PHOENIX, AZ -- 05/01/08 --
While more than 40 percent of all undergraduate
students attend a community college, 25 percent of all community colleges
in the United States do not offer the federal
student loans that could help those
undergraduates pay for their college costs, according to a new report by
the Project on Student Debt.
In 13 states, more than 10 percent of community college students do not
have access to federal student loans; in eight of those states, that number
is over 20 percent. Georgia has the highest percentage of community college
students who cannot get federal student loans, at 60 percent. Alabama and
North Carolina follow, at 51 percent and 47 percent, respectively.
The Project on Student Debt report, "Denied: Community College Students
Lack Access to Affordable Loans," concludes that more than 1 million
community college students attend a school that doesn't participate in the
federal student loan program.
Without access to the same low-cost federal student loans available to
undergraduates at participating two- and four-year institutions, community
college students at non-participating schools must resort to other, often
more costly options such as credit cards or private student loans in order to
bridge the gap between federal aid and college costs.
In the midst of the current credit crisis, however, with fewer lenders
offering private student loans and with increasingly stringent credit and
income requirements needed to qualify for almost any line of credit, these
credit-based alternatives are harder to come by, making it more difficult
for students without federal options to get the money they need for school.
Community college students tend to be lower-income and can come to depend
more heavily on financial aid than other undergraduates. Since these
students may not qualify for income- and credit-based private
student loans, they need to rely on federal grants and federal student
loans, which don't require a credit or income check.
"Financial aid, including loans, plays an important role in keeping
community college students in college and on track," write the authors of
the Project on Student Debt report. "Even modest amounts can relieve
financial pressures, allowing students to work less, or to have a financial
cushion when an emergency would otherwise."
Unfortunately, these very students who have the greatest need for federal
college loans aren't always able to get them if their school has deemed
federal student loans "too hazardous for the students or too hazardous for
the school," said Robert Shireman, executive director of the Project on
Student Debt.
Community colleges that don't offer federal student loans have opted out of
the federal loan program for two main reasons, researchers found: First,
the schools want to protect their students from taking on too much student
loan debt. Second, institutions are fearful of losing federal funding for
student grants if too many students, under the burden of unmanageable
student loan debt, default on their college loans.
In the early 1990s, Congress passed legislation that would bar schools from
receiving federal funds if too many of a school's students defaulted on
their federal student loans. Under these sanctions, schools would lose
funding not just for federal student loans but for federal grants, which
include Pell grants, the largest source of grant aid for students. Losing
the ability to disburse Pell grants would be potentially disastrous for
community colleges, since many low-income students rely heavily on Pell
money to be able to pay for college.
About NextStudent
NextStudent, Federal Lender Code 834051, is dedicated to helping students
and their families find affordable ways to pay for college. NextStudent
offers one-on-one education finance counseling and has a portfolio of
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please visit our website at www.nextstudent.com.
Contact:
Philip J. Tannenbaum
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