there anything students and their families can do?

Stranded credits can have a devastating impact on students and their families, but there are some things that they can do to attempt to prevent the situation, or to address or minimize the impact.

  • Get advice and gather information from the beginning of your education. Be sure you understand college finances, fees, loans, long-term obligations and debts.
  • Continue to ask questions and keep track of your account along the way. Don’t be taken by surprise by some hidden fee or compounding level of debt. Continue to talk to the college and check in on your account often.
  • If you foresee possible financial difficulties, get help as early as possible. Don’t allow yourself to increasingly fall behind.
  • If you can pay the balance, even over time, do so. Find out what you actually owe the college. A 2020 survey by the American Association of Collegiate Registrars and Admission Officers (AACRA) with 293 respondents found that 64% of those with holds owed les than $25 and 42% owed under $1000.
  • If you have a hold on your official transcript, ask for an unofficial transcript. Depending on what you need it for, an unofficial may sometimes be acceptable. The college is obligated to provide you with an unofficial transcript of your college record.
  • Contact the school Registrar’s Office, explain your situation and initiate a conversation about remedying the situation. Depending on your situation, a school might waive or make an exception to a policy or help you set up a payment plan.
  • Ask whether the school has a debt relief program. You may be allowed to return to the school and if you maintain an appropriate GPA your balance may be reduced over time or when you graduate.
  • Investigate a gap loan to pay your balance. If you choose this option, speak to a reputable loan officer and read the fine print. Be careful about taking on additional debt.

The bottom line for rescuing your stranded credits is not to ignore the situation and hope for a miracle. Initiate a dialogue with the school, do what you can, show good faith and see who can work with you to resolve your situation.

Related articles:

Making Sense of Your College Student’s Financial Aid Package

12 Topics Parents Should Cover to Help Students Gain Financial Literacy

My College Student Received Their Financial Aid Package, But What is Federal Work Study?


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