Weekly Briefing

Making higher education even more unaffordable

Conservative lawmakers pursue an inexplicable course

Quick: What is the single most important factor in transforming an economically moribund region?  Obviously, there are a lot of strong potential answers to such a question, but if you answered “building an educated workforce,” you would clearly have one of the best ones. In 21st Century America, state and regions simply must provide capable workers if they want to build and attract desirable employers.

As a practical matter this means having large numbers of college-educated workers – workers who can read, write, think critically and solve problems. It also means having an infrastructure of institutions capable of training workers – accessible community colleges and universities that can provide a broader education and hands-on training.

Of course, none of this is particularly new or controversial. Policymakers have known for decades how critical it is to maintain a vibrant system of affordable post-secondary education. North Carolinians have even inscribed in their state constitution.

All of which makes the action of state legislative leaders in recent days so perplexing.

Community college loans

Last year, in keeping with the common sense ideas discussed above, North Carolina lawmakers took an important action to help keep community colleges accessible and affordable to young people of modest income and the state’s large population of unemployed workers. After a great deal of study by a bipartisan commission, they directed that all of the state’s 58 campuses participate in the William Ford federal student loan program – a program that provides very low interest loans to eligible students to cover tuition and other basic expenses. When some colleges complained that this would require more staff and other resources to help them cope with the expected demand, legislators set aside $50 million to assist them. The schools were directed to get things fully up and running by this coming July 1.

In recent days, however, things have changed. As one of the first acts of the new conservative General Assembly, lawmakers in both houses have moved swiftly to repeal last year’s action by advancing bills in both houses that would allow individual community colleges to opt out of the program.

According to proponents of repeal, there are two main reasons: 1) many local colleges still don’t want to deal with such loans because of fears that large numbers of students will default (there can be sanctions on schools whose default rate exceed prescribed limits) and 2) there have been incidents in which students have made poor choices in accessing loans. One local campus representative from one of the state’s most conservative counties – Alamance – told lawmakers a story of a student who had taken out a loan and used some of the resources in ways that evidenced questionable judgment and priorities.

That’s pretty much it: “It’s a hassle to manage and, frankly, there are some people out there we just think don’t need a loan.” We’re not making this up.

Experts respond

Fortunately – at least for truth, if not for the actual actions of the General Assembly – there were experts present at the General Assembly to set the record straight and debunk the anti-loan program arguments.

Ran Coble, head of the venerable North Carolina Center for Public Policy Research – one of the state’s most assiduously bipartisan and middle-of-the-road think tanks – offered strong testimony in both houses regarding the folly of repeal.

Here are some excerpts from the written testimony he submitted:

“In our study of financial aid to students in North Carolina’s 58 community colleges last year, we were shocked to find that 37 of the state’s community colleges did not offer federal student loans. As a result, 55 percent of the students in our community colleges, or more than 177,000 students in curriculum programs, were being denied access to the safest and most affordable way to borrow money for college. This makes North Carolina one of only four states in the whole country that deny access to federal loans to so many community college students. Students who pay for school with a federal loan pay 4.5-6.8% interest, while we found students at the other community colleges putting their tuition and fees on their credit cards and paying 16% interest.”

He continued:

“One of the major reasons community colleges told us they didn’t participate in the loan program is fear of being sanctioned by the federal government for having a high default rate. The sanctions are real, but the fears are unfounded. To be sanctioned under federal law, a school has to have a default rate of 25 percent for three consecutive years, or40 percent in any one year.” (Emphasis is Coble’s).

Coble then pointed out that no participating college in North Carolina (or the nation as a whole) has come close to such rates.

“Only five of the 5,672 participating schools in the country were at risk for sanctions in 2011 based on defaults in prior years….The bottom line is that no educational institution in the country that offers federal student loans has actually been sanctioned in the last 7 years.”

Coble minced no words in concluding:

“The U.S. Bureau of Labor Statistics estimates that 45 percent of all new jobs will require a college education. The legislation that you passed last year was good for the state and good for our economic recovery, and you should give this bill an unfavorable report or have it lie upon the table.”

The rest of the story

So what’s really going on here? Why in the world would lawmakers – some of whom helped pass the change last year – act to repeal it now in the face of such compelling contradictory evidence? Two explanations seem most likely – neither of them very encouraging.

The first is ideology. One need not dig very deep into the writings of the state’s right-wing think tanks (the groups directly advising the new legislative majorities) to discover essay after essay about the supposed folly of widespread access to affordable higher education. To the contrary, these groups believe that tuition to the state’s colleges and universities should be raised dramatically, that higher education should be “privatized,” and that far fewer people should be on the college track to begin with. That Republican support for the repeal legislation has been directed by legislative leaders seems likely – especially given the private explanations of some of the more moderate lawmakers that the bill was “not their idea.”

A second and even more troubling reason relates to who it is that accesses these kinds of loans. According to data compiled by the legislature’s Fiscal Research Division, a very large percentage of the students accessing federal student loans at the colleges where they have been made available are members of racial minorities. This fact was enough to make some lawmakers who support loan access to wonder out loud about darker, ulterior motives of some of the local colleges. Could it be that some of the people who run some of the state’s community colleges would simply prefer not to have some of the students who tend to access these loans around?  Given North Carolina’s long, troubled and ongoing history of segregated schools, it’s not at all difficult to believe.

Going forward

This week, after passing the Education Committee on a partisan vote and initially being sent to the floor, the House version of the student loan bill was re-referred to the Appropriations Committee. Speculation in some circles is that lawmakers may take the opportunity to rescind the part or all of the previous $50 million allocation for administering the loans. While such a step would make sense if lawmakers are serious about allowing some schools to opt out of the loan program, let’s hope, instead, that another chance to examine the matter convinces lawmakers to reconsider their actions altogether.