CMU hopes to cut student loan debt, fraud

Colorado Mesa University introduced two programs this year aimed at preventing student loan abuse and excessive debt.

At $25,280 apiece, students at Colorado Mesa had the fourth-highest average student loan debt upon graduation among four-year public schools in Colorado last year, according to data released this month by the Colorado Department of Higher Education. The school’s two-year division, Western Colorado Community College, placed fifth among public community colleges in the state for average student loan debt upon graduation, $16,708.

WCCC had the state’s highest portion of two-year students with loans, with 83.2 percent borrowing in 2012-13. Colorado Mesa ranked fifth among state four-year schools, with 77.8 percent of students borrowing to pay for a baccalaureate degree.

With about half of the student body having a low enough family income to qualify for federal PELL grants and other financial aid, Colorado Mesa Vice President for Student Services John Marshall said the school has long had several students on loans. But the recent economic downturn and an increase in non-traditional students have impacted the number of students borrowing and how much they choose to borrow. The economy depleted some parents’ savings for their child’s education, he said, while older students who returned to school for a better degree to face a tough economy sometimes take out more student loans to help provide for a family while in school.

An increase in borrowing and student loan default rates — the school went from tying with the national average default rate of 10 percent in 2010 to 12 percent in 2011, according to the U.S. Department of Higher Education — in part prompted Colorado Mesa earlier this calendar year to hire a financial literacy and debt management counselor and to introduce a loan fraud prevention program this fall.

The counselor contacts and meets one-on-one with students who have a high amount of student loan debt and coaches them on basic finances, personal budgeting and comparing their debt to potential earnings once they earn a degree. The counselor met with 120 students this spring and more than 140 students this fall.

Loan entrance counseling is already required by the federal government but Marshall said the school has found “it’s just not enough.”

“Student loans aren’t necessarily evil, it’s just that we want to minimize them. Just because you’re offered $10,000 in loans doesn’t mean you should take $10,000 in loans,” Marshall said.

In an effort to prevent students from taking out loans, then ditching class and using the money for other purposes, the university began a “delayed dispersement” program this fall. The program withheld a students’ entire financial aid package until mid-September if he or she did not pass at least three-quarters of his or her attempted classes the previous semester. Students got the money if their professors decided they attended class an adequate amount of times in the first 30 days of the semester.

Of hundreds who were on the list, “just a handful” failed to attend classes and never got their financial aid money, Marshall said. More will be known about the ultimate success of the program as semester grades are released and reviewed.

Marshall said the school reaches out to graduates on a loan default list but the university prefers to focus on counseling students before graduation. Colorado Mesa can get admonishment from the U.S. Department of Education if its default rate ever grows alarmingly high, Marshall said, but the school cannot tell a student not to take loans, federal or otherwise. Marshall said the school’s next step is seeking a pilot program with the federal government that would give the university authority to limit loan amounts.



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