Scott Turner
In Motion Staff Writer
Tanamarie Wood/In Motion
Student loans are a point of contention. Since Daytona State has one of the highest default rates in Florida, there may be justification for complaints on both sides of the fence.
Where students are concerned, new strict, confusing regulations make it harder to understand, obtain and keep student loan eligibility. On the other hand, such loans have long been used and abused by not only students, but also professional fraud rings.
Michelle Goldys and Eileen Morrissey, of the Financial Aid Office, are offering in-depth workshops and information sessions for both faculty and students to help prevent student loan default and protect students receiving financial aid.
“In 2009, 29.6 percent of the students who received loans were unable to continue to meet the payments and defaulted on them. Once a school reaches 30 percent, they are no longer permitted to participate in Title IV Programs, including Federal Direct Loans and Pell Grants,” said Goldys, who is the Default Management Coordinator at DSC.
The effectiveness of the new initiative, launched several years ago, is already being seen. Daytona State’s default record has dropped to 26.4 percent as of the latest accounting. DSC is the only Florida state college during that period to lower its default numbers.
“One problem that we faced was lack of exposure to the students,” Goldys said. “We’ve since been collaborating with Student Activities to raise our profile and let students know there is somewhere to go to work out these problems.”
The biggest problem by far are students who take out loans without understanding the future ramifications of paying them back or defaulting. Unlike credit card debt, filing for bankruptcy does not eliminate student loan debt. As Goldys cautions, “It’s for life.”
Many students who get caught in a bind, also give up hope too easily and are unaware of the different payment plan options available to them. Those who left college without withdrawing from classes and thus received an F in those courses, may be ineligible to receive further student loans. Depending on their circumstances and the length of time between quitting and returning to college, they might be eligible to get amnesty for those previous poor grades.
With the desire to still allow students who need financial aid to get it, a plan of action was put into place at Daytona State College.
“We also have instituted a mandatory online Financial Aid seminar that must be completed before students are allowed to apply for loans to ensure they are aware of the responsibilities.” Goldys said.
Loan policies themselves have also been revised and unsubsidized loans, where students pay the interest, are only given to those who have an established history of responsible repayment with the College. Where multiple payment plans are available, the Financial Aid Office attempts to find the best fit for individual students.
The standard repayment plan is for 10 years. There is also a graduated repayment plan that lasts 25 years. An income-based repayment plan goes up to 25 years and has a maximum repayment amount of 15 percent of discretionary income. The pay-as-you-earn plan is similar to the income-based plan, but interest rates are lower. For those whom none of these plans fit, there are alternatives available to them that may suit a variety of needs.
In Florida, the average student loan debt is $23,000, as compared to the national average of almost $27,000. Among the ramifications of defaulting on student loan debt, according to Financial Aid Director Aileen Morrissey, are garnishment of wages and tax returns, as well as a ruined credit rating. Although a good credit score is not a factor in getting a student loan, defaulting will still hurt your rating, which is often a consideration in employment, renting or purchasing a home or even having utilities turned on.
Falsification of documentation may seem a brilliant idea, but the Financial Aid Office, which answers to state and federal government, is prepared for such things. Morrissey said some students look to sites such as PhonyExcuses.com to provide them with “documentation” of reasons why they haven’t been able to repay their loans. Financial Aid has a very reliable system of checking submitted claims and if documentation would not hold up in a formal court of law, there is no hope of it being accepted as a legitimate excuse for loan payments being missed.
Fortunately, there are many avenues to aid students before they get that desperate. Some websites allow students to see entire loan histories, while others let them choose a major then see how much they can expect to earn after graduation. Another problem students face, said the financial aid officers, is unrealistic visions of how much money they will be making in any given career.
Following are some of the many sites recommended by the Financial Aid Office:
FinAid.org — Provides in-depth explanations of the financial aid process and other tools to estimate obligations and needs.
Nsids.ed.gov — Allows borrowers to search and review information about their federal loans.
Studentaid.ed.gov — Offers government information on financial aid and education planning.
MappingYourFuture.org — A free resource for career, college, financial aid and money management.