Wayne Community College targets efforts at direct loan program
By Phyllis Moore
Published in News on October 27, 2013 1:50 AM
pmoore@newsargus.com
Getting a college education -- even at a community college -- is not cheap, and despite years of budget shifts and necessary tuition hikes, Wayne Community College officials say they are always seeking ways to provide students with the means to pay for their education.
Even if that means offering direct student loans.
The WCC board of trustees long debated the pros and cons of participating in the federal program offering low-interest loans to students before deciding to in 2009.
Of the financial aid options available to students -- most commonly grants and scholarships -- loans are the riskiest and most confusing, college officials said.
Which, they said, is why they are continuing to try to educate their students about the program.
Direct student loans are considered financial aid, but they are repaid to the federal government rather than the college. There are also penalties attached when the borrower defaults on payments.
And while those penalties are directed to the borrower, the college also stands to lose funding or face sanctions if the default rate of its students grows too high.
"If the default rate is greater than 3 percent, the college could lose Pell grants and the ability to dispense financial aid," said Gene Smith, associate vice president of academics and student services.
The college's default rate is currently in line with that, said Brenda Mercer, director of financial aid. For fiscal year 2011, the two-year default rate was at 2.7 percent, she said.
"This number includes 73 borrowers in repayment and of which two defaulted," she explained.
Since the direct loan program was introduced in the fall of 2009, officials in the financial aid department have tweaked efforts to better educate students about how it works.
In a nutshell, they come due and must be repaid, whether or not the student completes his degree or finds employment after graduation.
"Loans are not free," Smith said. "You'll have to pay them back."
In fact, he explained, payments begin 181 days after a student is no longer enrolled in class, whether due to graduation or withdrawal. And interest is accrued.
With a loan balance of $20,500, for example, at an interest rate of 6.9 percent, in 10 years the amount paid for the education becomes $28,309.
As part of the registration process, every student applying to attend WCC must fill out financial aid paperwork. That lets them know if they are eligible for financial aid, be it a grant, work study or other option.
It can be a confusing process, Smith said. And for those who have never taken out a loan, it gets even more complicated.
"We want them to know that they do not have to accept the loan. It's just an offer," he said. "We want them to know that there are extra steps that they have to do before they can receive the loans."
For students considering loans, Ms. Mercer and her staff offer financial aid sessions, one-on-one counseling and student loan information. Advisers on campus also are provided with loan information, and the subject is covered during new student orientation.
Smith said the hope is that students will make more informed decisions about the process.
"Last year, 24 percent of our students received direct loans," he said.
Overall, about 75 percent of the students receive some sort of financial aid, Ms. Mercer said.
"Seventy-five percent receive the Pell grant and that means 50 percent declined the loan offer," Smith said. "That's important. That tells that we're doing something to help them understand that the loan is not the best route.
"Our goal is to provide them what they need, make sure they have a working knowledge of what it's going to cost them to attend, what they're going to be able to get."
Smith said the intent is not to talk anyone out of finding an affordable payment plan, but rather to ensure that the decision made is a wise one.