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You can build your credit score with a credit card, provided you use it responsibly. That means paying your bill on time, all the time, and maintaining a low credit utilization rate, among other financial habits. This behavior can help build your credit by showing you’re diligent about meeting your debt obligations, which is something potential lenders look for.

What if you’re interested in using a credit card to build credit, but don’t yet have a credit card? In this case, there are credit cards that are marketed to those with a limited credit history who want to build their credit. Depending on your personal situation, here’s a look at the best way to build credit with a credit card.

Building Credit With a Credit Card

If you’re looking to build up your credit, a credit card can be a great place to start. Getting a credit card may be easier than getting approved for a mortgage or other type of loan. Plus, unlike most other loans, you won’t have to pay any interest with a credit card as long as you pay your statement balance in full each month.

Recommended: How to Avoid Interest on a Credit Card

8 Tips to Build Credit With a Credit Card

Curious how to build credit with a credit card? Here are eight tips to try.

1. Regularly Pay Your Bills on Time

Paying history is one of the biggest factors that makes up your credit score. If you’re focusing on building your credit score, you’ll want to make sure that you pay your bills on time, each and every month. If your credit report shows a history of late or missed payments, that can really drag down your credit score.

2. Maintain a Low Credit Utilization Rate

Another factor that helps to build credit is maintaining a low credit utilization rate, ideally under 30%. Your credit utilization rate is your total outstanding debt balance divided by your total credit limits expressed as a percentage. You can lower your utilization rate by paying down debt or increasing your total credit limit.

Recommended: What Is the Average Credit Card Limit?

3. Pay Your Credit Card in Full

In addition to paying your credit card statement before the due date, it’s also a great idea to pay the full statement balance every month, if possible. This helps lower your credit utilization rate, which is an important factor in determining your credit score. Additionally, it prevents you from paying interest.

If you’re not able to pay your credit card statement in full, make a plan and consider adjusting your financial habits going forward.

Recommended: Understanding Purchase Interest Charges on Credit Cards

4. Become an Authorized User

If you’re not ready or can’t get approved for a credit card in your own name, consider becoming an authorized user on the credit card account of a trusted friend or family member. You’ll receive a secondary card in your name, also known as a supplementary credit card, and you can benefit from the payment history and good credit of the primary account holder. This can help you when you go to get a credit card for the first time on your own.

However, you’ll want to be careful about whose account you become an authorized user on. If they miss payments or pay late, it can affect your credit score negatively.

5. Use Your Card Regularly

It’s not enough to simply have a credit card — you also have to use it. Using your credit card responsibly shows potential lenders that you’re more likely to be responsible with new debt or loan obligations.

Consider using your credit card to pay some of your monthly bills to keep it in regular use. Just make sure that you’re using credit cards wisely by also setting aside money to pay off the statement in full when it comes due.

Recommended: When Are Credit Card Payments Due?

6. Consider a Secured Credit Card

If you’re having trouble getting approved for an unsecured credit card on your own, you might consider a secured credit card. With a secured card, you typically put down a refundable security deposit, which serves as your credit limit.

As you consistently and responsibly use your secured credit card, you may be able to transition to an unsecured credit card.

7. Limit New Credit Applications

Another factor that goes into determining your credit score is how many new credit applications you’ve had recently. Almost every time that you apply for new credit, such as a credit card or a loan, the potential lender will do a hard pull on your credit report. Having too many loan and credit card applications can hurt your credit score, albeit temporarily.

8. Keep Your Credit Accounts Open

If you’ve had trouble in the past with credit card debt, your first thought might be to cut up your credit card and close your account. One reason to keep your credit card accounts open is that another factor that goes into determining your credit score with the credit bureaus is the average age of your accounts. Keeping an old account open — especially if it comes with no annual fee — and managing it responsibly can be a good way to build credit.

Alternative Ways to Build Credit

Besides leveraging credit cards, there are a few other ways to build credit.

Get an Auto Loan

If you’re in the market for a new or used car, consider getting an auto loan. Like a credit card, any auto loan balance or payment history that you have will show up on your credit report. Making reliable and on-time payments on your auto loan can have a positive impact on your credit score.

Take Out a Personal Loan

Besides an auto loan, a personal loan is another type of debt product that typically shows up on your credit report. With a personal loan, you receive money upfront from the lender and then pay it back over time, with interest. Having a history of on-time payments on a personal loan can be another way to build credit.

Get a Cosigner

If you’re not ready to apply for credit in your own name or are having trouble getting approved for a loan or credit card, you might consider a cosigner. A cosigner is a trusted friend or family member who will sign their name to your loan alongside your own. That makes them also financially responsible for the debt as well, so you’ll want to be careful about who you choose to cosign with. However, it can be a helpful step toward establishing credit.

