Gov. Eric Holcomb signed a bill Thursday limiting public universities’ ability to withhold transcripts from former students who owe money. The new law, though, doesn’t apply to Indiana’s nearly 30 private, nonprofit, post-secondary schools. 

The bill passed both chambers unanimously. 

What the new law does

Once Senate Bill 404 goes into effect in July, state and private for-profit colleges can no longer withhold transcripts as long as the current or former student is making an effort to pay down their debt. 

If a student owes less than $1,000 and paid at least $100 in the past year toward the debt, the university couldn’t withhold a transcript. Likewise, students who owe more than $1,000 and paid the lesser of 10% of the total debt or $300 in the past year, the university couldn’t withhold their transcript.

Bill author Sen. Spencer Deery, R-West Lafayette, said he exempted private, nonprofit, post-secondary schools because he wanted to give those institutions more flexibility since they cannot intercept tax rebate money. 

That means schools such as University of Notre Dame, Butler University and University of Indianapolis don’t have to change any of their policies. 

Why the bill matters

More than 100,000 Hoosiers owe an average of $2,800 to higher education institutions, according to a 2021 estimate from Ithaca S+R. Because a majority of universities across the country withhold transcripts in an effort to get those dollars back, Hoosiers who struggle to repay that money can’t further their education or often apply for higher-paying jobs. 

In Indiana alone, more than 800,000 Hoosiers 25 years of age and older have some college credits but no degree, according to U.S. Census Bureau estimates.  

“This bill was drafted to help increase college completion rates throughout Indiana,” Deery said in a statement, “so Hoosiers are ready for the 21st century workforce.”

What other states are doing

So far at least six states have limited transcript holds. Some have banned them altogether, while others have taken a more nuanced approach. Maine, for example, requires universities to release transcripts with or without a payment plan in place to those who owe smaller dollar amounts.

But Indiana’s approach appears unique because it differentiates between the types of universities. 

“We are the first to address the issue with a balanced approach,” Deery said in a statement, “and we have provided a model for other states to follow.”

Contact Kaitlin Lange on Twitter @kaitlin_lange or email her at [email protected]. 

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Header image: Graduates throw their graduation caps. (Credit: Pantheon)