So I have been transcribing a copyrighted song (as a HOBBY) that I love and was thinking about using it as a graduation song for my music school, but I’ve had to make some tweaks because there are some instruments involved that my music school doesn’t have access to. Even if I give credit to the composer, and I will make no profit from the performance, will it still be illegal to use my transcription?
Even if I give credit to the composer, and I will make no profit from the performance, will it still be illegal to use my transcription?
This definitely infringes the composer's performance and derivative work rights under the composer's copyright. There is a mandatory right to cover someone else's composition outside of a movie or TV show (roughly speaking) for a statutorily fixed royalty, but the bureaucracy is such that it would be impractical to do here.
Whether or not the "fair use" defense applies in this case is a "colorable" argument, but really, when you perform the entire work as written except for transcription, winning a "fair use" defense in a infringement action would be a long shot.
The fact that it is somehow connected to an educational activity would be the strongest argument in this case. Also, as noted in a comment, your school may have obtained express permission to cover the work:
Your music school may have a license with a PRO (performing rights organization) that covers your song. You might make some inquiries with the administration as to whether this is the case.
Radio stations obtain similar licenses to play a large catalog of music without individually obtaining licenses to use each work separately from the author.
This said, this kind of activity is often done, despite the fact that it is a copyright infringement, and most of the time, if the performance isn't too widely broadcast, most copyright owners will never pursue copyright infringement claims over something like this and indeed often won't even consider doing so.
Still, copyright is an absolute bar to infringing rights without permission, even if there is absolutely no money received for the work and even if there is full attribution of its author. I'm not a great fan of the law as it is, and it is often disregarded, but that is the law.
Also, this answer is based upon U.S. law, but there isn't much international variation in this part of copyright law in countries that meaningfully enforce copyright laws in their courts. But, as another answer notes, in some countries the mandatory right to do a cover of songs in the U.S. is much easier bureaucratically, in some other countries:
In several countries, there are organizations that deal with the copyright issue globally. That means you pay a certain (quite small) fee to be allowed to perform a piece of music publicly, and the organization deals with the individual right owners. That makes reusing works much simpler.