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2024 Update: Transcript Hold Regulations and Unpaid Balances

2/27/2024 8:00 PM

Managing regulatory changes is a top trend for business officers in 2024. One of the most discussed and anticipated changes is a new rule on withholding transcripts of students with unpaid balances.

In October 2023, the US Education Department announced they are prohibiting withholding transcripts of students in specific situations. The rule will go into effect on July 1, 2024 and applies only to students who have used federal financial aid to pay for their education.

The National Association of College and University Business Officers (NACUBO) summarized the new transcript rules as the following:

  • Institutions cannot withhold transcripts—or take other negative actions against a student—in cases where a debt on a student’s account is created because of an error made by the institution in administering Title IV funds, or when there is fraud or misconduct by the institution or its employees
  • Institutions will have to provide an official transcript to a student for payment periods when the student received Title IV aid and all institutional charges for that payment period were paid or included in an agreement to pay
  • Institutions will be able to utilize other existing methods of collecting a balance on a student’s account

States may have additional rules on transcripts and institutions should inquire their general counsel on the status of their state’s laws. For instance, some states have enacted laws prohibiting withholding transcripts for a number of reasons, including the need for a student to send transcripts to employers, other colleges and universities, or the military

Student-friendly approaches to past due balances

In the absence of transcript holds, there are options available to business offices trying to resolve past due balances and provide positive experiences to students.

Institutional policies and procedures

The groundbreaking research on stranded credits by Ithaka S+R is what brought the issue of transcript holds to national attention in 2020. Ithaka has since suggested methods for preventing and resolving unpaid balances, including:

  • Reviewing a student’s billing and financial aid to ensure they are receiving all of the aid they are eligible to receive
  • Supporting students in applying for campus, state, and federal resources
  • Reviewing timelines for tuition refunds and Return to Title IV to reduce the risk of returning a student’s aid after they withdrew

For more on this topic, listen to our podcast episode with Ithaka S+R Senior Researcher James Ward, “Addressing Stranded Credits to Create Win-Win Solutions.”

Communications and education

Regularly sending well-planned communications and educational material to students is another best practice for preventing and resolving undue balances.

Before developing the communications, take time to analyze overdue balances for trends. The goal is to identify common causes as well as rare but significant causes of unpaid bills. Guided by fresh insights, adjust policies and processes and develop communications that support the changes. Use automation to send communications based on deadlines, account inactivity, and other triggers.

Also, use communications to go beyond reminding students of deadlines and amounts due and to further educate them on payment processes, options, and policies. You could include lessons on financial literacy, tips on personal finance management, lists of available financial resources, and more.

Payment plans

Another best practice to resolve unpaid balances is payment plans with installments and other options tailored to your institution and students. Payment plans are often implemented proactively, before an unpaid balance occurs, but they can be set up after a debt is accrued, too.

Staff can schedule payments, send automated reminders and notifications, and more. Payment plan solutions integrate with campus systems so when a payment is made other departments that need to know are informed, like the registrar’s office.

Service assistance

Managing payment plans and student accounts to recoup payments can take a lot of time and effort from staff. To reduce this burden while still resolving balances, institutions can consider seeking assistance from vendors who service accounts on behalf of colleges and universities.

Institutions control the details of the payment plans but the day-to-day management of payment plans is handled by professional service providers, and their software integrates with your student information system, including account reconciliation.

Another option is a recovery solution that combines software and compassionate service to students. Staff mark an account as past due in their Student Information System, and the recovery solution works the account with a student-friendly approach and timely communications to resolve the balance. Comprehensive recovery solutions can save staff time, help students stay on track, and prevent students from entering collections.

Options for success

Colleges and universities have options to successfully manage unpaid balances without the ability to withhold transcripts. Solutions and services provide assistance to students with a compassionate and student-first attitude that students appreciate. Administrators see positive results in account resolution, integration with their campus systems, reduced workload, and more benefits to the business office and institution.

For more information on recent trends to transcript holds, join ECSI, a Global Payments company for their upcoming webinar on the topic, Transcript withholding and your institution: What to expect in 2024.