The Takeaway

Using a credit card can be a great way to build credit — as long as you do it responsibly. Aim to use your credit card in such a way that you can pay off your full statement balance completely. Showing responsible payment history over time and keeping your overall credit utilization rate low are two of the biggest factors that make up your credit score.

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FAQ

What is the fastest way to build credit with a credit card?

Building credit is usually not something that will happen overnight. Instead, most potential lenders are looking for a history of making on-time payments over time. This can take months or potentially even years to build your credit to the desired level.

How do you use a credit card to build credit for the first time?

When you get a credit card for the first time, you’ll want to start using the card to pay for some of your monthly expenses. Just make sure to set aside the money for those purchases, so that you can pay your credit card statement in full when it comes at the end of the month. Establishing a history of on-time payments will help you to build your credit, as it shows other potential lenders that you’ll be responsible with your debt obligations.

How long does it take to build credit with a credit card?

Establishing credit is not something that usually happens over a short period of time. Instead, building your credit is something that happens over months, if not years. Demonstrating a history of reliably meeting your debt obligations is one of the biggest factors that makes up your credit score, so always aim to pay your bills on time and in full, each and every month.

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Photo credit: iStock/Ridofranz

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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For those stumped about which presents to buy, a top gift that parents and grandparents really hope to find under the tree this season is a gift card, according to an exclusive survey.

If you’re like many people, you plan to spend a considerable amount on loved ones as you celebrate this winter. For instance, one recent Gallup poll revealed that Americans plan to spend over $1,000 on gifts (a new high) for the 2024 holidays. But there’s no need to stress or spend tons of time hunting because you’ll know exactly what to buy.

Here, in our exclusive survey of 1,000 individuals (250 of each — moms, dads, grandmothers, and grandfathers), you’ll learn the holiday present they really want this season — and what they don’t want. Get ready to find out and then get shopping!

Source: Based on a What People Actually Want This Holiday Season survey of 1,000 U.S. adults from October 26, 2022 to October 27, 2022.

Gift Cards Are the Favorite Gift by Far

The number-one gift requested by moms, dads, grandmothers, and grandfathers is … a gift card! And it wasn’t even close. Gift cards were the most-requested gift across the board.

Almost 33% of respondents picked gift cards as their most-wanted holiday gift. Here’s how it breaks down across the generations:

•   Moms: 39%

•   Dads: 31%

•   Grandmothers: 34%

•   Grandfathers: 27%

The Type of Gift Card You Give Makes a Difference

There are all kinds of gift cards to choose from, including gift cards for restaurants, stores, and airlines, to name just a few. So, as you get ready to shop and celebrate the holidays without blowing your budget, which type should you get for your parents and grandparents?

A gift card that can be used anywhere, like a Visa gift card, was the top choice, selected by:

•   45% of moms

•   44% of grandmothers

•   40% of grandfathers

•   38% of dads

The one group that wants a different kind of gift card? Moms ages 35 and up. They preferred a gift card to a retailer like Target, Amazon, or Walmart.

The way gift cards function is similar to how credit cards work, since your parents and grandparents can use them to buy whatever they like. Perhaps that’s why they were so popular in our survey: Your relatives can pick out exactly what they want.

Recommended: Breaking Down the Different Types of Credit Cards

Skip the Fancy Jewelry

You might think mom would be thrilled with luxury goods like an expensive necklace, bracelet, or earrings, but jewelry is actually at the very bottom of her list. When asked the gift they wanted least, most moms (22%) said fine jewelry. Dads agreed — 21% chose fine jewelry, such as a watch, as their least favorite holiday gift.

Grandparents also said no thanks to fine jewelry:

•   26% of grandmothers picked it as their least favorite gift

•   21% grandfathers chose at gift they wanted least

Recommended: Secrets to Not Paying Full Price

Holiday Gift Ideas for Mom

Here’s what Mom wants most:

•   A gift card: 39%

•   No gift at all — she just wants to spend time with family: 14%

•   An experience (like a concert or vacation): 10%

•   Clothes or shoes: 9%

•   A homemade gift like a photo collage: 7%

•   Electronics: 6%

•   Jewelry: 6%

•   Home goods: 5%

•   Donation to a charitable organization: 3%

•   Beauty/health products: 2%

Holiday Gift Ideas for Dad

Here’s what dad wants most:

•   A gift card: 31%

•   Electronics: 14%

•   No gift at all — he just wants to spend time with family: 12%

•   An experience (like a concert or vacation): 12%

•   Clothes or shoes: 10%

•   Jewelry: 9%

•   A homemade gift like artwork: 5%

•   Donation to a charitable organization: 4%

•   Home goods: 2%

•   Beauty/health products: 2%

If you’re thinking about getting dad the electronics he wants, but you don’t have the cash to pay for the gift upfront, applying for a credit card, and charging the electronics to it, is an option you may want to consider.

