Short End of the Stick: Why Some Community College Students Can't Get Federal Loans
A new study by the Institute for College Access and Success points at the glaring problem facing many community college students: they can't access federal student loans. Learn about the study, the problem, and what resources you do have available.
Community colleges are known for their low-cost education options that help students with limited funds get the training they need to find good jobs after graduation. However, many hopeful students are realizing that even community college can become an "impossible dream," once they discover federal loans are not available for many of these institutions.
A recent study from the Institute for College Access and Success found that more than one million students across 31 states do not have access to the federal loans they need to make a college education a reality. We will explore the reasons behind this reality, and how it impacts the ability of adults to get the education and training they need today.
What Federal Loans can Do
The Institute for College Access and Success conducted this study through their initiative, Project on Student Debt, which is committed to helping make college more available and affordable to students of all backgrounds. The study states that community colleges serve a variety of purposes, from awarding associate degrees and certificates to providing workforce training and lifelong learning opportunities for students of all ages. These schools are designed to serve students of all backgrounds and income levels, ensuring everyone in this country has access to necessary training to land good jobs after graduation. Community colleges are currently educating 40 percent of all the undergraduate students across the country.
The low tuition and fee rates have historically made these institutions more affordable than other schools of higher learning. However, the study also notes that when those expenses are combined with the cost of books, transportation and living, the price for education through community college quickly rises to levels comparable to other universities. Federal student loans can help make the cost of education more affordable to students, but the study found that community college students are much less likely to have this option made available to them than individuals attending four-year colleges and universities.
Financial experts across the board agree that federal loans should be a first resort when financing an education, above credit cards or other types of consumer debt. Federal student loans offer a wealth of advantages over other types of lending options, including low, fixed interest rates, flexible repayment plans and generous forgiveness programs. Consumer protections are also abundant on federal student loans, offering graduates options in situations like unemployment, military service or death and disability. When students do not have access to these loans, they must resort to other types of borrowing that leave them more vulnerable to economic difficulties after college.
What the Study Found
According to the study, nine percent of all community college students across the country do not have access to student loans. In some states, the number without access rises to more than half of all community college students in some states. A report at Reuters provided additional data about the study:
- As many as 16.4 percent of African-American students and 18.5 percent of Native-American students in community colleges lack access to federal loans across the country.
- North Carolina features the most community college students without access to federal loans, at 57 percent of their entire community college population.
- Default rates on federal student loans across the country currently stands at about seven percent. However, default rates for community college students, who often come from lower-income backgrounds, could be somewhat higher than the national average.
Debbie Cochrane, program director at the Institute for College Access and Success, told Reuters in regards to the findings, "Federal student loans should always be considered before relying on credit cards to get by or taking out a private student loan or resorting to payday lenders. Federal financial aid programs, both grants and loans, are there to make sure that students from all backgrounds can afford to cover college costs. When colleges opt out of the loan program and don't make that option available to students, it undermines the goal of the program; making college more affordable."
Why Colleges don't Allow Federal Aid
There are a number of reasons why community colleges are hesitant to make federal funding available to their student bodies. According to a report at the Rocky Mount Telegram, some schools fear they could lose all of their federal aid if students do not repay their loans on time. Some school presidents also don't believe that students really need the money, since tuition rates for community colleges are already very low.
Martin Nadelman, president of Alamance Community College, told the Telegram, "I feel that if we were to participate [in the federal loan program], there would be students that would borrow money for purposes other than education. I think we're trying to help them do the right thing." Many of these community colleges do offer a variety of grants and scholarships to students through affiliated foundations, rather than the federal government. However, not everyone agrees that the college should make the financial decisions for the students.
Rick Glazier, a North Carolina House member, told the Telegram, "Nothing suggested to me that students in these other colleges were any less capable of making decisions about their life, about what debt they wanted to incur, or that they were any less advantaged or disadvantaged in gaining jobs when they left college. It's not about what's best for the colleges, but what's best for the student."
It appears that community colleges will continue to debate the issue of federal student aid, as more schools grapple with the best approach to paying for higher education. In the meantime, students around the country wait anxiously to find out whether they will be able to afford the education and training they desperately need for the jobs they want.
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