To Cut Student Debt, Florida College Cuts Off Some Student Borrowing
ARUN RATH, HOST:
Colleges have always been concerned about GPAs and SAT scores. Now they have a new number to be concerned about - default rates. That's the percentage of students who stopped paying their student loans. Schools now face punishment from the federal government and even closure if their rate is too high. John O'Connor with member station WLRN in Miami has the story of one college in South Florida that is working hard to trim its student debt.
O'CONNOR: To get a student loan at Broward College, you've got to sit through a two-hour financial lesson with Kent Dunston first.
KENT DUNSTON: If you find wrong information, you can file a consumer dispute. The process is usually...
O'CONNOR: It's a little like "Scared Straight," that 1978 documentary designed to keep kids from ending up in prison. This lesson is about scaring students into making good financial choices.
DUNSTON: You're not going to borrow more than that amount of money. You'll be offered more. You don't need it.
O'CONNOR: Dunston is in charge of monitoring student loan defaults for Broward College. It's the nations fourth-largest community college with more than 60,000 students. About 75 students are here watching as Dunston tells them the story of a young woman concerned how her $137,000 student debt would affect her chances of getting married.
DUNSTON: Well, that can throw a lot of cold water on a relationship unless the guy can say well, that's OK baby. I owe $87,000 myself.
(LAUGHTER)
O'CONNOR: This class, which started six years ago, is just one effort aimed at preventing students from taking on so much debt that they can't pay back their loans.
DUNSTON: We want to assure ourselves that they understand what the hooks are on the backend of these programs.
O'CONNOR: Starting last year, Broward began trying something else - don't let students borrow more than they need. The school stopped accepting unsubsidized loans. Those are the more expensive loans that require students to make interest payments right away. Subsidized loans can wait until after a student graduates.
Broward is doing this along with 28 other schools around the country as part of an experiment with the federal government to cut down on student debt.
GEORGE ALEMAN: I would say about $60,000.
O'CONNOR: That's how much George Aleman owes. The middle-school dropout came to Broward already owing $60,000 in debt from a previous attempt at trade school.
ALEMAN: Their reaction - they couldn't believe that I owed so much. (Laughter) And I only have an associate's degree.
O'CONNOR: Broward told Aleman that he was almost maxed out and could only access loans for one year of tuition. After that, he'd be on his own.
ALEMAN: I'm just starting to find something that I really want to expand in. And I'm hitting a brick wall now.
O'CONNOR: The Broward officials say capping loans is not a barrier for most students. Associate vice president of student affairs Bob Robbins says the school has not seen enrollment decline because students no longer have access to unsubsidized loans.
BOB ROBBINS: One of our big concerns is what the student impact would be. And we were really, really surprised at what happened. We didn't see many complaints.
O'CONNOR: That could be because Broward's tuition is only $2,400 a year. And community college students aren't the ones borrowing too much, according to Debbie Cochrane with the student advocacy group The Institute for College Access and Success. She fears that rejecting unsubsidized loans may force some students to turn to credit cards or other high-interest loans to pay for school and living expenses.
DEBBIE COCHRANE: So the downside of limiting students' access to federal loans is that they will have to go these routes to, you know, that are not nearly as preferable.
O'CONNOR: But Broward officials proudly cite their default rate, which has gone down in the last three years. The most recent numbers available, from 2011, show that 12 percent of students default on their loans, which is less than the national rate of 13.7 percent. For NPR News, I'm John O'Connor in Miami.
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