09/25/13 — Student loans on the rise at Wayne Community College

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Student loans on the rise at Wayne Community College

By Phyllis Moore
Published in News on September 25, 2013 1:46 PM

Students taking out loans to pay for their college education represents a big portion of the $7.2 million increase to the latest Wayne Community College budget of $45.4 million, approved by the board of trustees Tuesday night.

The college is not in the student loan business, even though the direct loan budget had been increased in recent years, WCC President Dr. Kay Albertson said.

"We just made the decision that it was the best thing for our students at this time," she said. "We know that the loans are going up. We don't ultimately know what the default rate will be."

Board member Tommy Jarrett said, "I guess if we were not in the loan program, our FTEs (full-time equivalents) would go down, because they'd go to another college where they could borrow money."

The 2013-14 budget includes all funding sources -- state, federal and institutional. A major part of the federal sources are Pell grants, college work study, direct loans and other federal programs. The latest budget reflects a $704,733 rise in Pell grants and an increase of $4.8 million in loans.

"We're looking at a budget now of $45 million now versus last year. I guess it must have been over $39 million," said Sam Hunter, chairman of the board's finance committee. "This budget is proposed, I think, at the same amount of money in the coming year that we did last year.

"The year before, though, when we proposed the budget for 2012-13, it was for $1 million in loans and we actually did $6 million in loans. So now we have $6 million in loans and it could be higher."

Joy Kornegay, chief financial officer, explained that the direct loan program is a federal program but is processed through the college's financial aid department. Federal money is made available to students and paid back to the government, but the paperwork is filled out at the college. Even though it doesn't come out of college funds, it is included in the budget as federal money afforded to the college, she said.

"When you prepare your budget, you're preparing it on past information," she said. "The year before we had only processed $1 million in loans and ended up with $6 million in loans.

"It's a best-guess scenario because we have absolutely no idea how many students are going to apply for loans. More and more students borrowed last year. With the way the economy is right now, students are taking out more loans."

WCC is not unique in participating in a direct loan option, Mrs. Albertson said.

"We're in this ball game with about 30 other (community) colleges," she said. "We feel that this was the best step to take. But it's a big responsibility for these students to pay these loans back."

The indebtedness factor is a concern.

"The big picture is that students are going deeper in debt every day to continue their education," board member Keith Gunnett said.

He suggested the need for discussion about the connection between getting an education and the potential job market, to prevent students from going deeper in debt.

"It seems like all that needs to be correlated together -- this is what you can make, this is what debt you're accumulating, this is what a debt over 10 years will cost you every month," he said.

"We look at in our data the programs on campus with the most students getting loans, and they were really some of our highest cost programs," Mrs. Albertson said, citing such examples as nursing and automotive. "They're going to make the money.

"We did have a few that weren't and those are the ones that we're trying to target. ... But you're so right, Keith. We have got to keep harping on that."

Efforts are being made to offset some of the "sticker shock" of the consequences of borrowing money, said Gene Smith, associate vice president of academic and student services.

In addition to working to increase the financial aid counseling staff, he said his staff has worked to provide more information, such as a calculation of how much will have to be paid back over a period of time.

"These people have never really borrowed money, so they don't know how to handle it," he said. "We're doing the extra steps to make sure they know as much as they can."