NIC to stop distributing financial aid in lump sums
NIC will no longer pay financial aid in lump sums at the beginning of next semester.
The process, called Incremental Disbursement, will result in half of the awarded amount being given to students at the beginning of the semester and the remainder to be distributed a week after midterms take place.
“We’re going to go in and evaluate whether students are attending,” said Joe Bekken, director of the financial aid office. “Any students that are failing courses or have withdrawn and are no longer attending six credit hours will not get their second disbursement.”
Loans will be the only form of financial aid affected by the changes; scholarships, Pell Grants and other forms of entitlement funds will continue to be distributed in lump sums.
A student debt taskforce commissioned by NIC President Joe Dunlap recommended the changes after a three year evaluation found the college’s student default rate to be both on the rise at 19.9 percent and larger than the national average of 17 percent.
“It could penalize us,” Bekken said. “If we get to a 30 percent rate then NIC could have sanctions based on how many students default.”
Sanctions could include fines levied by the board of education, and should the problem grow serious enough, the revoking of the college’s ability to distribute financial aid completely.
NIC paid out around $ 30 million in student loans to roughly 5,200 students this year alone.
According to The Education Trust, more than half of students who take out loans to enroll in two-year for-profit colleges never finish.
“For those students that unfortunately, for one reason or another drop out or fail school, they’re not going to be in as much debt because they won’t have received all the money on the front end,” said Vice President for Student Services Graydon Stanley.
“Nationwide student debt is out ranking credit card debt,” Bekken said. “We’re in a national crisis.”
But it is a crisis 21-year-old nursing student Jordan McGaughey said she feels will be compounded by the new disbursement system.
“Many students have to run up their credit cards at the beginning of semester to buy supplies for school, and this new rule would force students to pay unnecessary interest fees on debt they don’t truly have,” McGaughey said.
Bekken said to help augment the burden, the Mica Peak Exchange will not charge any interest on supplies purchased against the second loan payment until after the second dispersal date.
“I feel like many of us are relying on [loan money] to buy the school supplies that the Mica Peak doesn’t sell,” said Mason Thompson-Rice, 20, nursing, Coeur d’Alene. “I know I purchased my camera for photography class and a better laptop.”
There is also the added complication of students that use their loans for living expenses.
“It affects everyone differently, but for myself I wouldn’t be able to take as many classes as I do without it because I would have to pick up hours at my job just to pay the bills,” Thompson-Rice said.
Another student faced a similar problem.
“Most of my loans go to gas so I can get to school,” said Destiny Walton, 21, criminal justice, Athol. “For me it would hurt me because I don’t work, I depend more on the money.”
Stanley said that the college is looking into creating an appeals process for students in desperate situations, but cases would be considered the rare exception rather than the rule.
need, but there was ultimately no feasible solution.
“We actually did meet with the Department of Education before we implemented this and they said it would be discriminatory to separate out those student populations,” Bekken said. “Unfortunately it does hurt a number of students to have to go through this, the select few are really hurting the rest of the population.”
Not all students are completely opposed to the changes, however.
“It isn’t necessarily the spender’s problem if they take the money and not return it, it’s everyone’s.” said Melaina Bell, 20, social work, Post Falls. “In the meantime, somebody has to pay for it.”
When students receive a failing grade for a course, NIC has to investigate whether the student “earned the F” or simply ceased attending classes.
If a student that is receiving financial aid that chose to stop attending classes, the college has to calculate from that time for ward to the end
of the semester. “We have to return that money back to the federal government, which leaves NIC with an institutional burden,” Bekken said.
A burden which could ultimately be passed down to the remaining student population by affecting the college’s operating costs Bekken said
“We’re really hoping to create more responsible students and less debt for the institution,” Stanley said.