CPCC opts out of federal loan program

CHARLOTTE, N.C. — Central Piedmont Community College will no longer be a part of the federal direct student loan program. 

The college’s Board of Trustees voted to opt-out of the program in early March, but CPCC hasn’t sent a campus-wide notification to students yet. The “opt-out” is effective at the beginning of the Fall 2014 semester.

CPCC said the decision was based on “concerns for students’ financial well-being and the need to protect other types of federal aid.”  Communications Director Jeff Lowrance explained participating in the federal direct loan program was “too risky” for CPCC.

According to guidelines, if at least 30 per cent of students default on federal loans for three consecutive years, the school can lose all other types of federal funding, including Pell Grants. 

Nearly 60 percent of CPCC students use Pell Grants to pay for school. Less than ten per cent of CPCC students depend on federal direct loans, and most of those students also use Pell Grant money.

“As a business major, I understand,” said Matthew Jannazzo, who depends on federal loans.

He found out about the decision when he submitted his financial aid application for next year early.  The 28-year-old has paid for the past two-and-a-half years of school using a federal loan. 


In addition to protecting the college, Lowrance said the decision to opt-out would also protect students from taking on enormous amounts of debt.  He said most students would be able to fund their education through grants and scholarships.

However, not all students qualify. Jannazzo is 28-years-old, married and works full-time.

His income is just above the government grant cutoff and so far, has been unable to get a scholarship.

Students like Jannazzo will likely be forced to use credit cards or apply for private loans, both of which have higher interest rates and offer less protection than federal loans.


Jannazzo attempted to secure a private loan to pay for next year, but said the lender (Sallie Mae) turned him down.

“They denied me because I already have federally backed loans. They said I need to continue with the federally backed loans…but I can’t because my school doesn’t accept them anymore,” said Jannazzo.

Lowrance said CPCC has more than $1million to give away in scholarship money each year, and some of that often goes unused.  The college has recently made it easier to apply for scholarships by streamlining the application process.

CPCC is not an unusual case. Only half of North Carolina’s 58 community colleges participate in the federal direct loan program.

Former Governor Bev Perdue vetoed legislation in 2011 that would have allowed community colleges to opt-out of federal loans. One year later, her veto was overridden by legislators, paving the way for CPCC and others to make this move.


CPCC said it would be notifying students by email in the near future, before registration begins.  Admission and financial aid officers will be able to assist students with questions. 

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