RALEIGH — Some community college presidents in North Carolina are banding together against a new law that could make low-interest federal loans an option to nearly 200,000 students, fearing they could lose all financial aid if too many students don’t repay.
Some community college officials want to reverse the law that beginning in July would force all 58 campuses to participate in the loan program. Thirty-eight schools don’t participate now, including campuses in major cities such as Durham, Winston-Salem and Charlotte.
The law passed last year determined the third-largest community college system in the country should make every financial aid option available as the Great Recession sent students — many of them unable to find work in their chosen fields — cramming into classrooms to revamp or hone skills. But some legislators want to allow each campus to continue deciding for itself.
Critics say withdrawing the requirement would deny students the ability to choose for themselves whether a loan would carry them to an associate’s degree or a better job.
The House education committee is scheduled to begin debating the question Tuesday.
Tuition at North Carolina community colleges has risen by a third in the past two years to $1,808. But adding fees, books and living expenses pushes the average cost to $15,084 this year, according to the North Carolina State Education Assistance Authority.
More than 116,000 students enrolled in associate degree, diploma and certificate programs received financial aid in the 2008-09 academic year. That figure — about half of all degree students — was down 9 percent from five years earlier. The average financial aid package nearly doubled in that period to $3,290.
About 25,000 community college students have taken federal loans — about a tenth of all student borrowers in the state. Some students also turn to bank loans and credit cards to pay their expenses, though both charge significantly higher interest rates.
College presidents pushing for repeal fear students won’t be able to pay off the loans if they drop out or don’t land good jobs. That could lead to loss of all federal financial aid money, though federal officials could not give an example of the last time that happened.
School presidents also say students shouldn’t have access to the loans because they don’t need the money.
“I feel that if we were to participate (in the federal loan program) there would be students that would borrow money for purposes other than education,” said Martin Nadelman, president of Alamance Community College and one of the most vocal critics of the mandate. “I think we’re trying to help them do the right thing.”
Montgomery Community College president Mary Kirk said her campus, Nadelman’s and many others have affiliated foundations that offer grants on top of federal and state financial aid. Her college’s foundation had money for 60 to 70 scholarships this year, yet got only about 40 applications, Kirk said.
So there’s no reason a student should leave community college burdened with debt, said Kirk, who heads an association representing the state’s community college presidents.
“Maybe people would say that’s not your decision. It’s true, it’s not. But a lot of our students are first-generation college students” who may have trouble managing loans, Kirk said.
The view is shared by the American Association of Community Colleges, which says the schools are structured so that borrowing is a student’s last resort.
The loan mandate was the product of a legislative committee that studied state-funded financial aid and found requiring all community colleges to offer them would maximize available federal funding. The committee found North Carolina was one of four states where more than 40 percent of community college students can’t get federal student loans.
“Nothing suggested to me that students in these other colleges were any less capable of making decisions about their life, about what debt they wanted to incur, or that they were any less advantaged or disadvantaged in gaining jobs when they left the college,” said committee member Rep. Rick Glazier, D-Cumberland. “It’s not about what’s best for the colleges, but what’s best for the student.”
Matthew Robinson said subsidized loans might have eased the struggle of some of his classmates at Alamance Community College, like the single parent with two children who drove the bus he once rode to high school.
“I know people who paid for their own tuition and books, paid for rent,” said Robinson, 21, of Mebane, who now studies business at the University of North Carolina at Greensboro. “They could use that help.”
None of the state’s community colleges is now at risk of being sanctioned for high numbers of unpaid student loans, said Van Wilson, a top academic and student services officer. If a school has ever been penalized, it’s been decades, he said.
While the U.S. Education Department annually warns schools when they have unacceptably high student loan default rates, the agency was unable to say this week when a school actually was cut off from being able to offer federal financial aid.
Edgecombe Community College President Deborah Lamm said she’s determined to make student loans available because the need for financial aid is increasing. Her school in one of the state’s poorer regions saw enrollment jump 43 percent over two years to 3,380 last fall. Eighteen percent of the school’s students borrowed to cover education costs in 2009, up from 8 percent two years earlier, Lamm said.
“Our students are using that money to pay the rent, child care,” Lamm said. “It’s just that the economy is so dire and so desperate that more and more people are needing the help.”