Holiday Gift Ideas for Grandmothers

•   A gift card: 34%

•   No gift at all — she just wants to spend time with family: 22%

•   An experience (like a concert or vacation): 12%

•   Clothes or shoes: 8%

•   A homemade gift like artwork: 6%

•   Electronics: 5%

•   Jewelry: 4%

•   Donation to a charitable organization: 3%

•   Home goods: 3%

•   Beauty/health products: 2%

Holiday Gift Ideas for Grandfathers

•   A gift card: 27%

•   No gift at all — he just wants to spend time with family:14%

•   Electronics: 12%

•   An experience (like a concert or vacation): 10%

•   A homemade gift like artwork: 10%

•   Clothes or shoes: 8%

•   Donation to a charitable organization: 8%

•   Home goods: 5%

•   Jewelry: 4%

•   Beauty/health products: 2%

Recommended: 41 Charities to Support This Year

Who Buys the Best Gifts?

It’s unanimous: Moms, dads, grandmothers, and grandfathers all agree that their spouse or partner is tops when it comes to choosing holidays gifts. No other person even comes close.

Who Gives the Best Gifts?

•   Spouse/partner: 37%

•   Parents: 18%

•   Friends: 10%

•   Siblings: 9%

•   Other relatives: 9%

Whose Gifts Rate the Worst?

Ranking at the bottom of the best gift-giver list: In-laws and bosses. Only 4% of respondents said their mother-in-law and father-in-law give good gifts, and just 1% said their boss does.

Regifting is Real — and It Can Be Pretty Awkward

There’s a lot of regifting going on: 41% of our respondents admitted they’ve done it. But when the tables are turned on them, things can get a little uncomfortable. Fortunately, many have a sense of humor about it.

Almost 1/3 of Moms Have Been Regifted a Gift They Gave First

•   68% thought it was funny

•   32% were hurt, annoyed, or mad

Yet this didn’t deter them from doing it themselves: 38% of moms have regifted what they didn’t want. Most of these unwanted gifts were from friends.

Almost Half of Dads Have Been Regifted a Gift They Gave

•   71% thought it was funny

•   28% were hurt, annoyed, or mad

Dads are even more likely than moms to regift: 47% of them have done it — mainly with presents from distant relatives.

Lots of Unwanted Gifts Are Sitting in a Closet Someplace

When they get a Christmas present they don’t want or need, the overwhelming majority of respondents said they hang onto them, rather than exchange them. This was the answer chosen by:

•   80% of grandmothers

•   79% of moms

•   74% of grandfathers

•   70% of dads

(Perhaps eventually they decide to sell their unwanted stuff, however. It can be a good way to bring in some cash.)

So Whose Gifts Do They Take Back?

Of those parents and grandparents who return or exchange gifts:

•   Moms are most likely to return gifts from friends

•   Dads are most likely to return gifts from parents or other relatives

•   Grandmothers are most likely return gifts from distant relatives

•   Grandfathers are most likely to do return gifts from distant relatives or coworkers

Recommended: Tips for Using a Credit Card Responsibly

Plenty of Moms and Dads Are Wishing for a Vacation

If you splurge and get your parents a trip as their holiday gift, expect them to waste no time in packing their bags. Of the moms and dads who chose an experience as the gift they most want for the holidays, taking a vacation was at the very top of the list.

While paying for a vacation can be expensive, you might want to think about splitting the cost with your siblings or putting it on your credit card to help cover the cost. This is one reason why getting a credit card can be helpful when you’re buying holiday gifts.

Time Together Might Be the Greatest Gift of All

You may not need to get your parents a lot of presents (besides a gift card, that is!). A number of moms and dads who took our survey said they wanted family time over the holidays more than anything. In fact, for moms, spending time with family is their second most-wanted gift.

For dads, family time came in third. Electronics like gaming systems edged it out slightly.

Grandmothers and grandfathers want to spend time with family most of all. Each of them chose it as their second favorite gift option.

The Takeaway

One specific holiday gift will please your parents and your grandparents this year: a gift card. Not only does this make your shopping easier, but it gives your loved ones exactly what they want. A gift card that can be used anywhere, like a Visa gift card, is what the respondents to our survey wanted most.

If you’re looking for other gift options, dads are partial to electronics, like gaming equipment, and both moms and dads would be happy to find airline tickets for a vacation in their stocking.

