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A Virginia legislator wants to ban a practice holding back students with college debt

Person speaks into microphones
State Sen. Ghazala Hashmi (D-Chesterfield) speaks at a 2019 Democratic watch party. (Photo: Crixell Matthews/VPM News)

Virginia Sen. Ghazala Hashmi (D-Chesterfield) is sponsoring legislation this year to ban transcript withholding as a form of debt collection for students who attend public colleges and universities in Virginia. Currently, many schools don’t release proof of credits completed to students until they’ve paid direct-to-school debt in full.

As detailed in VPM’s “Dreams Deferred” series last fall, transcript withholding prevents current and former college students from obtaining transcript copies that are necessary for enrolling in additional college classes and seeking employment.

Hashmi used to teach literature at J. Sargeant Reynolds Community College in Richmond. She’s seen firsthand how easy it is for students – especially first-generation college students – to get overwhelmed when navigating the complicated college financial system.

“A lot of times when students have debt to these colleges, it may be as little as $100 or $300 or some small amount. And students themselves oftentimes don't even know how limited or small the debt might be,” Hashmi said. “They just see it as a barrier. And a lot of times - this is normal human behavior - we're sometimes afraid to ask how much we might owe a collection agency or an institution. And so many students end up being disenfranchised from the process of higher education, not being able to access their transcripts to get jobs or transfer [to another college].

“Those are the students who are really the ones of concern for many of us,” Hashmi said. “Because we have so many barriers - especially for first-generation students whose families may be really unfamiliar with the process, who have never had the experience of navigating these complex systems within higher education - those are the students who oftentimes just simply don't return, don't finish out a degree. And the debt that they owe may be rather insignificant in the context of what we're talking about.”

Data that the State Council for Higher Education in Virginia requested from colleges as part of a Congressional inquiry into the issue shows that some schools have been withholding transcripts for as little as $1. Over 200 Virginia students had their transcripts withheld for less than $1,000 since 2016, and several universities were not able to provide data to SCHEV as part of the inquiry, nor to VPM.

Figures provided to SCHEV show that nearly 450 students from the University of Virginia had their transcripts withheld over the last five years, but the data does not show the total dollar amount due per student account nor the amount collected. UVA told SCHEV they could provide the data but would need more time to collect it.

Senator Hashmi’s office is working closely with education advocacy group Virginia21, which advocates on behalf of Virginia college students and young Virginians for things like more financial aid dollars and overall greater affordability.

Julia Billingsley is policy director for Virginia21 and says direct-to-school debt is an issue the organization has been aware of for a long time. But she said recent media coverage of the problems – including VPM’s Dreams Deferred series – have prompted Virginia21 to mobilize legislative efforts for this month’s General Assembly session.  Virginia21 is working closely with the Virginia Poverty Law Center and the Student Borrower Protection Center on the draft legislation.

“These three groups have really convened in the last couple of months to say, ‘I think the time is now,’” Billingsley said. “The information is out there. Legislators are aware and concerned. And this opens up an avenue for advocates like ours to step into that space, ready with a solution in hand, to say, ‘Let's work on this together. Let's make this a better system in Virginia so that we're not hearing of so many students, current and former, that are so harmed by the system.’”

Some other states like California have already passed legislation to prohibit transcript withholding. Billingsley said Virginia21 is in the process of talking to Virginia college and university leaders about the draft legislation. So far, Billingsley said, it’s received mixed feedback.

“The institutions with more affluent student bodies are the ones that have shown the most concerns because they have found that by withholding the transcript, it causes the student to pay,” Billingsley said. “Whereas the schools that have a student body that is socioeconomically more low-income… these schools have found that it’s been less effective because these are student populations that couldn’t pay in the first place.”

Jay Speer, executive director for the Virginia Poverty Law Center, says he feels like transcript withholding is the least fair part of the entire student debt system because it prevents students from moving on.

“What we're talking about is students who, through no fault of their own, had to drop out or lost their student loans… Something happened, typically a medical issue, and they had to drop out,” Speer said. “And now the universities and colleges are going after them for thousands and thousands of dollars in tuition they [students] obviously can't pay. And the state law has them tacking on 25% attorneys’ fees, plus all the interest and it just becomes a huge burden on folks. And I just don't think it's right.”

Senator Hashmi says the legislation to prohibit transcript withholding is just one avenue for helping students get back on track.

“The question that we have as a state really in front of us is ‘to what lengths and to what expense do we want to commit state energy and state dollars in the pursuit of student debt like this?’” Hashmi said. “Most student debt is fairly low figures. And yet, we do expend a great deal of resources through the attorney general's office in pursuit of debt like this. Is the business of the state to really be a collection agency?”

VPM recently reported that in Virginia, the attorney general’s office disproportionately took students from Virginia State University – a historically Black university – to court for direct-to-school debt during the pandemic. Some of the students taken to court told VPM News they could not afford to pay off the debt.

“Just because somebody owes a debt does not mean that somehow that they're at fault, that we should pursue them. The law says that we have to go after them. There has to be aggressive debt collection [per state law], but one person's aggressive as another person is cruel, unusual,” Speer said.

When asked if he’d take a less aggressive approach to collecting debt from low-income students, Attorney General-elect Jason Miyares told VPM News that he plans to put forward a legislative package that includes a proposal to update the Virginia Debt Collection Act to allow his office more discretion when handling these cases.

“When you have those students, typically lower-income, the last thing you need is to be paying legal bills on top of that,” Miyares said. “We’re going to see if we can get a change in the code and reevaluate that area in the office.”

On barring transcript withholding, Miyares said he wants to have his legislative team review the policy before committing, but said it “seems pretty reasonable.”