Group Says Community College Students Are Denied Funding

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Community college is one of the most affordable ways for students to obtain college credits, an important launching pad to four-year schools or for offering sufficient training through offered technical programs. Community college students now comprise about half of all undergraduate students, but as many as one million of them may be missing out on federal student loans according to Project on Student Debt, which is an initiative of the Institute for College Access & Success, a nonprofit, nonpartisan organization.1

Last week, the group issued a brief, Still Denied: How Community Colleges Shortchange Students by Not Offering Federal, which warns that students who are not able to secure federal student loans are forced to turn to credit cards or high interest rate private student loans as a way to finance their education. Students aren’t able to get federal student loans because their schools choose not to offer them. In 2008, the FTC issued guidelines to help students avoid deceptive loans, but with no federal loans available, students sometimes get pulled in.2

Governments Respond

Recent changes at the city and state level has revealed that some locales are taking lack of access to federal student loans seriously.

• In Chicago, IL, all seven of the City Colleges now participate in the loan program. In
2007-08, three of the colleges did not offer loans.

• In North Carolina, recent state legislation requires all of the state’s 58 community colleges to offer federal loans by 2011-12. North Carolina currently has the largest share (57 percent) of community college students without access to loans in the nation.

• California now has the largest number of community college students – about 214,000 – without access to federal loans. Since 2007-08, six of the state’s colleges have withdrawn from the federal student loan program, and two have entered it.

Federal Loan Program

“Federal student loans are the best option for students who need to borrow to get to and through college,” said Lauren Asher, president of the Institute for College Access & Success (TICAS), home of the Project on Student Debt. “Opting out of the federal loan program doesn’t keep students from borrowing — it just keeps them from using the safest type of loans.”

Community colleges will often cite loan default problems as reasons why they choose not offer federal student loans. When default rates are high, the federal government imposes costly sanctions, but “Still Denied” says that this action is rarely taken. Importantly, as of this publication, no community college is currently being sanctioned. Schools can also limit default rates by offering loan counseling and preventive strategies to help affected students.

Recommended Action

The brief includes several specific recommendations for both colleges and the U.S. Department of Education, aimed at encouraging more schools to participate in the federal student loan program.

“Especially in these tough times, all community college students should have access to federal loans if they need to borrow. But right now that’s not true in 31 states,” said Debbie Cochrane, TICAS program director and the report’s primary author. “By offering federal student loans and helping students make wise decisions about whether and how much to borrow, community colleges can help their students stay enrolled and graduate while minimizing risks for both students and schools.”

References & Resources

1 Project on Student Debt; More than One Million Community College Students Still Denied Access to Federal Student Loan; April 29, 2011

2 Federal Trade Commission; Student Loans: Avoiding Deceptive Offers; June 2008

The Institute for College Access & Success: Home

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Categories: Campus News