After her husband died of cancer, Cindy Cummings of Clayton wanted to pay forward the help she received during his illness. At age 51, she enrolled in Johnston Community College to become a nurse.
But that future is now in jeopardy because JCC has opted out of the federal student loan program Cummings relied on. With her final year of school starting next month, Cummings has no idea how she will cover living expenses while facing the most demanding stretch of her degree program.
“I feel like I’m going to fall between the cracks, and I’ve worked so hard to get into the (nursing) program,” Cummings said. “My future is at stake.”
Citing a rising default rate on federal student loans, JCC leaders said they had little choice but to refuse them. Under the loan rules, JCC would lose all federal funding, including grants, if the school’s default rate exceeded 30 percent three years in a row or 40 percent for one year. In 2011, an estimated 23 percent of former JCC students defaulted on their federal loans, a sharp increase over prior years.
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But JCC’s decision, while prudent in the eyes of college leaders, doesn’t help Cummings. The last year of her nursing program requires full-time enrollment, with classes piled atop clinical experience. She won’t have time to hold a part-time job to make ends meet.
And Cummings might not be alone. This past year, 22 percent of JCC’s enrollment – about 1,200 students – used federal loans to go to school. On average, they borrowed $7,420.
Why opt out?
At JCC, the student default rate on federal loans has climbed rapidly in recent years. In 2008, the rate was just 2.9 percent. It jumped to 7.8 percent the next year before nearly doubling to 15.2 percent in 2010. The 23-percent estimated rate for 2011 is the latest available figure.
“I’m sorry that we’ve had to do this,” said David Johnson, president of JCC. “This was an extremely difficult decision to make because the mission of the community college is to support and help students be successful.”
Johnson blamed the federal government for the rising default rate. Until five years ago, he said, community colleges could run credit checks on students seeking federal loans. But in 2010, the federal government banned that practice, citing the potential for discrimination in lending. Now, colleges have to give loans to everyone who applies or opt out of the program entirely; there is no middle ground, Johnson said.
After the federal government banned credit checks, more students started applying for loans, said Pam Harrell, vice president of student services at JCC. In 2009, she noted, 9 percent of students took out a federal loan. In 2012, 22 percent did so.
“What we found,” Johnson said, “was that our inability to manage federal direct loans effectively was not allowing our students to be successful and was actually saddling them with, in some cases, exorbitant loans that they might not ever have the opportunity to repay.”
Last year, JCC students borrowed about $7.5 million from the federal government. But loans are not the only federal help students receive. About 60 percent of students receive Pell Grants, which top out at $5,700 a year. Last year, JCC students received about $9.2 million in Pell Grants and work-study dollars.
If JCC’s default rate exceeds 30 percent for three years in a row, or 40 percent in one year, that $9.2 million in other aid disappears, Harrell said.
Last year, JCC paid about $270,000 to the federal government for loans that students didn’t pay back. The college will try to collect that money from the students but has no guarantee of success.
Johnson said JCC has no plans to opt back into the federal loan program anytime soon.
What’s next for students?
What happens next for the 22 percent of JCC students who had relied on federal loans?
Many will need more time to complete their degrees, Johnson said. Because they will have to work more hours to support themselves, they will have to decrease their class load, he predicted.
JCC is trying to help where it can. The college is scrounging up more scholarship dollars, which climbed to $420,000 this year from about $200,000 the year before. Also, the college now allows students to pay tuition in installments, and it is providing help with textbooks.
But students in health-care programs, especially nursing, could find themselves in a bind, Johnson said. Those students have demanding schedules that don’t leave time for jobs.
That’s true for Cummings, who might have to quit her part-time job as a preschool teacher when classes resume in August. She has looked at private loans, which have higher interest rates, but she would need a cosigner, and as a 53-year-old widow, she doesn’t know who to ask.
Noting that the default rate would have to exceed 30 percent in three straight years, Cummings thinks JCC pulled the plug on federal loans prematurely. But Harrell, the vice president, said the default rate was on a trajectory to quickly eclipse 30 percent.
Cummings also said JCC didn’t communicate well with students. The college sent out a letter in April, but by that time, she said, it was too late to apply for most scholarships.
Johnson said JCC tried to give students as much notice as possible. The college received the latest default rate in October but needed some time to research its options, he said. In January, Johnson carried his recommendation to the board of trustees, which voted in March to opt out of the loan program.
A dream in jeopardy
Cummings wonders now if she’ll be able to repay the kindness she and her husband received during his illness. Burt Cummings died in 2010, leaving behind his wife and two sons, now ages 19 and 23.
During the illness, “I found myself feeling really, really supported by not only family and the community but also by the medical community, especially the nurses that were involved in his care,” she said.
At JCC, Cummings receives the maximum Pell Grant, using that money to pay for tuition and pricey textbooks. But she had relied on about $12,000 a year in loans to cover her living expenses.
Cummings has been thinking of using crowd-sourcing websites to try to raise money, but she’s reluctant. “Over the years since my husband got sick ... you learn to accept help, but it’s hard to do,” she said.
Until now, Cummings said, she had loved her experience at JCC. The teachers, administrators and fellow students have been great, she said.
But now? “I feel almost sick to my stomach over the concern for how this is going to play out,” she said.