Future students at local college, Frank Phillips College, could lose access to financial aid from federally opposed sanctions. The sanctions would be the consequence of the college??s high cohort default rate which is now above 30%.
??The federal government allows students to take out loans for their educational purposes. Obviously, being a loan, once they finish school, those loans become due in terms of payment. So what??s happened is, that through what they call the default rate, students, former students, are not paying back the loans to the federal government,?? said Frank Phillips College president, Dr. Jud Hicks.
A cohort default rate is the percentage of a school??s borrowers who enter repayment on a student loan during the fiscal year and default prior to the end of the next one or two years.
In 2009, the default rate was 22.3%. There has been a steady increase, showing 24% in 2010 and nearly 26% in 2011. Though the rates are now at its highest, the Board of Education may impose potential sanctions based upon the results from the years 2009-2011. This leaves the college with no possible recourse for working with former students who may have moved or gone to a different university.
Dr. Hicks traveled to Washington D.C. in January to visit with state representative, Mac Thornberry, about the circumstances surrounding the issue. Thornberry says the problem is with the Department of Education and not the colleges.
??The responsibility of the student who borrows that money is that you??ve got to pay it back,?? said Thornberry. ??Now the rest of the story is that the school of Frank Phillips has very limited information as to whether the student actually does pay it back and very limited options to try to encourage them to repay the loan. So I think that??s the big objection here. The Department of Education is asking the school to do something they can??t really do and don??t even really know about.??
Thornberry also said that the Department of Education did not give the information to the schools about their default rates until a couple of years after the fact. The school is receiving information now regarding possible penalties about default rates from a couple of years ago. Thornberry says this is where the Department of Education has not been doing their job.
??That??s why I say the Department hasn??t been very good doing its job and giving information to the school. You know, the school has made extra efforts once they found out about the problem to make sure that students, while they are attending, know of their responsibilities to pay back the loans. But they didn??t know they had a problem for a couple of years,?? said Thornberry.
Hicks said it is too difficult to speculate at the reasons for the increase in defaults, and that even on a federal level, he does not believe anyone knows why defaults are the way they are. He said if the issue is not resolved, there is a possibility that, beginning in January of 2015, there may not be any student loans or federal grant money available for students.
??We will continue to pursue every avenue we can to get below that 30% threshold,?? said Hicks.