High default rates are a concern in all sectors, according to lawmakers, student advocates and college leaders. But most thought community colleges would be in the clear thanks to their relatively affordable tuition, which results in small numbers of student borrowers. That confidence appears to be somewhat misplaced, at least in the case of Frank Phillips.
Some community college officers said default rates penalize faculties for factors beyond their control, including the local economy or the life conditions of students. And faculties can do little to encourage students not to take on unneeded debt.
The legislation features a protection for associations that face default option-fee sanctions. Universities can file an appeal with all the section depending on the percentage of pupils who take out national loans. The attractiveness was constructed to regulations to keep schools from being penalized depending on a few borrowers.
The federal "participation rate index challenge" creates a sliding scale. Put simply, it sets a standard for sanctions that is more lenient if a smaller percentage of an institution's students take out loans.
For example, the baseline default rate of 30 percent carries penalties merely at institutions where at least 2-1 percent (approximately) of students participate in federal loan programs. But if a school has a higher default fee, it may trigger sanctions even if fewer students participate; if its participation rate was at least 18 percent, for example penalties would be faced by a school for a default rate of 35 percent.
Since just 19 percent of community school pupils borrow, based on data in the American Association of Community Colleges, the sector-wide three-year default speed of 2 1 percent indicates few would neglect beneath the appeal procedure.
But while most community colleges with failing rates will prevail with their appeals, experts said, they will still take a public-relations hit when the statistics are released.
Debbie Cochrane, the institute's investigation director, mentioned the feds could also send a clearer message by enabling schools to appeal per annum, instead of merely after failing for three straight years.
Jee Hang Lee, vice-president for public-policy and external relations in the Association of Community College Trustees, concurred that a yearly challenge procedure is reasonable. In addition, he said the division could do a lot more to help schools get the term out about revenue-based repayment choices.
Frank Phillips College, however, likely will be unable to succeed in an appeal, Hicks said. Colleges received a draft version of their fall rate in February. And the small Frank Phillips, which enrolls 1,200 students, faces a third straight year of topping 30 percent in defaults.
That's perhaps not for a lack of attempting, stated Hicks. The faculty brought in a default management consultant and has worked with students to aid them repay their loans, including through notifying them of repayment, deferment or forbearance alternatives.
Frank Phillips is not the only rural neighborhood college that's fighting with comparatively high default speeds, several specialists said. That Is because rural locations are not as probable to have bounced straight back in the downturn.
Just a few more loan-repaying students could have put Frank Phillips over the hump. The college would not be facing sanctions if just four defaulters had been able to repay their loans in a recent year.
In a December letter Hicks delivered to Arne Duncan, the secretary of schooling, he said the school was facing "unintended consequences" from the loan default policy. Hicks also mentioned the process didn't give the school an adequate chance to lessen its rates.
Way more pupils at Frank Phillips obtain Pell Grants (461 this twelvemonth) than simply take out national loans (193), based on Hicks. Simply 38 pupils participate in both plans. Yet it seems likely that national support will probably be out-of-reach for the university's several lower-income pupils.
"It seems somewhat punitive for an institution to lose Pell because of a loan default issue," Hicks said via email. "From a student participation perspective, these are unrelated."
Hicks said the school is functioning with department officials to double-check its default numbers.
Preemptive Leap
Several community colleges around the country have pulled out of federal lending programs voluntarily. They cite the risk of default-rate penalties and a desire to preserve student access to other forms of federal aid.
For example, less than half of North Carolina's community colleges are participating in federal loan programs.
Nearly 9 % of community school students nationally are unable to obtain national loans, based on 2011 information; the amount has probably gone up since then.
The Education Department has urged colleges not to jump. In a February "Dear Colleague" letter the department explained the rules on default rates and appeals, and also noted the "importance of institutions providing continued student access to the Title IV student loan programs."
TICAS has blasted schools for deciding to pull out of lending. They say some, like Victor Valley University, which is located in California, made the choice without apparently being conscious of engagement-rate appeals and protections.
Yet, Cochrane mentioned some neighborhood colleges seem reluctant to acknowledge that their increasing tuition rates aren't affordable as they used to be.
"There's still somewhat of a tepid embrace of federal loans" among community college leaders, she said.
The two community college associations have already been driving hard in Dc for more flexibility on default prices among their members.
"It Is terrible public plan for neighborhood colleges to get rid of their Pell Grant qualification because former pupils never have refunded their loans," stated David Baime, the organization's senior vice-president for government relations and study.
