Can an elementary school refuse to transfer records?

One of my family members is having financial problems and had to switch her child from Catholic school to public school because they can no longer afford the tuition. She is now trying to enroll her child in the public school system, but the Catholic elementary school will not release her child's records until last year's tuition is paid in full. The public school won't enroll her child because she doesn't have the records. School starts in 4 weeks and it looks like the child won't be attending any school now. She has been paying the tuition balance, a little bit at at a time, but since it is not paid in full she is stuck between a rock and a hard place. Can the Catholic school refuse to transfer the records? Any suggestions you can provide would be much appreciated.

Update:

They live in New Jersey.

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