Federal Loans Tough To Come By For Community College Students

Jul 15, 2014
Originally published on July 16, 2014 8:50 am

Tuition and fees at most community colleges are pretty reasonable these days, about $3,500 a year. Which is why the vast majority of community college students don't take out loans to cover their costs. But, according to the Institute for College Access and Success, a non-profit advocacy group based in California, nearly a million community college students who do need help paying for school don't have access to federal student loans.

Debbie Cochrane, research director at TICAS, surveyed some 1,100 institutions and found that 237 simply don't participate in the federal student loan program. So, for their students,federal loans aren't an option. And that, says Cochrane, puts lots of students in a financial bind.

The American Association of Community Colleges doesn't dispute these numbers, but Senior Vice President David Baime says there's a perfectly good reason why one-fifth of the nation's community colleges don't offer federal student loans.

"The primary concern of the institutions' presidents, on balance, is the severe consequence of student loan defaults," Baime says. "Over 1 out of every 5 of our students defaults on a federal student loan within 3 years of entering repayment."

The problem for community colleges, says Baime, is that schools with a 30-40 percent default rate - or worse - can be banned from receiving any kind of federal aid. Many schools that don't participate in the federal student loan program still depend on other sources of federal help, like Pell grants, scholarships and funding for work-study programs. To protect that funding, some schools choose to forego the loan program entirely.

Debbie Cochrane says, as a result, nearly a million students who need to borrow from the federal government to cover their community college costs can't. Hardest hit are low-income black, Latino and Native American students.

"In some states it's quite extreme," says Cochrane. She points to Alabama, where almost 64 percent of low-income black students in community college don't have access to federal loans. In Alaska, 60 percent of low-income Native American students attend schools that don't offer federal student loans.

David Baime says, while federal loans are critical for many students to finance their education, for schools "the consequences of default are so significant and long-lasting that it's a double-edged sword."

As long as that's the case, Baime warns, many community colleges will stay out of the federal student loan program.

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Transcript

AUSIE CORNISH, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel. Tuition and fees at most community colleges these days are pretty reasonable. But according to a new report, nearly a million students who do need help covering the cost don't have access to federal student loans. NPR's Claudio Sanchez explains why.

CLAUDIO SANCHEZ, BYLINE: The Institute for College Access and Success, a nonprofit advocacy group based in California, found that community colleges students in at least 30 states cannot get federal loans. That's because the schools they attend don't participate in the program. Tuition and fees at most of these schools can be pretty low - about $3,500 a year. But the total cost for full-time community college students can go as high as $15,000. For many of those students it's impossible to stay in school without borrowing, and Debbie Cochrane, the author of the report, says...

DEBBIE COCHRANE: So, for those who do need to borrow, federal student loans are undoubtedly the safest, most affordable option.

SANCHEZ: But they're not an option at 237 community colleges across the country. The reason...

DAVID BAIME: The primary concern of the Institution's presidents on balance is the severe consequence of student loan default.

SANCHEZ: David Baime is with the American Association of Community Colleges.

BAIME: And it's very disturbing, but it is a fact that over 1 out of every 5 of our students defaults on a federal student loan within three years of entering repayment.

SANCHEZ: That's a problem for some community colleges because any school with a 30 to 40 percent default rate or worse can be banned entirely from the federal student aid program, which could mean losing access to other federal help they depend on like Pell grants, scholarships and work-study programs. So, the logic goes, why risk losing those programs when most community college students don't need federal loans to begin with? But Debbie Cochrane of the Institute for College Access and Success says that's not a good enough reason for not offering students federal loans as an option, especially when it's mostly black, Latino and Native American students who are losing out.

COCHRANE: And in some of the states it's quite extreme. You know, Alabama - 63.7 percent of African-American students lack access.

SANCHEZ: In Tennessee, nearly 60 percent of low-income black students attend community colleges that do not offer student loans. In Alaska, it's 60 percent of low-income Native American students who don't have access.

BAIME: Low-income and minority students are precisely the students who are most at risk of defaulting on student loans in general.

SANCHEZ: Again, David Baime.

BAIME: Giving students loans - while critical for many of our students to finance their educations, the consequences of default are so significant and long-lasting, they are, in fact, a double-edged sword.

SANCHEZ: And as long as that's the case, Baime says, hundreds of community colleges will stay out of the federal student loan program. Claudio Sanchez, NPR News. Transcript provided by NPR, Copyright NPR.