COEUR d'ALENE - To help stem the growing tide of students who register for classes at North Idaho College, and then fail to attend those classes, the college instituted a new set of registration and attendance procedures at the start of the fall semester.

Students who did not show up for the first week of a class in August were immediately dropped from the course under the college's new non-attendance policy.

"It's going to free up seats for students who need them and want to go to class," said Joe Bekken, the college's financial aid director.

The new policy is also designed to help mitigate the amount of financial aid dollars NIC must return to the federal government because students are not attending class.

Bekken came on board at NIC in May 2010.

"One of the big things we noticed over the course of last summer, fall and spring, was how much money was being sent back at the end of each term," he said.

During a one-year period, NIC had to return $1 million back to the federal government.

"It's happening nationwide," Bekken said.

There were 420 NIC students who had at least one course removed from their schedules for non-attendance. Some of those students may still be attending other classes on campus.

Before the new non-attendance policy was put in place, student performance was reviewed by the college at the end of each semester, Bekken said. At that time, they looked at attendance and determined which students' financial aid awards had to be sent back. Meanwhile, those seats remained unfilled.

Colleges must repay the full amount of any Title IV federal financial aid funds granted or loaned to a non-attendant student, including any balance left over from loans after the college's tuition and fees are paid in full. Those additional funds, meant to help students with their living expenses while attending school, are disbursed to students during the first weeks of each semester.

When the college was reviewing attendance at the end of each semester, students who didn't attend classes were receiving these disbursements.

Now, because the students are having their courses removed from their schedules prior to the balance disbursement date, they no longer receive those funds.

Previously, when returning financial aid dollars to the federal government, NIC had to dip into its own coffers to cover the loan balances disbursed to those non-attendant students. They had to then seek repayment of those funds from the students, and the collection rate isn't good.

"That's a big reason why we instituted this policy," Bekken said. "It's being written off as bad debt at this point."

Colleges and universities throughout the nation are tightening their attendance, registration and financial aid policies following the recent rapid growth of enrollments, and increasing student debt loads and default rates.

The United States Department of Education announced on Monday that the national student loan default rate increased to 8.8 percent for students whose first loan repayments came due between October 2008 and September 2009. The most recent spike, up from 7 percent a year earlier, represents a 25 percent jump.

"These hard economic times have made it even more difficult for student borrowers to repay their loans, and that's why implementing education reforms and protecting the maximum Pell grant is more important than ever," said U.S. Secretary of Education Arne Duncan in a statement.

NIC's Bekken said the national default rate includes four-year and graduate programs, which tend to have better default rates than community colleges.

The 2009 default rate for NIC is 13.6 percent, up from the previous year's 10.6 percent.

The official national default rate for community colleges has not been released, but Bekken said it is about 11 percent.

Bekken agrees with Duncan's assessment that the economy is driving the recent financial aid trends.

Regarding NIC's buckling down on attendance and its impact on financial aid, Bekken said: "My sincere hope is that in future semesters, those seats are actually filled with students who are going to class."