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August 16, 2014
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Umpqua Community College loan default rate threatens availability of financial aid

By one key measurement, more than one-third of Umpqua Community College’s ex-students have defaulted on student loans.

It’s the worst rate in the state and jeopardizes the college’s eligibility to continue awarding some types of federal financial aid.

“It’s really unfortunate because the students of the past are affecting current and future students,” UCC Financial Aid Director Michelle Bergmann said.

In preliminary figures, 35.8 percent of UCC students who began repaying student loans in 2011 are in default.

The year before, the default rate for students who started repaying in 2010 was 38.5 percent. Among Oregon’s other 16 community colleges, only Klamath and Lane community colleges had default rates topping 30 percent.

If the rate stays above 30 percent for three straight years, UCC students in the fall of 2015 face losing access to Federal Pell Grants and Direct Loans, two of the most popular federal aid programs. At least 40 percent of the college’s students receive this aid.

Sophomore James Stokes, 24, of Roseburg is one such student who relies on Direct Loans and Pell Grants.

Stokes said he has a lot to lose if UCC students can’t get federal financial aid.

“It would make it so I couldn’t go to school,” he said.

Elizabeth Cox Brand, director of student success and assessment for the Oregon Community College Association, said she knows of no Oregon college that has ever been cut off from those programs.

Losing eligibility “would have a far-reaching impact,” she said. “You may lose a lot of your student body.”

UCC students have defaulted on at least $9 million in loans, and college officials say they are trying to counsel ex-students to help them pay.

Meanwhile, the college will appeal their most- recent default rate to the U.S. Department of Education, arguing the percentage should be lowered because lenders did a poor job of notifying some students they were in danger of default.

Bergmann said she was unsure why UCC students default at higher rates than other community colleges.

“I don’t know,” Bergmann said. “It might just be our area. We’re in a rural community.”

UCC President Joe Olson cited the Great Recession, when the college saw a jump in enrollment as jobless workers went to school. Students took out loans but were unable to pay them back, he said.

“I don’t think it necessarily reflects on Umpqua,” Olson said. “It just reflects on the state of the economy.”

Associated Students of Umpqua Community College President Kristapher Yates said some students applied to college specifically for aid, not necessarily a degree.

People who were out of work during the recession turned to the college for a source of income, he said.

“They’re in the same situation now, only worse with a bunch of student debt,” Yates said.

While UCC faces losing federal financial aid, individual students also face consequences for not paying their loans.

Ex-students in default could have their wages and tax refunds garnished, along with being tagged with a poor credit rating.

In response to high default rates seen last year, UCC hired a loan counselor, Kasey Hovik.

Hovik said he makes hundreds of calls a week, trying to contact students with loans to repay. If he can get them on the phone, he can help them, he said.

“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.”

Those unable to pay their loans are usually afraid and unaware of their options, Hovik said.

Hovik said he has helped around 90 students get out of default by setting up a new payment plan and more than 10 suspend payments until their financial position improves.

“If you can’t pay, we have options for you,” Hovik said.

• Reporter Megan Campbell can be reached at 541-957-4221 or

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The News-Review Updated Aug 16, 2014 11:26PM Published Aug 20, 2014 09:25AM Copyright 2014 The News-Review. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.