One way to fund holiday gifts can be by using a credit card.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

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Photo credit: iStock/seb_ra

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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For college students, few things are more welcome than extra money. And surprisingly, those additional funds might be from your school in the form of a college refund check.

Colleges sometimes issue refunds to students, and the amount can be thousands of dollars, depending on your situation.

Are you eligible for a refund from your college, and if so, how long does it take to get your money? Read on to learn more about college refund checks.

What Is a Refund Check From a College?

A refund check is typically issued by your college or university when your financial aid covers more than what you owe for tuition, room, board, and fees. Here’s how that can happen: When you receive financial aid, the aid amount is based on your college’s cost of attendance (COA). The COA is an estimated amount, however, and sometimes the actual price turns out to be less than the amount you may have been awarded in scholarships and borrowed through student loans. In that case, your school sends you a refund check.

For example, let’s say you received $15,000 in aid for the semester, but your school’s tuition and fees were $12,000. In this case, you’d get a $3,000 refund.

When you are owed a refund check, your college or university may send you a paper check in the mail, directly deposit the money into your bank account, or credit your school account (the credit can be applied for the next semester’s tuition or other school-related expenses).

Although it’s exciting to get money back, student loan refunds are typically not free money. Unless the refund comes from leftover funding from a grant or scholarship you received, these funds are likely to be part of the student loan you borrowed, and they will need to be repaid with interest. So it’s important to use your refund wisely.

Refund Check Process

The process for getting a refund check varies from school to school, but this is typically how it works:

1.    Financial aid is disbursed at the beginning of the semester. This is when federal student loan funds, grants, scholarships, and private student loans are sent to your school and applied to your tuition, room, board, and fees. To make sure your disbursement happens promptly, register for all the classes required to get your financial aid, and sign the Master Promissory Note (MPN) for your federal Direct subsidized and unsubsidized student loans.

2.    Your school should notify you when the disbursement happens. If there is money left over after that, your school will issue a refund.

3.    You may receive a paper refund check or the money may be directly deposited into your bank account (you can sign up for direct deposit through the online portal for your school account). The refund might also be credited to your college account, in which case it won’t be sent to you. Instead, the credit will be applied to future school costs like tuition.

College Refund Check Dates

Schools typically disburse financial aid at the beginning of a semester. After they disburse your funds, if they determine that you are owed a refund, they will start the refund process. The time it takes to receive a college refund check varies from school to school. Some schools issue refunds within several days; others take 14 days. Contact with your college’s financial aid office to find out the timeline.

For freshmen, the college refund check process may take longer. First-year undergraduates who are taking out student loans for the first time may experience a 30-day delay after the first day of the school’s waiting period before their college disburses their loan funds. Not every school uses this 30-day rule, though, so check with your school to find out.

College Refund Check Status

To check on the status of a college refund, log into your school account through the online portal to see if the refund is noted on your account. If it is, but there’s no information listed about how long the refund might take, contact the school’s financial aid office to inquire about the status of your refund check.

Refund Check Problems

If you believe you are owed a refund but the money hasn’t landed in your account, there may have been a snafu. Some possible reasons a college refund check could be held up include:

•   Late paperwork. If you filed your Free Application for Federal Student Aid (FAFSA) late or you waited to apply for student loans, you might experience a delayed refund check. The financial aid office at your college or university may be able to give you an update on the status of your refund and when you might expect it.

•   Incorrect paperwork. If you forgot to complete a section of your paperwork or missed a signature on your financial aid forms, this could delay the process. Fix the mistakes and submit the correction, then double check with the school’s financial aid office to make sure everything is in order.

•   Regular processing delays. It takes time for colleges and universities to implement financial aid disbursements and then to pay out any necessary refunds, especially at the busy start of the school semester. These may just be normal delays, but of course it doesn’t hurt to contact the school to find out.

When Will I Get My College Refund Check?

The dates for refund checks vary by the school and their financial aid disbursement process. The type of aid you’re being refunded for may also factor into the equation.

For example, in 2024, Jackson College in Jackson, Michigan, mailed or deposited Pell Grant check refunds on September 13. Loans, however, were disbursed by the school in two waves. For the first loan disbursement, refunds were sent on October 4, 2024. For the second disbursement, refunds go out on November 1.

As you can see, how a school handles this process affects when you’ll receive a refund. Every school’s dates and processes are different, so check with your college to find out the specifics.

Do I Get a Refund Check Every Semester?

You might get a refund check every semester you’re in college, but it depends. You must submit the FAFSA each year, which could affect the amount of aid you receive. That, in turn, can determine whether or not you receive a refund.

Recommended: Student Loan Forgiveness Guide

What Is the Average College Refund Check?

