A low-interest student loan program has been discontinued after a state audit found a high percentage of users were failing to repay their debts.
Established in 2012, the Student Access Loan acted as Georgia’s primary form of need-based aid, doling out $266 million in loans to nearly 36,000 college students, the 2021 audit showed. But that audit also found 31% of borrowers defaulted on those loans and determined nearly $50 million of that state money likely would not be repaid.
During the 2022 legislative session, months after the audit’s release, the General Assembly reduced SAL’s funding, making it unavailable after fiscal year 2024, which began in July. The Georgia Student Finance Commission, which administered the loan program, declined to comment publicly on its suspension.
Although the program offered students up to $36,000 in loans during a college career, experts say its suspension isn’t necessarily a bad thing, particularly because a portion of SAL’s funding has been redirected toward another grant program.
Credit: Contributed
Credit: Contributed
“This is technically a ‘win’ in terms of how we set students up for success,” said Ashley Young, senior education analyst with the Georgia Budget and Policy Institute. “Getting a loan to help you pay for college feels and seems helpful in the moment, but we have to weigh the potential back-end outcomes that students and families have to then navigate.”
With the Georgia Legislature set to convene next month, many higher education experts hope lawmakers will pass legislation that will provide more money for the grant program and other funding options for students.
Considered a loan of last resort, SAL was available to students who had exhausted all other financial aid options. Borrowers were not required to submit a credit check or cosigner, and while that helped ensure access for students who couldn’t get a private loan, a 2024 state report found it also made higher default rates more likely.
Although not explicitly targeted for low-income students, the audit found roughly 75% of SAL borrowers were eligible for the federal Pell Grant, meaning they had displayed “exceptional financial need.”
Experts say Georgia is unique in its approach to financial aid. While it leads the country in merit-based funding through the HOPE and Zell Miller scholarships, it is one of only two states that lacks comprehensive need-based financial aid. Georgia lawmakers attempted to address the need-based aid issue through the College Completion Grant.
Aimed at students who can’t afford to finish college, the grant initiative offers up to $2,500 for students who have completed at least 80% of their program.
Rep. Chuck Martin, R-Alpharetta, who sponsored the 2022 bill that initiated the program, has said the program had a 95% success rate.
“I don’t know that we have another program where we’re investing in our students to get them across the finish line that’s 95% successful,” Martin, chair of the Georgia House Higher Education Committee, said at a January committee meeting.
Martin backed legislation earlier this year to expand the program to students who have completed 70% of their credit requirements in a four-year program or 45% of credits in a two-year program to receive help. The legislation passed the Georgia House of Representatives but failed to get a Senate vote.
The three-year pilot program is set to expire next year, and advocates want to see the General Assembly extend it.
The Georgia Budget and Policy Institute report called the completion grants program “a significant step forward in the state’s efforts to support financially disadvantaged students.” But it advised that lawmakers should establish more financial aid interventions for students who need assistance earlier in their college careers.
“Who knows how many students we lost at the 20% completion, at the 50% completion or at the 75% completion,” Young said.
Data from the National Institute for Student Success at Georgia State University found that once a student withdraws from enrollment at a college, their odds of completing a degree drops dramatically. That’s partly why GSU launched the Panther Retention Grant in 2011, a program that served as a model for the College Completion Grant and has prevented thousands of students from dropping out.
“If a student leaves and their chances of graduating if they stop out goes down by 50 points, you better figure out some ways to keep them enrolled,” said Tim Renick, senior vice president for student success at GSU.
Although geared for students nearing graduation, the Panther Grant does not have a hard requirement of 80% completion of credits. Advocates want to see the legislature follow suit by decreasing the College Completion Grant’s 80% threshold, and they want to see more money allocated for the grant, which received $10 million in its first year and another $10 million in fiscal year 2024.
More broadly, advocates want Georgia to make a larger investment in financial aid for students earlier in their college careers.
“Comprehensive need-based aid has remained non-existent (in Georgia), leaving a critical gap in support for students facing financial barriers to higher education,” the GBPI report said.
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