ROSEBURG — Former students at a community college in Oregon's long-suffering timber region are defaulting on loans at such a high rate that the school could lose access to federal aid used by nearly half of those now in the classroom.
The default rate among former students at Umpqua Community College has been well above a 30 percent threshold for two years running, the Roseburg News-Review reports.
If the rate stays above that threshold another year, students in the fall of 2015 face losing access to Federal Pell Grants and Direct Loans. At least 40 percent of the college's students now get the aid.
Oregon has 17 community colleges, and the default rate at Umpqua is the highest, followed by those at the Klamath and Lane schools, both in timber areas.
Students at the Umpqua college have defaulted on at least $9 million in loans.
The school's website says more than 15,000 people take one or more classes a year, the equivalent of 3,000 full-time students.
Losing access to federal aid would have a far-reaching impact, said Elizabeth Cox Brand, director of student success and assessment for the Oregon Community College Association.
"You may lose a lot of your student body," she said.
She said she knows of no Oregon college that has been cut off from the programs.
Sophomore James Stokes, 24, told the News-Review he relies on the two programs.
If Umpqua students can't get the federal financial aid, he said, "It would make it so I couldn't go to school."
School President Joe Olson said jobless workers took out loans to go back to school during the Great Recession but now can't repay them.
"I don't think it necessarily reflects on Umpqua," he said. "It just reflects on the state of the economy."
Some saw the aid as a source of income, said Kristapher Yates, president of the student association.
"They're in the same situation now, only worse with a bunch of student debt," Yates said.
The school plans an appeal to the U.S. Department of Education, arguing the default percentage should be lowered because lenders did a poor job of notifying some students they were in danger of default.
It has also hired a loan counselor, Kasey Hovik, who said he makes hundreds of calls a week to talk to debtors. He said he has helped about 90 get out of default by setting up new payment plans and at least 10 more suspend payments until their financial position improves.
"I'm not a collector," Hovik said. "We're here for them. There are options available to them. This doesn't have to be something they have to stress over."