Default Worries Prompt Most Tribal Colleges to Opt Out
of Student-Loan Programs
by Larry Viterna and Kathy Bixby, USA Funds Services
Most of the nation's tribally controlled colleges choose not to participate in federal education-loan programs because of concerns about potential loan defaults. John Gritts, director of Tribal College Relations for the American Indian College Fund, explains that, in general, the colleges have decided not to put themselves "out on a limb" and risk losing eligibility for other federal programs because of potentially excessive default rates.
Some 26,000 students attend tribal colleges. Gritts notes that some students aren't prepared academically, socially or financially. "You have to understand the economy on a reservation. Unemployment rates are high. There are no strip malls or McDonald's. No places for students to work part-time and earn some money for school," Gritts says.
Tribal colleges have come up with other means to help their students cover college expenses. They deliberately try to keep costs affordable so that students can attend. They also offer scholarships and other forms of assistance.
"The colleges work with students in any way they can, whether it's helping them find work at school or outside of school, or attending part-time," Gritts says.
Tribal schools that do participate in the federal loan programs face special challenges.
"Mainly, students don't want to leave the reservation when they graduate, and there are not a lot of job opportunities on the reservation, which puts them in a bind to pay back their student loans," says Jeannie Burland, director of Financial Aid at Salish Kootenai College in Pablo, Montana.
Burland believes that personal contact keeps the college's default rates low. The college was in danger of losing eligibility for Title IV federal aid, when its staff decided to make personal contact and letters to borrowers a priority.
"We've made great progress since then. We let students know we're trying to help them before they go into default," Burland says. "We also have a delinquent list that we work from. We work really hard with the students who are close to defaulting on their loans. That list is a real asset. It tells us what deferments they've already used, so we know how else we can help them."
Burland said that exit counseling is mandatory for all students, whether they are graduating, transferring or withdrawing from school. The college has 850 to 1,000 students enrolled each quarter.
Bob Parisien, financial-aid director at United Tribes Technical College in Bismarck, N.D., encounters a different set of challenges at the two-year school. With almost 400 students representing 46 tribes in a metropolitan area, rather than on a reservation, the college works to get students through the two-year program debt-free.
"A majority of our students are eligible for the federal Pell grant. They also get money from the Bureau of Indian Affairs. This usually doesn't take care of the whole cost but the education part of it: tuition, books and fees," says Parisien.
Some of the programs offered at the college allow students to transfer to a four-year college. Parisien explained that some students are not sure what they want to do when they begin, but when they see that they can succeed, they're interested in continuing their education. "We're kind of a stepping stone for students who are not sure they're ready for a four-year school," he says.
Parisien uses debt-management materials from the school's guarantor in counseling those students. "We have an enormous amount of information to use with students who go on to four-year schools. We want them to understand what they're getting themselves into financially," he says.
The school also is using materials from USA Funds®' financial-literacy program, Life SkillsSM, to teach students how to be financially responsible.
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