A college refund check might be hundreds or thousands of dollars. The refund amount depends on a variety of factors, including your school’s estimated COA versus the true cost. Other factors include the type of financial aid you receive and how much you get. Each student’s situation is unique.

And remember, a bigger refund is not necessarily better. If the refund is from loan funds, you’ll have to repay that money eventually, along with the rest of your student loans. A student loan payment calculator can help you figure out how much you might owe and help put things in perspective.

Things to Do With a College Refund Check

Getting a college refund check is exciting, and you may be tempted to spend the money on a vacation or some new clothes. However, since those funds are supposed to be for your education — and you may very well have to repay it — think carefully about how you spend it. Some ideas include:

•   Start paying your student loans. You can begin repaying your student loans anytime — you don’t have to wait until the six-month grace period after you graduate. Making payments on your loans now could give you a head start on getting out of student loan debt.

This is especially true if you have loans that accrue interest while you’re in college, like federal Direct unsubsidized loans. Depending on the federal student loan interest rates, the amount of interest you might accrue over time may be substantial if you don’t begin paying them off. You can even just pay down the interest amount.

•   Put the money toward your tuition bills. You can allocate a college refund to next semester’s tuition. You might also use it for other education-related expenses, such as books or supplies.

•   Pay off other debt. Another option is to use the money to help pay off high-interest debt, such as credit card debt. With interest rates of approximately 24%, this type of debt can add up quickly if you don’t begin tackling it.

•   Return the refund. You don’t have to accept a college refund check. If the money is from federal student loans, you can send it back to the Department of Education, which could help reduce your student loan debt. As long as you return it within 120 days, you won’t pay interest or fees on the sum. To return the refund, call your college’s financial aid office to see if they can help. If they are unable to, contact your loan servicer.

Recommended: Student Loan Debt by Major

The Takeaway

You may be eligible for a college refund check if your financial aid amount was more than the actual cost of your tuition, room and board, and other fees. The check may be mailed to you or deposited directly in your bank account, or the amount may be credited to your college account for future school costs. The length of time it takes to receive a college refund depends on your school, among other factors, and it generally takes between several days to two weeks.

One way to use a college refund is to start repaying your student loans, especially if interest is accruing on the loans while you’re in school. And keep this in mind: If the interest rates on your student loans are high, one option is to refinance student loans later on for a lower rate and better terms, if you qualify. Just be aware that refinancing federal loans makes them ineligible for federal benefits, such as income-driven repayment.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

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Photo credit: iStock/Drazen Zigic

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOSLR-Q324-039

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Your college transcript is an official record of your academic progress. It’s a vital document that may be used to verify the advanced education you completed when you’re transferring to a new school or securing employment. However, until recently, some colleges would withhold transcripts if a student owed them money.

That practice changed in July 2024, when the Department of Education finalized a regulatory provision to provide students with greater protections regarding academic transcript withholding.

Learn more about how the new regulation works and what it might mean for you.

Legal Considerations

Before the new regulatory change went into effect, many colleges would withhold transcripts as a way to try to collect unpaid debts a student owed. The Consumer Financial Protection Bureau (CFPB) flagged the practice as a debt collection strategy that harms former students, both academically and for long-term earning potential.

Federal and State Laws

On October 31, 2023, the Department of Education published its final rule changes under the Higher Education Act of 1965. Among the changes was one that limits colleges that administer Title IV federal aid, including federal student loans, federal grants, and work-study programs, from transcript withholding practices.

The new provision states that colleges cannot hold transcripts that include credits a student paid for using federal financial aid.

For example, let’s say you’re a graduate of a college that administered federal financial aid to you while you were enrolled, and you used your financial aid award to pay for school courses. In this scenario, you’re entitled to receive an official transcript of any credits or hours that were paid for by federal money.

The new provision also states that colleges can’t withhold transcripts due to an unpaid debt that resulted from misconduct or fraud at the institution or an error in the way the school administered the federal aid.

Some states have already banned or restricted college transcript holds. According to a 2024 survey by the American Association of Collegiate Registrars and Admissions Officers (AACRAO), the following states restrict — or completely prohibit — colleges from withholding students’ transcripts:

•   California

•   Colorado

•   Connecticut

•   District of Columbia

•   Illinois

•   Indiana

•   Louisiana

•   Maine

•   Maryland

•   Minnesota

•   New York

•   Ohio

•   Oregon

•   Washington

Additionally, as of June 2024, six states (Massachusetts, Missouri, New Jersey, Oklahoma, Texas, and Virginia) have pending legislation that restricts academic institutions from holding transcripts from former students.

