Anywhere he goes, Kenneth Wilson, the director of financial aid at Albany Technical College in southwest Georgia, is prepared to talk with students about the workings of their loans -- whether it's at a campus basketball game, a picnic or when he’s out running errands. He keeps literature about avoiding loan default in his car, just in case. “Sometimes I run into students at Walmart who want to talk about their student loan,” Wilson said. “That’s fine.”

Until 2006, Albany Tech didn’t offer students the option of taking out federal student loans. Today, those funds constitute a critical resource for the community college's students. Of the 3,892 students enrolled this fall, nearly two-thirds (64.8 percent) have student loans that will help defray the costs of attendance, including rent, books and child care, according to Wilson.     

Offering loans to students comes with an equally important task: making sure students repay them. To prevent schools from preying on low-income students who are unlikely to repay their federal loans, the government measures an institution's cohort default rate (the percentage of a school's students who default on their federal loans within three years of entering repayment). If a school’s cohort default rate is 30 percent or higher for three consecutive years, it can trigger federal sanctions, such as losing the right to distribute federal grants. Albany Tech’s cohort default rate reached 28 percent in fiscal year 2009. And that’s where outreach can make all the difference, said Wilson, who joined the administration last year.

“The thing is to get engaged with the actual student so they remember that: One, just borrow what you need, and, two, you have to pay this money back,” he told International Business Times.       

Nearly one million community college students attend schools that don’t offer federal student loans, often because the schools are concerned that their default rate will climb too high, according to a new report by the Institute for College Access and Success (TICAS).

But when students can’t get access to federal loans, which come with fixed interest rates and the option of income-based repayment programs, they're at a disadvantage, according to Debbie Cochrane, lead author of the report. Those students, instead, “have to turn to private student loans or credit cards if they need to borrow,” she said. “Those options are all costlier and riskier.”

The report found “substantial differences” in access to federal loans depending on a student’s racial and ethnic background. Nationally, 8.5 percent of all community college students attend schools that don’t make federal loans available. For white students, that figure drops to 7.5 percent, and for Asian students it falls further, to 4.5 percent.  

By contrast, “that share rose to 10.5 percent for Latino students, 12.4 percent for African-American students, and 20.1 percent for Native-American students, the three groups most likely to lack federal loan access,” the report says.   

In seven states, more than a fifth of community college students attend schools that don’t offer federal loans: Alabama (42.7 percent), Georgia (26.5 percent), Louisiana (44.1 percent), Montana (21.9 percent), North Carolina (36 percent), Tennessee (41.4 percent) and Utah (25.7 percent).

If high default rates on loans lead to sanctions, losing the ability to distribute aid in the form of grants could be devastating to an institution, Cochrane said. “I think what’s missing is a solid understanding that colleges can help their students avoid default,” she said.

South Louisiana Community College, for example, is offering federal student loans for the first time this fall -- with an emphasis on “smart borrowing,” said vice chancellor for student services David Volpe, who joined South Louisiana last year from Pennsylvania Highlands Community College, a school that participates in the federal loan program.

That means having one-on-one conversations with students about the differences between grants and loans, and the costs involved in paying back a loan. “There’s a lot of personal communication as to, 'What is a loan?'” he said.

The TICAS report also points to the lessons learned at Albany Tech. The school now has a default management committee, and its members hand out information on loan repayment at almost all campus events (including basketball games). Each term, loans are dispersed in two installments instead of one lump sum, to encourage students to manage their loans responsibly. College staff track attendance and mid-term grades through a schoolwide database, and financial aid staff can immediately contact students who have withdrawn or who are failing courses.  

“Accordingly,” TICAS noted, “the college has seen its default rate drop in recent years, from 28.0 percent in FY 2009 to 23.1 percent in FY 2010, and to a projected rate below 20 percent for FY 2011.”  

Wilson said he wants to lower the default rate even further, though it will take some time. “You can’t get there overnight,” he said. Meanwhile, school officials will continue to talk to students “whenever we get a chance,” and wherever that may be.