Over one million community college students in 31 states can't borrow federal student loans. What gives with this unequal practice?
With the rising cost of college, paying tuition bills is a challenge for everybody these days. But students attending two-year community colleges have a much tougher time footing the bill than many of their peers attending four-year schools. According to the latest report from the Project on Student Debt, over one million students in 31 states attend community colleges that deny them the chance to borrow from federal student loan programs. This inequality forces community college students to pay for school via riskier and more expensive options, like private student loans and credit cards.
Federal loans are preferable to private loans because of their fixed interest rates, flexible repayment plans, and consumer protections. Community colleges are less expensive than four year schools, but cash strapped students unable to borrow part of the cost of tuition, books, and supplies often end up working longer hours, taking fewer classes, or dropping out of school entirely. Campus financial aid administrators justify their decision to opt out of offering federal loans by saying the predominantly low-income students of color attending community colleges—black and Native American students are most affected—might be prone to default.
Rising default rates jeopardize a school's ability to distribute any kind of financial aid, like Pell Grants or other scholarships. But according to the Project's study, no community colleges that make federal loans accessible are currently being sanctioned due to default rates. In fact, as you might guess, community colleges that have moved to make federal loans available to all students have seen positive results.
In 2007, almost half the students in the Chicago Community College system didn't have access to federal student loans. But after a study by the college's finance department revealed that students were paying tuition bills with high-interest plastic, the push began for all seven campuses in the system to offer loans. Administrators say adding the federal loan option allows them to support President Obama's goal of the United States leading the world in college completion by 2020. Since the change, an additional 45,000 Chicago students have access to safer and more affordable borrowing options.
Unfortunately, not all community college systems are so forward-thinking. Fifty-seven percent of students in North Carolina don't have access, and California "has the larges number of students without access to affordable student loans of any state: about 214,000 students." Lauren Asher, head of the Project on Student Debt says "local communities should demand that their students have access to the same safe and affordable borrowing options as students at other colleges." If President Obama's serious about his college completion goal, it probably wouldn't hurt if he also put some pressure on the nation's community colleges to end their unequitable financial aid practices and make education truly available to all students.