Challenges for Colleges and Universities

When the regulation changes were announced in October 2023, it was unclear how colleges would respond. The regulation explicitly prohibits transcript holds only for courses students paid for using Title IV federal funding. Therefore, institutions could technically choose to withhold course and credit information that was paid for using non-federal aid and provide the student with a partial transcript instead.

However, schools likely would have a difficult time separating which courses students paid for using Title IV funds versus other financial sources, such as private student loans. A 2024 Transcript Hold Regulation Impact survey by the AACRAO and Ithaka S+R, a higher education research firm, found that 77% of institutions surveyed said they would not implement a partial transcript policy. Furthermore, 69% of colleges said they would stop using transcript holds as a means of recouping students’ unpaid balances.

Recommended: Student Debt by Major

Common Reasons for Transcript Holds

Colleges and universities have typically withheld transcripts for various reasons. An official transcript might be withheld due to unpaid tuition and fees, past-due library fines, or campus parking citations. A transcript could also be withheld due to disciplinary actions resulting from a violation of the school’s code of conduct.

A student’s unpaid debt doesn’t have to be in the thousands, or even hundreds, of dollars for institutions to hold back transcripts. A study by the AACRAO and Ithaka S+R found that 64% of colleges withhold transcripts because of unpaid balances that are less than $25.

Impact on Students

Not having timely access to academic transcripts can result in delayed or missed opportunities for students in furthering schooling or in their careers.

Career and Education Consequences

Ramifications caused by a withheld transcript could be significant and might include:

•   Prevent or delay a student’s admission into a new school. Without their transcript, students who want to transfer to a new school or continue their education later in life will have a harder time proving the academic credits they’ve earned. Not being able to access official transcripts can prevent them from admission entirely or result in having to retake courses.

•   Derail potential job prospects. Certain professions require proof that you’ve completed specialized courses related to your career field. Having transcripts withheld can jeopardize job prospects that might unlock lucrative career opportunities.

•   Disqualify students from participating in professional exams. Some professional exams, like the American Bar Exam, require official college transcripts in order for students to take the test.

Financial Implications

A withheld transcript can also cost a student money.

•   Can impact future financial aid. Not having access to official transcripts due to an outstanding balance might make it difficult for students to apply for grants and scholarships that require a transcript for eligibility verification. Additionally, students whose transcripts were withheld due to a defaulted federal student loan would be ineligible for a new federal loan.

•   Can result in further financial inequity for under-represented groups. Advocates of the new federal regulation to limit transcript holds stated that the practice greatly impacts students who are already disadvantaged in the higher education system. This includes low-income students, first-generation college students, and students of color.

Recommended: Student Loan Forgiveness Guide

Strategies for Obtaining Withheld Transcripts

If you were denied your official transcripts and aren’t protected by the new Department of Education rule, there might still be a way for you to get your transcripts.

Negotiate with the Institution

It’s worth seeing whether you and your former school can find middle-ground when it comes to releasing your transcript. For example, you could offer to pay a portion of your unpaid balance now, in exchange for your transcripts, and agree to repay the reminder by an agreed upon date. A student loan payment calculator may be helpful in figuring out what you can afford.

The school administrator might also be willing to make an exception if you’re facing a hardship that makes paying back the debt difficult. For example, if you’ve been unemployed and a new job opportunity that requires the transcripts can help you regain steady income, the school might agree to work with you since the new job should help you repay what you owe.

Explore Payment Plans

Another approach to potentially unlocking your transcripts is to speak to your school administrator about its payment plan options. Prepare to show proof that you can financially follow through with the payment plan by having pay stubs or other proof of income on hand.

Propose a monthly payment that realistically is aligned with your budget, and a timeline of when you’ll fully repay the debt. As an additional show of good faith, consider offering to have payments automatically withdrawn from your bank account. This isn’t a surefire approach, and the institution may decline your request for a payment plan, but it’s worth exploring.

Alternatives and Solutions

If none of the above methods works for you, there are other options you can pursue.

•   Pay what you owe. Find out how much your unpaid debt to the school is. If the amount is within your means, consider paying it and getting out of student loan debt to avoid delays if you need access to your transcripts.

If your loan payments are challenging to make, you might want to consider refinancing student loans. With refinancing, you replace your old loans with a new private loan, ideally one with lower interest rates and more favorable terms. This could make it easier to manage your payments. Just be aware that refinancing federal loans means they are no longer eligible for federal programs and benefits.

•   Request an unofficial transcript. In some cases, such as when an employer wants to verify that you took a particular college course, an unofficial transcript from your school might suffice.

•   Submit a complaint. If your college is withholding your transcripts because you owe money, but you believe you’re protected under the new transcript withholding provision, you can file a complaint with the CFPB.

