LEWISBURG, W.Va. — So far, the speakers at new-student orientation at New River Community and Technical College on this afternoon have been upbeat and supportive. Now comes financial aid director Trish Harmon. The tone darkens.
"Caution! Student Loans must be paid back!" screams the headline of the flier she hands out. It lists the consequences — a dozen in all — for borrowers who default: Garnished wages. Bad credit reports. Collection agencies at the door.
"The federal government has very long arms," Harmon warns. "And they're going to go after you every way they can."
President Obama last week offered a softer message. In a speech bemoaning the "crushing debt" some students take on, Obama said the Education Department this fall will contact struggling borrowers to provide information on repayment options that can keep them from defaulting. He also proposed a ratings system that would reward colleges that keep loan debt manageable.
Student borrowers aren't the only ones in jeopardy. If a high percentage of its borrowers consistently fail to pay back their loans, the school can lose access to millions of dollars in federal student aid.
The number of colleges at risk of penalty is on the rise. That helps explain the recent rush by many colleges to keep closer tabs on borrowers, even if the colleges' default rates are not at crisis levels.
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