It’s been three years since Tyeisha Turner left her job at a call center to get her college degree. Even though the state waived her tuition at Antelope Valley College and she has a Pell Grant and works part time, it isn’t enough for the single mother of five to cover living expenses – so she has borrowed about $18,000 in federal loans.
Turner, 35, says the loans let her focus on her studies and work faster toward her goal of transferring to a four-year university.
“I definitely need it. It helps me continue my education,” Turner said. “Because I’m only working part time – 15 to 20 hours a week – that makes up for that income. You can't survive with just part-time employment. That doesn't cover the rent.”
Turner is among the 93,000 California community college students who borrowed federal loans in 2010-11. As big as that number is, it’s a tiny slice – about 4 percent – of all students who attend community colleges here. That’s partly because California’s community college tuition is the lowest in the nation and many students take only a class or two at a time.
But some community colleges are seeing increases in the number of students who default, and they are pulling out of federal loans all together to avoid sanctions. Hartnell College in Salinas opted to stop participating in the program this fall, bringing the number of California community colleges without federal loans to 17 out of 112 statewide.
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The shift reflects a thorny side of the crackdown on colleges with high loan default rates. At a time when concern about student loan debt has reached a fever pitch, the federal government is trying to rein in schools that saddle students with unmanageable debt – including many for-profit colleges. Colleges that have several consecutive years of high default rates risk losing access to Pell Grants and other aid.
The law has built-in protections for colleges like Hartnell, where a small fraction of students use federal loans. But many community college officials don't know about or understand these protections, and some say the U.S. Department of Education has not adequately explained them.
Losing access to federal loans has consequences for students like Turner. Those who can't get federal loans at a community college likely would turn to more costly private loans or forego school, critics say.
Initially, Hartnell College’s interim vice president for student affairs, Mary Dominguez, said in an interview that she and other upper-level college officials decided [PDF] to back out of the federal loan program because a U.S. Department of Education representative who visited the school in April strongly recommended doing so.
But Raul Galvan, the analyst with the Federal Student Aid Office who visited the college, disputed that characterization.
“The Department of Education and Federal Student Aid are always interested in providing students with as many options as possible in paying for higher educational cost,” Galvan said in a written statement. “The decision as to which programs are available at the institution is one that is driven by the institution and not Federal Student Aid."
Dominguez later said Galvan had told college officials in writing that they needed to consider whether loans should be offered anymore.
“We took it as a recommendation from him, even though he didn’t directly say that,” Dominguez said.
At Hartnell, 32 percent of students who started repaying their loans in 2010 defaulted within two years. Under federal law, if a college’s two-year default rate hits 25 percent or higher for three years in a row, it can lose eligibility for Pell Grants and other federal aid. This was Hartnell’s first time exceeding the 25 percent cap.
But less than 1 percent of Hartnell students borrow federal loans. Colleges with low numbers of borrowers can avoid the sanction by filing a challenge.
Some advocates say the government should do more to publicize the protections against default rate sanctions. Federal regulations spell out a somewhat complex formula for determining a college’s participation rate index, and Debbie Cochrane, research director for The Institute for College Access and Success, said her organization estimates Hartnell could appeal successfully.
“I think what the department really needs to be doing is reaching out to colleges that are likely eligible for the participation rate appeal and making sure they understand the appeal and how it works,” Cochrane said.
“Given how important federal aid is for the colleges and their students, it’s alarming how little folks seem to know about this important protection, even when they would clearly benefit from it,” she said.
Department of Education spokesman Chris Greene said Galvan discussed several options with Hartnell officials, including developing a plan to help students avoid default and filing an appeal should they incur sanctions.
He said the department runs several training programs for college financial aid professionals at annual conferences and online, all aimed at helping colleges understand how federal financial aid works.
"The department dedicates significant resources to helping schools administer and manage the federal student loan programs on their campuses," Greene said. "That said, we are always looking to improve our training and technical assistance to ensure schools understand their options and obligations, and we are open to any suggestions the school or the Institute may have."
Antelope Valley College, which Turner attends, also is seeing a high default rate. About 33 percent of students who started repaying loans in 2009 defaulted within three years. But the college is hanging on to its federal loan program.
“Our cost of attendance is over $17,000 for a student who lives away from home. It's not that much higher for a student who's going to a CSU,” said Sherrie Padilla, financial aid director for Antelope Valley. “The only difference is tuition. Students, I believe, still have the need for the loan.”
Padilla said college officials ran the numbers to see if the school could qualify for a low-participation rate appeal, and it does. But it takes three years in a row of bad default rates for a college to face sanctions. And the government doesn’t consider appeals until a school is actually subject to the penalties. That frustrates Padilla.
“I think that kind of sucks, actually,” she said. “I don't know for sure if the department is automatically going to give us a pass on that. They won't give me that assurance.”
Padilla has studied data on students who defaulted. Part of the problem is the economy, but students also don’t have enough information on how to avoid default by applying for programs that allow borrowers to make lower monthly payments due to financial hardship, for example.
Some students borrow more than they really need. But college financial aid officials can’t require a student to take out less than they are eligible for; they can only counsel students on how much they should borrow.
Starting this fall, the college is doing all loan counseling face to face rather than online. Students who want loans have to attend a workshop at which they learn about the right amount to borrow and how to deal with payments once they finish school, Padilla said.
“It would be a lot easier for us to not be in the loan program because there'd be a lot less work we'd have to do,” she said.
Jacque Bradley, assistant dean of financial aid at Mendocino College, said students in nursing and other health professions are among the most likely to take out federal loans at her college because the programs require them to attend full time and do clinical training.
If Mendocino moved to get rid of federal loans – something the college has not considered – “it would affect who pursued a nursing degree at our school,” Bradley said.
Turner, who is studying sociology, uses her federal loan money to help cover rent, transportation, books and supplies. It also freed up time. During her first year of classes, Turner took public transportation from her home in Lancaster to the school, a trip that sometimes took two and a half hours. She said that if she had not been able to borrow federal loans, she might have tried enrolling in an online college or would not have been able to go back to school at all.
She’d like to go into a career in which she can help people. At a minimum, she hopes a degree will give her more career flexibility.
“Instead of being on the call-center floor,” she said, “maybe I could manage the call center.”