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Racial and ethnic demographics continue to shift in the United States, and more students of color, first-generation students, and students from lower-socioeconomic backgrounds pursue higher education. In some states, persons of color are quickly becoming the majority. However, while this shift is occurring, certain groups are being left behind in higher education and workforce opportunities. Historically underrepresented students continue to bear the negative impact from the cumulative disadvantages associated with systemic inequity in education. One of the most significant issues affecting the way students of color and from low-income backgrounds participate in higher education is rooted in the way systemic racism has shaped wealth gaps and student debt, including debt owed directly to institutions. In this report, we review the results of an in-depth descriptive qualitative study that examined the lived experiences of students and staff familiar with institutional debt, also known as stranded credits.

Our findings indicate the following: (1) Stranded credits disproportionately affect students of color and those from low socioeconomic backgrounds; (2) Stranded credits impact students' academic and career trajectories, can mean the difference between stopping out and dropping out, affect financial aid eligibility, and have a detrimental impact on students' psychological well-being; (3) Stranded credits prevent students from taking advantage of the financial and career opportunities that could help settle their institutional debt; (4) Institutional bureaucracy sometimes contributes to the accumulation of institutional debt, particularly for first generation students who are unfamiliar with how to navigate the collegiate environment; (5) Intersecting identities such as first generation and socioeconomic status can increase a student's risk for accruing institutional debt; (6) Because there are restrictions on the use of federal aid and very few financing options, students usually have to settle their outstanding debt with personal funding; (7) Payment plans to settle institutional debt are not necessarily helpful for students who are experiencing financial instability; (8) Debt relief programs offer students an opportunity to address their institutional debt while also continuing their matriculation; and (9) Institutions need to be more flexible and compassionate to help students resolve stranded credits. It is in their best interest to create solutions that will help keep students enrolled and to go on to be well-employed contributing alumni.

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