Potentially Yes. They have no obligation to give you an "official transcript" which will be required by your new school. You should be able to obtain an unofficial transcript, but it probably won't be accepted by your new school for purposes of obtaining credit. If you can't pay the balance, you may want to look into filing bankruptcy. When you file, the school may no longer withhold the official transcript. However, there is a case in NJ, In re Billingsley, which held that if you have a non-dischargeable student loan, then you were not entitled to the transcript. There is debate as to how and when this case applies. I would recommend you find a consumer law or bankruptcy attorney in your area to help you with this tricky situation.
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