The college I previously attended, refuses to release my transcripts unless I apply for a Sally Mae loan to cover the balance owed to the school?Anyone ever heard of such a thing?

Was it that they wouldn't give you the transcripts until you specifically took out a Sallie Mae loan or they wouldn't give them to you until you paid the balance due? The second one is VERY common (I'd even guess that virtually all schools do this -- mine wouldn't release my transcripts because of a $25 parking ticket I'd forgotten about!!). It's one of the only items of collateral that they have to get their money (that and your diploma, although you can pretty much live without the diploma itself, so it's really just the transcripts). I've never heard of anyone saying you have to take out a specific loan to pay for it. I would guess (and I'm just guessing here) that they probably really don't care how you pay it and were just giving you an option of how to do it. The problem is that the loan would be for educational expenses already incurred and it might be that SM is one of the only ones to do that (that's also a big guess, though).

Not that this was a lot of information, but I hope this helps! Good luck!!

I will second that! The second part at least. All schools hold transcipts if a balance is owed. However I have heard of loans being backdated for the same academic year.