The Takeaway

The new regulation by the Department of Education regarding the withholding of college transcripts is a win for the millions of students who use Title IV federal financial aid to fund their education. These students are now generally protected from colleges withholding their transcripts as a debt collection practice.

However, colleges still have a limited scope in which they can deny transcripts. Students who’ve paid for their education using private student loans, for instance, may find their transcripts withheld if they owe the school money. Students looking for manageable ways to pay off their loan debt — and therefore gain access to their transcripts — may want to explore student loan refinancing, especially if they can qualify for favorable rates and terms that might make repayment easier.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Is it legal for colleges to withhold transcripts?

As of July 1, 2024, a new regulation from the Department of Education states that colleges can’t hold transcripts for courses that students paid for using federal aid. This rule applies whether the student has an unpaid balance, like campus parking fines, or a defaulted federal student loan.

How long can a college withhold transcripts?

A newly enacted federal law limits colleges from holding your transcripts. This rule applies to students who received and paid for their college courses using Title IV funding, like federal Direct Loans and through the federal work-study program.

Can I get my transcript if I owe money to the college?

A new federal regulatory change that went into effect on July 1, 2024 says that students who paid for their courses using federal money have a right to their academic college transcript. However, colleges can hold transcripts due to balances on the student’s account if courses were paid for using non-Title IV aid.

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Photo credit: iStock/jacoblund

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you enrolled in a college, university, or career school based on misleading information from the school, or you were the victim of other types of misconduct by the institution, you can apply to the government to have your federal loans forgiven under a process known as Borrower Defense Loan Discharge.

If your borrower defense application is approved, a discharge means you will no longer have to repay your federal student loans. In some cases, you may also see reimbursement for federal loans you’ve paid up to now, including interest on the loans.

Understanding Borrower Defense to Repayment

The Borrower Defense to Repayment program has made a difference for a great many people. As of October 2024, the Department of Education (DOE) had forgiven $28.7 billion worth of debt for more than 1.6 million borrowers who were cheated by their schools, saw their institutions precipitously close, or were covered by related court settlements.

Borrower defense discharges apply only to federal student loans that are Direct Loans or can be consolidated into a Federal Direct Consolidation Loan, including Federal Family Education (FFEL) Program loans, Federal Perkins Loans, and Parent Loans for Undergraduate Students (PLUS).

Borrower defense discharges don’t apply to private student loans.

Definition and Purpose

Borrower defense loan discharge, which is sometimes shortened to “borrower defense” or “borrowers defense,” is a federal regulation that allows students who can demonstrate that they have been defrauded by their schools to get forgiveness of their debt.

According to the formal definition of borrower defense, people can apply who were “enrolled in a school or continued to attend a school based on misleading information from the school or other misconduct covered by the regulation, and suffered a detriment that is of a nature and degree warranting a full discharge of their applicable federal loans.”

Historical Context and Recent Developments

Borrower defense began in the 1970s. At that time, the federal government created an interagency committee to examine and address the growing problem of “educational abuses.” An amendment to the renewal of the Higher Education Act in 1993 codified borrower defense to repayment into the Act.

The law gives the Secretary of Education the power to determine when and under what circumstances valid defenses against repayment of federal student loans can be granted.

The Department of Education received a modest number of borrower defense claims in the 20th century. However, in the last 20 years, borrower defense has gained prominence. An official administrative process for borrower defense was created after the 2015 collapse of Corinthian Colleges, which affected tens of thousands of students.

The most famous borrower defense case is a class-action suit known as Sweet v. Cardona (formerly Sweet v. DeVos). On June 22, 2022, the Department of Education and the plaintiffs in the case agreed to a $6 billion settlement. Those payments are still being processed as of late 2024.

Recommended: Student Debt by Major

Eligibility Criteria for Borrower Defense

There are six different grounds that may qualify an individual for a borrower defense discharge under the 2023 Borrower Defense Regulation, which sought to strengthen protections for borrowers. According to the Federal School Aid division of the DOE, the six criteria are:

1. Substantial Misrepresentation

A school makes a substantial misrepresentation when it lies to or misleads students about its educational services, financial charges, or the employability of its graduates, and that information is central to a student’s decision to enroll, stay enrolled, or take out loans.

2. Substantial Omission of Fact

A school makes a substantial omission when it suppresses, conceals, or omits important information that a reasonable person would have considered in deciding to enroll, stay enrolled, or take out loans.

3. Breach of Contract

A breach of contract has occurred when you have an agreement with your school and your school does not do what it promised to do in your agreement. The agreement must have been made in exchange for your decision to attend or continue attending, your decision to take out loans, or for funds disbursed in connection with a loan.

Recommended: Do Student Loans Count as Income?

