No more federal student loans at Caldwell Community College & Technical Institute
Starting with the 2013-14 school year, students will no longer be able to use federal student loans to pay for their education at Caldwell Community College and Technical Institute.
At a board meeting Wednesday, trustees voted unanimously to stop processing federal student loans. Students would still be free to take out private loans.
Caldwell students' default rate on the loans has been climbing -- it was 20.3 percent in 2011, up from 10.6 in 2010 – and getting closer to the level that would trigger the college losing eligibility for Pell Grants, need-based federal grants that students don’t have to repay. Pell Grants are used by more CCC&TI students than are federal loans.
Some trustees worried that ending federal student loans would cause a drop in enrollment – but they said losing Pell Grants would be devastating as well.
“We’re just in the corner with a gun pointed at us with this thing,” trustee Bill Stone said.
In 2012-13, 258 CCC&TI students relied on federal student loans, and 1,717 relied on Pell Grants. Another 1,132 students had a combination of federal student loans and Pell Grants.
Schools where the default rate on federal student loans reaches 25 percent are at risk of losing eligibility to receive Pell Grant funding.
The federal student loan default rate was 9.9 percent nationally for 2010, the most recent year for which a rate was available, but defaults have risen because of the weak economy and rising college enrollment.
CCC&TI isn't the only institution in the N.C. Community College System to see high default rates. In 2010, 19.4 percent of Western Piedmont Community College's borrowers defaulted.
CCC&TI president Ken Boham, along with several trustees, said higher usage of the Pell Grant program propelled their decision to stop federal student loans.
“The question is, what is most difficult for the college?” trustee Ron Beane said. “Both would be disastrous, but the worst thing would be to lose Pell.”