N.C. Community Colleges Required To Offer Loans Starting July 1st

By: Chris Jones
By: Chris Jones

Community college students across the state will soon have a new option in paying for their education. Starting July 1st colleges will be required to offer student loans. Some schools feel that's risky business.

Some community colleges in the east got out of the student loan business because they saw their loan default rates rising. They say that hurts the students and the school. Legislation has gone back and forth on the issue, and a recent veto from democratic Governor Bev Perdue all but seals the deal, forcing community colleges back into the loan business.

Victoria Tyson is a single mom and a first time college student, hoping to make a difference for her and her family.

"I wanted to show my son at any age you can get a degree, you can still be whatever you want to be," said Tyson

It's not cheap and Tyson needs help. She has Pell grants which are federal funds she won't have to pay back. She says she'd like to get a student loan to cover some of her living expenses and allow her to remain a full time student. She's thrilled her school has to start offering loans. Her school, Beaufort County Community College is not.

Dean of Administrative Services Phillip Price said, "Once our default rates get above a certain percentage we stand to lose federal funding."

Price says if 30% of their students defaulted on their loans, the school wouldn't be able to offer Pell grants anymore. The majority of their students, including Tyson, rely on those grants.

"If we weren't able to award Pell grants you could almost assume 60% of the people at the college wouldn't be here. That's pretty much closing the doors," said Price.

In 2007 their default rate jumped from 0 to 6.4% in just one year. It was down a couple percentage points in 2008 according to the most recent numbers released by the Department of Education. Price says in order to stay competitive, many lenders stopped screening applicants through credit checks, and default rates started rising.

The problems at Beaufort County Community College pale in comparison to the ones at Martin Community College where the default rate is a staggering 20.8 %."

MCC's President Ann Britt said "We were 12.8 in 2005 and we have not given a loan since then and we're currently at 20.8."

Again, 2007 numbers, the more recent numbers show them at 23-percent. Britt can only imagine how that number could jump when they're required to start offering loans again. She says students should think twice before taking out student loans, because the only way out of them is to pay them off. Even bankruptcy doesn't forgive student loan debt.

"That is the worst loan you can have. It never goes away, they'll take it out of social security, it will go to your estate," said Britt.

She says she knows some students feel it's the only way they can afford their education, but says student loans should be a last resort. Victoria Tyson says no matter how she computes it, she's already trimmed her budget about as far as she can.

"The loan is going to make or break the deal in being a full-time student to a very low end part-time student," said Tyson.

Unless lawmakers override the governor's veto, community colleges will have to offer loans starting in July. So Ann Britt says her school will go out of their way to counsel students about the risks involved.

Other colleges in the east are working out plans to keep their default rates down. Craven Community College is just 1.7%. Pitt Community College is at 7%, and they never stopped offering loans. Lenoir Community College has a default rate just over 11-percent.

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  • by OHL on May 21, 2011 at 11:25 AM
    Solution: Pay the students at the END of each semester instead of at the beginning only if they successfully complete the work! This is not ideal, but would surely save the Community Colleges from losing all! In the real world, I don't know of many employers who pay employees their wages before they do the work! I realize this would be a hardship for some, but it could be a win-win situation in the end if carefully handled and properly administered!
  • by David Location: New Bern on May 18, 2011 at 08:57 AM
    Look, nobody ever said it was going to be easy. My mother went as a full time student for 4 years and had 2 children to care for, while working a full time job. She still made straight A's. It's all about how bad you want it. There are alot of people that think they want it, get a loan and start school. It is too easy for them that way and they lose that hunger. So many of them stop after that and have another bill to pay. They end up worse off then they started. All that does is make it harder for the rest of us. Just like financial aid. I can't get it because it is based on the income of status if everyone that applies. Half of them are on welfare. They apply for classes and get there fianancial aid checks, then withdraw and never go to class. Happens all the time. It just allows certain people to take advantage f the system.
  • by Abin Location: Michigan on May 18, 2011 at 01:49 AM
    Student first should analyze their situations first before they get any type of loan since they are the ones who will have to pay for it in the end. Here’s a great article relating interesting information that compares different college majors and how long it takes to pay back student loan
  • by US-First Location: Greenville on May 17, 2011 at 09:06 PM
    Read my lips. Don't force community colleges to loan money without due diligence. No one is saying to force them not to loan money, only that they should be able to loan money or not based on the financial health of the college and the quality of the student applying. Without this you are just creating another probable bloating debt for future taxpayers and financial crises in community colleges. Those students posting about needing the loans because of hardship should also consider how hard going to school would be if 50% of the community colleges failed, closing their doors. The facts indicate that many community colleges that secured loans have from 7 to 40% default rates. Cry me a river when everyone is paying back their loans responsibly and they still won't loan money. Then I would be on your side. Until then I suggest you put the pressure first on your fellow students to pay what they owe and last on the government and by extension taxpayers to foot the bill.
  • by BCCC Student Location: Eastern NC on May 17, 2011 at 06:25 PM
    At times it is really hard to pay for school and pay your bills, if we can get student loans then we will be able to go to school full time get an education then get a job and support our family. If you get laid off you need a new career and that takes full time student status.
  • by ECU alumni on May 17, 2011 at 02:33 PM
    Somehow, someway, people with no money need to be able to get some sort of education. IF they can cut it. Who has all of the answers and solutions?
  • by Tom Location: Goldsboro on May 17, 2011 at 01:06 PM
    No, it's not risky, it's stupid. I think the new legislature needs to "undo" this immediately. Yeah, students are already paying back loans....but in this case, not to a community college that would pass the risk on to taxpayers.
  • by Anonymous on May 17, 2011 at 01:06 PM
    If you receive a pell grant and you drop out or are kicked out before a certain time period you are required to pay back the money! Get your facts straight.
  • by martin county on May 17, 2011 at 08:53 AM
    To "Dave P", its the school they really dont have much to offer and they dont have online classes like the other commmunty colleges.. they need to come up with a better plan bc their enrollment is soooo low. With them having to offer the student loans there enrollment may pick up...
  • by To: Anonymous @ 10:31 PM on May 17, 2011 at 08:31 AM
    Students are already required to pay back a % money when they drop out of school after grants have been issued. This is why most people that post on this site should do research first before making nonsense comments.
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