Most Students In Massachusetts' No-Interest Loan Program Are In Collection

More than half of the college students who borrowed from a Massachusetts loan program are in collection.

That's the finding of a report by the Hildreth Institute, a nonprofit that aims to replace student debt with grants and scholarships.

The Massachusetts No Interest Loan Program allows students to borrow up to $20,000 in interest-free loans. The money has to be repaid within 10 years. Most eligible students are low-income.

It currently has $55 million out in loans, so it's a small program, but it started out as much more ambitious one.

The program began in 1992. The state Legislature used to appropriate $10 million each year. Then, in 2002, the funding stopped. Since then, the program has been operating entirely on repayments borrowers make, lending out $5 to $6 million a year.

"What's happened is that the rotating fund has been eaten away year after year by the failure of students to pay back their loans," said Bob Hildreth, the founder of the Hildreth Institute. He's also a member of the WBUR Board of Overseers and the principal funder of WBUR's Edify.

Those borrowers in collection — 56 percent of the borrowers in the program — are struggling to repay a relatively small amount: $2,605 on average.

Hildreth thinks they never graduated.

"Because if you only have one to two thousand dollars in student debt as a loan balance, it probably means you dropped out, because you can't go to two- or four-year schools with such a low loan," Hildreth said.

Hildreth argued that this demonstrates that the program is a waste of taxpayer dollars and failing to provide educational opportunities to residents in need.

Officials in the state department of higher education did not return a request for comment.