College ends loan program
By Phyllis Moore
Published in News on June 12, 2008 1:47 PM
The board of trustees at Wayne Community College voted Tuesday to discontinue participation in a federal loan program for students, at least for the next year.
At a special called meeting, Dr. Kay Albertson, WCC president, told the board of the administration's recommendation to "get out of the business" of certifying student loans.
"Over the last six or seven months we have been getting more and more information from various sources in reference to student loans," she said. "Not student scholarships that require no payback but student loans, particularly (Federal Stafford) student loans."
Research showed that of the 58 community colleges in North Carolina, only 23, including Wayne Community, were still involved in the student loan certification process, she said. Many counterparts have cited increased default rates and no credit checks as reasons for exiting the program.
College Foundation Inc., the college's primary lender, stopped the practice of completing credit checks for students applying for the loans in July 2007.
"We don't have any credit checks any more. Any student can walk in our doors," Dr. Albertson said. "We don't have the human resources to do the kind of advisement and counseling that most of our students require to learn about budgeting and managing."
As a result, students have often borrowed more than they can afford to pay back, leaving the college with a default.
Board member Dr. Michael Gooden was incredulous.
"College Foundation is lending money but not doing credit checks?" he asked. "Can you see a bank or any credit card company doing that?"
Board member Tim Haithcock was also baffled.
"It's kind of hard to understand," he said. "I just think we have got to look at this very carefully. It's a complex issue."
At the same time, he said he was concerned about restricting access to any student desiring to attend the college.
Dr. Linda Nelms, vice president for student services, said there are other options for funding available to students, including different types of loans and lenders.
And, she explained that according to her research, she has found no decrease in enrollment at other community colleges that have opted to leave the loan program.
It's really more of a stewardship issue for students, said Karen Statler, associate director of financial aid. Students should be advised of all options available, but at the same time there is an obligation to caution against borrowing more than they can afford to repay.
Board member Tommy Jarrett asked whether the state community schools' office had weighed in on the issue.
"No statement," Dr. Albertson said, "but the advice that we have all received is, look very carefully at what you're doing if you're in the business, look at your default rates, make sure you're doing adequate counseling and do the best that you can do."
Gooden said it would be foolish to continue in the loan program, especially if there were other funding sources available -- be they grants, scholarships or loan programs where credit checks were done. To consider that, he added, would also offset any notion that trustees were "pulling the rug out from under them (students)."
Most supported the administration's recommendation to discontinue being affiliated with the Stafford loan program -- with one caveat.
Jarrett and board member Keith Stewart expressed some "unreadiness" before the vote was taken.
"I think I'm going to support it but I would like for us to review it again next year to see what we have done," Jarrett said.
"That's my unreadiness," added Stewart.
Board member Gwyn Wilson suggested if the General Assembly -- currently involved in a study of the changes necessary to improve financial aid for community college students -- encouraged the College Foundation to start doing credit checks, something beneficial might come out of it.
Board member Bobby Strickland posed the question that turned the tide.
"If we got out this year, can we get back in next year?" he asked.
Ms. Statler said that is an option.
With that, the board unanimously supported the recommendation, with plans to review it again next year to reassess its decision.