Something is not adding up. Universities only "attempt" to withhold transcripts if there is unpaid tuition. They don't withhold transcripts for defaulted student loans.
You need to clarify the debts owed.
I agree with my colleague. Some facts seem to be missing.
It seems that you used student loans to pay for some of your tuition, what about the rest of the tuition? Were you responsible for the rest and has that obligation gone into default or delinquent status?
Generally speaking Colleges and Universities can withhold transcripts as a means of collecting payments. You may need to discuss with the university the status of your account with them, what is outstanding? Then try and make arrangements to make the payment.
In some rare instances you can retrieve your transcript from a college even though you owe them money, but you would have to prove that the tuition debt that was incurred did not result in you receiving any "educational benefit." Also, you would have to file a bankruptcy as well. It does not seem like that is the case in your situation. You may just need to try discuss the matter with your school and the debt collector. Good Luck!
The asking of and answering general questions does not establish an attorney-client relationship. Please consult with an actual attorney in your local area before deciding on a course of action.
No matter what you do, you should work on getting the loans out of delinquent status since delinquent status has ramifications. Depending on your employer and how valuable you are, they may offer some assistance to help you fix the problem. The only other possibility is to make an offer with the attorney or university. If you have half or even a quarter of the money, they may change their position. Money talks.
This trend is sadly increasing. You student loan companies may ask your university to withhold your transcripts, and you school is allowed to withhold the transcripts. The school really doesn't get a benefit for withholding, but more and more schools are doing it. You could file Chapter 13 and the automatic stay should lift the hold. You might try calling the University President or Provost and maybe they can overrule the decision. Alternatively seek to consolidate with Direct Loans, a government program, and apply for income based repayment. The consolidation will cure your default.