North Carolina Voting out of the Loan Program? read more

A vote to allow NC community colleges to opt out of federal college loans is back on the table after being vetoed earlier this year.

A 3-week session began Sunday night during which state lawmakers will discuss several items, including HB 7, which would allow individual community colleges in the NC to decline to participate in the Loan Program. Although HB 7 was vetoed by Gov. Beverly Perdue, the special session agenda showed that the bill could be reconsidered and the veto possibly overturned.

Support for the bill is split mainly down party lines. Republicans cite growing loan default numbers in their support of the legislation while Democrats say that the bill will kill critical access to student loans.

“Here’s an opportunity for them to get the types of loans necessary for them to further their education, and yet we’re taking it off the table,” Democratic Sen. Malcolm Graham said in an interview.

Supporters of the bill say that community colleges should have the right to opt out of the federal student loan program. Community colleges with high loan default rates could lose access to other federal financial aid programs that benefit the schools and their students.

Republican Rep. George G. Cleveland, who co-sponsored HB 7, said that he thought it was “stupid for any president of a community college to jeopardize his student’s financial positions and the school’s financial positions for helping students” (“Federal Student Loans in Jeopardy for Local Community Colleges,” WSOC–TV, Nov. 27, 2011).

According to the bill’s language, a community college may opt out of the federal student loan program once by passing a resolution. If a college then rescinds its resolution and rejoins the federal student loan program it may not choose to decline participation in the program a second time.

Lawmakers passed a special bill this summer that gave two local North Carolina community colleges, Central Piedmont Community College and Gaston College, the right to opt out of federal education loans. Neither school has publically stated whether it would take advantage of its ability to decline participation in the federal college loan program.

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About defaultprevention

Default Prevention Specialist since 1998.
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