InfoBytes Blog
CFPB questions transcript withholding as a debt collection practice
On April 18, the CFPB announced it is examining the practice of transcript withholding as a debt collection practice. According to a Bureau blog post, many post-secondary institutions choose to withhold official transcripts from borrowers as an attempt to collect education-related debts ranging from student loans to library fines. “Withholding transcripts as a debt collection tactic is particularly perplexing, as it can undermine rather than enhance a student’s likelihood of repaying,” the Bureau said, noting that this practice can cause students to become stuck in a cycle of collections. As previously covered by InfoBytes, the Bureau announced in January that it plans to examine the operations of post-secondary schools that extend private loans directly to students and that are not subject to the same servicing oversight as other lenders and servicers. The Bureau noted that it is “concerned about the borrower experience with institutional loans because of past abuses at schools,” high interest rates, and debt collection practices.