Cochrane, however, wasn't sold. She said such a move "does nothing but accept colleges' ability to evade accountability."
Some community college officers said default rates penalize faculties for factors beyond their control, including the local economy or the life conditions of students. And faculties can do little to encourage students not to take on unneeded debt.
The legislation features a protection for associations that face default option-fee sanctions. Universities can file an appeal with all the section depending on the percentage of pupils who take out national loans. The attractiveness was constructed to regulations to keep schools from being penalized depending on a few borrowers.
The federal "participation rate index challenge" creates a sliding scale. Put simply, it sets a standard for sanctions that is more lenient if a smaller percentage of an institution's students take out loans.
For example, the baseline default rate of 30 percent carries penalties merely at institutions where at least 2-1 percent (approximately) of students participate in federal loan programs. But if a school has a higher default fee, it may trigger sanctions even if fewer students participate; if its participation rate was at least 18 percent, for example penalties would be faced by a school for a default rate of 35 percent.
Since just 19 percent of community school pupils borrow, based on data in the American Association of Community Colleges, the sector-wide three-year default speed of 2 1 percent indicates few would neglect beneath the appeal procedure.
But while most community colleges with failing rates will prevail with their appeals, experts said, they will still take a public-relations hit when the statistics are released.
Debbie Cochrane, the institute's investigation director, mentioned the feds could also send a clearer message by enabling schools to appeal per annum, instead of merely after failing for three straight years.
Jee Hang Lee, vice-president for public-policy and external relations in the Association of Community College Trustees, concurred that a yearly challenge procedure is reasonable. In addition, he said the division could do a lot more to help schools get the term out about revenue-based repayment choices.
Frank Phillips College, however, likely will be unable to succeed in an appeal, Hicks said. Colleges received a draft version of their fall rate in February. And the small Frank Phillips, which enrolls 1,200 students, faces a third straight year of topping 30 percent in defaults.
That's perhaps not for a lack of attempting, stated Hicks. The faculty brought in a default management consultant and has worked with students to aid them repay their loans, including through notifying them of repayment, deferment or forbearance alternatives.
Frank Phillips is not the only rural neighborhood college that's fighting with comparatively high default speeds, several specialists said. That Is because rural locations are not as probable to have bounced straight back in the downturn.
Just a few more loan-repaying students could have put Frank Phillips over the hump. The college would not be facing sanctions if just four defaulters had been able to repay their loans in a recent year.
In a December letter Hicks delivered to Arne Duncan, the secretary of schooling, he said the school was facing "unintended consequences" from the loan default policy. Hicks also mentioned the process didn't give the school an adequate chance to lessen its rates.
Way more pupils at Frank Phillips obtain Pell Grants (461 this twelvemonth) than simply take out national loans (193), based on Hicks. Simply 38 pupils participate in both plans. Yet it seems likely that national support will probably be out-of-reach for the university's several lower-income pupils.
"It seems somewhat punitive for an institution to lose Pell because of a loan default issue," Hicks said via email. "From a student participation perspective, these are unrelated."
Hicks said the school is functioning with department officials to double-check its default numbers.
Preemptive Leap
Several community colleges around the country have pulled out of federal lending programs voluntarily. They cite the risk of default-rate penalties and a desire to preserve student access to other forms of federal aid.
For example, less than half of North Carolina's community colleges are participating in federal loan programs.
Nearly 9 % of community school students nationally are unable to obtain national loans, based on 2011 information; the amount has probably gone up since then.
The Education Department has urged colleges not to jump. In a February "Dear Colleague" letter the department explained the rules on default rates and appeals, and also noted the "importance of institutions providing continued student access to the Title IV student loan programs."
TICAS has blasted schools for deciding to pull out of lending. They say some, like Victor Valley University, which is located in California, made the choice without apparently being conscious of engagement-rate appeals and protections.
Yet, Cochrane mentioned some neighborhood colleges seem reluctant to acknowledge that their increasing tuition rates aren't affordable as they used to be.
"There's still somewhat of a tepid embrace of federal loans" among community college leaders, she said.
The two community college associations have already been driving hard in Dc for more flexibility on default prices among their members.
"It Is terrible public plan for neighborhood colleges to get rid of their Pell Grant qualification because former pupils never have refunded their loans," stated David Baime, the organization's senior vice-president for government relations and study.
Cochrane, however, wasn't sold. She said such a move "does nothing but accept colleges' ability to evade accountability."
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