The financial brick wall going up for students at some community colleges doesn’t exist at Shoreline Community College.
“Years ago, we chose a different solution than some of the schools now having problems,” SCC financial aid manager Ted Haase said. “That choice is now helping our college and our students.”
In recent weeks, students at community colleges in Washington and across the country are feeling the pinch of tightening credit policies at major lenders for student loans. Citibank is one of those lenders, but bank officials say they are not singling out community colleges, but rather have suspended loans at all colleges with small loan volumes and short repayment terms.
"The combination of a significant increase in our funding costs, as well as the expense of originating and servicing these loans, has made loans to borrowers at these schools economically unworkable at this time," Mark Rodgers, a spokesman for Citibank, said in one published story.
"The last couple of weeks have really been something," Kim Matison, the director of financial aid services at Tacoma Community College, said in a recently published report. Citibank and KeyBank have just pulled out of student loan financing agreements at TCC. "It's one thing to read about it happening. It's another to have it happen to you and your students directly."
Matison said TCC had 10 lenders offering student loans last fall. That list is now down to six, and could soon be at five. Changes at Bank of America are forcing the college to consider dropping that lender.
Matison said the market could collapse further.
"If something does happen, it's likely to happen all at once," she said, adding that she is closely monitoring developments.
Loans for students attending Shoreline Community College aren’t affected because at SCC, all such loans are made directly by the federal government. The only other community colleges using the direct federal loan program are Spokane Community College and Spokane Falls Community College.
Students in Washington take out about $900 million in student loans each year, said John Klacik, the director of student financial assistance for the state Higher Education Coordinating Board. About 40 percent of the loans are made directly through the federal government and aren't affected by the market turmoil, he said.
“For Shoreline Community College, it was just a philosophical decision a number of years ago,” Haase said. “We felt that the direct federal loan program would just be more stable for our students.”
Haase said that there are no interest rate advantages in either the direct federal loan program or going through approved private lenders. “There is a slightly lower fee in the direct federal program,” he said.
The fact that most major four-year colleges in the state, including the University of Washington, also use the direct federal loan program was a factor in the original SCC decision, he said. SCC historically transfers a higher percentage of its graduates to the UW than any other community college in the state.
“Students getting loans here are already familiar with the process when they go to the UW,” Hasse said. “If they want to consolidate loans, they’re already in the same system.”
If there has been any downside the federal program, it has been for SCC staff, not students, Haase said.
“We process, literally, every penny by hand,” he said. That situation is expected to change in the coming months with software upgrades coming from the State Board of Community and Technical Colleges. “We’re excited,” Hasse said. “The time saved in loan processing will mean we have more time for helping students.”
For more information about financial aid at Shoreline Community College, contact the financial aid office at 206-546-4762, by e-mail at firstname.lastname@example.org or by fax 206-533-6609.