4. Aggressive and Deceptive Recruitment

A school engages in aggressive and deceptive recruitment when it:

•   Demands or pressures you into making enrollment or loan-related decisions immediately

•   Takes unreasonable advantage of your lack of knowledge about, or experience with, postsecondary institutions, postsecondary programs, or financial aid

•   Discourages you from consulting with others before making an enrollment or loan-related decision

•   Obtains your contact information through websites or other means that falsely offer assistance to individuals seeking federal, state, or local benefits; falsely advertise employment opportunities; or present false rankings of the institution or its programs

5. Judgment

This means that a judgment has been issued against your school where a court has ruled that your school violated the law. This judgment must be based on your school’s act or omission relating to the making of a loan or on the provision of educational services for which the loan was provided. It’s important to be aware that a settlement is not a judgment.

6. Prior Secretarial Action

You may be approved for a borrower defense discharge based on a decision by the DOE to revoke your school’s provisional program participation agreement or deny its recertification to participate in the federal student aid programs, if that action is based on conduct that could give rise to a borrower defense.

Application Process

When you begin the application process, you’ll be asked to create a StudentAid.gov account so you can submit, review, and manage your borrower defense application online.

Alternatively, you can download a PDF version of the borrower defense application and submit your completed application by mail to the address listed on the application.

According to regulations, your application must meet the “materially complete” standard to be considered. Among the things you will need to provide are:

•   A description of what your school did or failed to do that is covered by the kinds of misconduct that qualifies for borrower defense discharge.

•   The names of the school or representative of the school that committed the misconduct and when the misconduct occurred.

•   How the misconduct impacted your decision to attend the school, to continue attending the school, or to take out the loan for which you are applying for a defense to repayment

•   A description of the harm you experienced because of the school’s misconduct.

Under the 2023 regulation, the Department of Education has three years to make a decision on your application after receiving it and determining that it is materially complete. However, the three-year period is paused if your application becomes part of a group application process at any time.

Potential Outcomes

A borrower defense claim can result in full loan forgiveness, partial loan forgiveness, or no loan forgiveness. A refund may include both principal and federal student loan interest. The remaining loan balance may also be discharged, meaning you won’t have to repay it.

However, your request for borrower defense may not be approved. If the evidence does not meet the DOE’s standard, your claim will be denied. You won’t receive a discharge of your federal student loans, and the forbearance or stopped collections period will end for all of your loans. You’ll be responsible for repaying these loans.

Alternatives to Borrower Defense

If you’re trying to get out of student loan debt, and you are denied borrower defense, you may qualify for a deferment or a forbearance. With both of these options, you can temporarily suspend your federal loan payments. However, there is a difference between the two options related to the interest on your loans. In deferment, interest doesn’t accrue on some types of Direct loans, while during a forbearance, interest accrues on all Direct loans.

If you are seeking student loan forgiveness through an income-driven repayment plan over a period of years, there are several programs that exist to help lower your monthly loan payments based on how much money you earn and your family size.

Another route to explore is refinancing your student loan to potentially obtain a lower interest rate or more favorable terms of repayment. When you refinance student loans, you replace your old loans with a new loan from a private lender. It’s important to know that if you refinance federal loans, they will no longer qualify for federal student loan forgiveness.

As you consider different methods to manage your student loan debt, a student loan payment calculator can help you determine what your loan payments might be in various scenarios.

The Takeaway

Borrower defense can be a path to federal loan forgiveness or even repayment for people who can prove misconduct on the part of their school. As of October 2024, the Department of Education had forgiven $28.7 billion for more than 1.6 million borrowers who suffered from misconduct by their schools, saw their institutions precipitously close, or were covered by related court settlements. The application requires proof of misconduct and the harm it caused you, and the Department of Education can take three years to decide whether to approve it.

If you don’t qualify for borrower defense to repayment, there are other options you can pursue for help repaying your student loan debt. These include deferment, forbearance, or student loan forgiveness, if you qualify.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

What types of school misconduct qualify for borrower defense to repayment?

The types of school misconduct that can lead to a successful case includes an institution lying to or misleading borrowers about its educational services, financial charges, or the employability of its graduates.

How long does the borrower defense to repayment process take?

The Department of Education (DOE) has three years in which to review an application for borrower defense. The DOE says, “We have three years to make a decision on your application once we determine that your application is materially complete. The three-year period is paused if your application becomes part of a group claim process.”

Can private student loans be discharged through borrower defense to repayment?

No, private student loans are not eligible for this program. Borrower defense to repayment is only applicable to federal student loans.

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Photo credit: iStock/PeopleImages

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

This article is not intended to be legal advice. Please consult an attorney for advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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