|Community college students across the state will soon have a new option in paying for their education. Starting July 1st colleges will be required to offer student loans. Some schools feel that's risky business.
Some community colleges in the east got out of the student loan business because they saw their loan default rates rising. They say that hurts the students and the school. Legislation has gone back and forth on the issue, and a recent veto from democratic Governor Bev Perdue all but seals the deal, forcing community colleges back into the loan business.
Victoria Tyson is a single mom and a first time college student, hoping to make a difference for her and her family.
"I wanted to show my son at any age you can get a degree, you can still be whatever you want to be," said Tyson
It's not cheap and Tyson needs help. She has Pell grants which are federal funds she won't have to pay back. She says she'd like to get a student loan to cover some of her living expenses and allow her to remain a full time student. She's thrilled her school has to start offering loans. Her school, Beaufort County Community College is not.
Dean of Administrative Services Phillip Price said, "Once our default rates get above a certain percentage we stand to lose federal funding."
Price says if 30% of their students defaulted on their loans, the school wouldn't be able to offer Pell grants anymore. The majority of their students, including Tyson, rely on those grants.
"If we weren't able to award Pell grants you could almost assume 60% of the people at the college wouldn't be here. That's pretty much closing the doors," said Price.
In 2007 their default rate jumped from 0 to 6.4% in just one year. It was down a couple percentage points in 2008 according to the most recent numbers released by the Department of Education. Price says in order to stay competitive, many lenders stopped screening applicants through credit checks, and default rates started rising.