Four North Carolina community colleges will not let students apply for federal student loans, fearing they’ll run up debts they won’t be able to repay. Other colleges in the state are considering pulling out of the loan program.
North Carolina legislators passed a law requiring community colleges to participate in the loan program, then reversed the mandate. Gov. Beverly Perdue vetoed the reversal, but the veto was reversed in a special session late in the year.
Central Piedmont Community College started offering the federal student loan program in July. Some 3,168 students have run up $5 million in student loans.
“Our concern is if students take a large amount of debt, once they do finish school it will impact their ability to do things like buy a house or a car,” said Jeff Lowrance, assistant to the president at CPCC.
Leaders are also concerned about new federal laws. In a couple of years, the schools could lose all federal aid, including Pell grants, if a large percentage of their students default on the loans.
“There is no screening process. There is no way to tell if a student is in a good position to pay back those student loans,” Lowrance said.
North Carolina ranks last in the nation in community college students’ access to financial aid, says Debbie Cochrane of The Institute for College Access and Success. There’s little risk community colleges could be barred from Pell Grants because of loan defaults, Cochrane says.