With Americans increasingly having to borrow to pay for college, a new report from The Institute for College Access & Success (TICAS) finds that nearly one million community college students cannot get federal student loans because their school chooses not to offer them. Without access to federal student loans, students may not be able to stay enrolled without turning to more costly and risky forms of borrowing such as credit cards or private loans, or reducing their chances of graduating by working longer hours or cutting back on classes.
At What Cost? How Community Colleges that Do Not Offer Federal Loans Put Students at Risk documents substantial disparities in loan access by state, urban/non-urban status, and race/ethnicity during the 2013-14 academic year. It includes data for every state and delves into particularly notable changes in California, Georgia, and North Carolina.
“Most community college students still don’t use loans to pay for their education, but for those who need to borrow, federal student loans can make the difference between graduating and having to drop out,” said Debbie Cochrane, TICAS’s research director and the report’s lead author. “Only 17 percent of community college students take out loans, but 37 percent of community college associate’s degree graduates have federal loans.”
At What Cost? Key Findings:
In total, 8.5 percent of the nation’s community college students—nearly 1 million students in 30 states—have no access to federal student loans. More than 250,000 of these students are enrolled in California community colleges.
In seven states, more than 20 percent of community college students attend schools that do not participate in the federal loan program (AL, GA, LA, MT, NC, TN, and UT). There are 20 states where all community colleges participate.
Students from underrepresented minority populations are disproportionately denied access to federal loans. Among all U.S. community college students: 10.5 percent of Latinos, 12.4 percent of African Americans, and 20.1 percent of Native Americans lack access to loans, compared to 7.5 percent of White and 4.5 percent of Asian-Pacific Islander students.
In some states, the racial/ethnic disparities are much more severe, for instance:
In Alabama, 63.7 percent of African-American students lacked access compared to 34.7 percent of White students;
In Alaska, 60.1 percent of Native-American students lacked access compared to 6.5 percent of their White peers;
In Tennessee, 58.9 percent of African-American students lacked federal loan access compared to 37.1 percent of White students; and
In Texas, 13.3 percent of Latino students lacked access compared to 2.7 percent of their White peers.
Nationally, community college students in non-urban areas (towns and rural areas) are more than twice as likely as their peers in urban areas (cities and suburbs) to attend schools that block access to federal loans (13.9 and 6.4 percent, respectively).
Despite relatively low tuition and fees, community college students still face average total costs of $15,000. Almost 40 percent of all U.S. undergraduates attend community colleges, including one-fourth of all full-time undergraduates. The vast majority (82 percent) of full-time community college students need financial aid, and hardly any—just 2 percent—have their need fully met by grants. Federal loans can help cover the remaining costs, so that students can pay for child care while they attend classes or study, get a car repaired so they can get to school and work, or quit a second or third job to take more classes and increase their odds of graduating.
Community colleges that do not participate in the federal loan program typically cite concerns about loan defaults, which, if too high, can prevent colleges from offering federal financial aid. Yet loan defaults are not inevitable; colleges can do a great deal to help students borrow wisely and avoid default. For instance, the report notes that Albany Technical College in Georgia, which sees federal loans as essential to enabling more of its students to enroll full-time, has significantly reduced its default rate by introducing campus-wide strategies to help students stay on track.
“Barring access to federal student loans doesn’t keep students from borrowing—it just keeps them from borrowing federal loans, which are the safest option,” said Cochrane.
At What Cost? describes the many ways that community colleges can and do help students borrow wisely and avoid default. It also includes specific recommendations for how the U.S. Department of Education can encourage more schools to offer federal loans.
NOTE: This report includes state-by-state data on the share of community college students without access to federal loans, with breakdowns by race/ethnicity and urbanicity. It also has a link to a list of all community colleges nationwide and whether they participate in the federal student loan program.
An independent, nonprofit organization, The Institute for College Access & Success (TICAS) works to make higher education more available and affordable for people of all backgrounds. TICAS’ Project on Student Debt works to increase public understanding of rising student debt and the implications for our families, economy, and society. Follow us on Twitter.