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State House approves community college loan opt out bill
Written by Josh Ellis/David Horn   
Wednesday, 09 March 2011 11:15

(RALEIGH) - North Carolina House lawmakers gave final approval to a bill that would allow state community colleges to opt out of a federal loan program. The measure now heads to the state Senate.

Republican co-sponsor Rep. Dan Ingle said community college leaders are concerned about high default rates among students and the potential federal scrutiny that could bring.  Under federal law, schools can be sanctioned that have a default rate of 25 percent for three consecutive years or 40 percent in any one year.
 
“We should give them the right to decide, through the board of trustees, whether they want to participate or not,” said Ingle.
 
Ingle added that 38 of the 58 state community colleges plan to opt out of the federal program if the bill becomes law. However, North Carolina Center for Public Policy Research executive director Ran Coble recently told the House Education Committee that no state community college is in jeopardy of losing its federal money.
 
Opponents also argued that without the availability of federal loans, students will borrow money from alternative sources, often at a higher interest rate. “Many of these folks that are seeking this federal money are people who are not only adults, but unemployed adults,” said Democratic Rep. Ray Rapp. “Many of them are students fresh out of high school. They have no credit history.”
 
Republican leaders insist that alternative financing options such as Pell Grants would still be readily available for students.

 
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