EASTHAM — The select board voted 5-0 on Monday to approve a series of changes to the Timothy Smith Loan Policy, under which town residents can receive loans of up to $4,000 per year for college. One of the changes declares that all unpaid loans issued before Dec. 31, 2014 are now considered “uncollectable.”
The Timothy Smith Fund was established in 1918 by the will of Eastham resident Smith, who is best known for funding the construction of town hall in 1913. At his death, he left the town $25,000 — the equivalent of $521,185 today.
There is currently $260,000 in the fund, held in two money market accounts. According to Town Manager Jacqui Beebe, the balance has been maintained through repayment of loans and accrued interest.
Beebe said that the select board typically authorizes between one and six loans to undergraduate students per year. “Not a lot of people know about it,” she said.
The board’s vote designated 12 loans that have gone unpaid for years as uncollectable. The oldest was awarded in 1984, the youngest in 1997. They total $35,660. Town officials declined to name the 12 debtors.
Beebe told the select board on Sept. 23 that the town treasurer had repeatedly tried to collect the loans, sending 22 letters in one case to the borrower, with no response.
“I do not want you to lose sight of the students this program has served,” Beebe told the board. “We want to continue to offer this program to as many residents as possible.”
The 12 delinquent borrowers aren’t completely off the hook. The loan policy provides that recipients and co-signers of loans who fail to repay them may not obtain beach stickers, shellfish licenses, or any other permits from the town.
Two of the 12 debtors — the only ones currently living in Eastham — will receive one final letter requesting repayment. If they fail to respond and agree to a payment plan, the town will report them to a collection agency. The remaining 10 nonresident borrowers will be reported to collections immediately without the benefit of a warning letter.
Select board member Suzanne Bryan hoped that the permit restriction would be enough to motivate the two debtors still in town to repay their loans. “It’s likely the borrowers already have credit issues,” she said. “If the families are still in town, not being able to get a beach sticker or a dump sticker is motivating to pay the thing back, or at least engage in the process.”
To further encourage repayment, the board voted to set the interest rate for all Timothy Smith loans at zero percent. The previous rate was 3 percent.
The board also voted to extend eligibility for the loans to graduate students.
The revised policy now includes a provision that the money go directly to students rather than to their schools. That change was proposed by board member Jamie Demetri, who said that schools often deduct scholarship and loan money from a student’s financial aid, thereby negating any benefit. “It’s some feedback I’ve heard from students,” she said.
Board member Gerald Cerasale told the Independent he believes there should be hardship criteria for people unable to fully repay their loans, but no such provision has been added to the policy.
Bryan, who is the board’s youngest member at 35, suggested that the lack of an online payment system for the Smith loans creates hardship for a generation accustomed to automation. “That was for sure a hurdle,” she said, recalling when she paid off a Timothy Smith loan for her own education. “I had to write the check, buy envelopes, buy stamps, go to the post office….”
“We all used to have to do that, Suzanne,” Beebe told her.
The select board’s action comes at a time when student loans are a national concern. Applications for the U.S. Dept. of Education’s “Fresh Start” program, which restores eligibility for forgiveness on defaulted student loans from before March 2020, closed on Sept. 30.
The last time the Eastham Select Board updated the Smith Fund Loan Policy was 2008. At that time the board, chaired by Linda S. Burt, voted to write off all loans issued before Dec. 31, 1979 as uncollectable.
Along with providing student loans, Smith specified that a $1,000 annual donation from the fund be made to the Eastham Public Library and a further $1,000 from the fund be granted to “deserving needy persons” in Eastham around Christmas.
