Community Colleges Denying Loans: Federal Loans Made Less Available For Students Attending Schools

Community Colleges around the country are dropping the option of students taking out federal loans, insisting that they are more than students need. Others disagree.

A new study has discovered that students attending community college are less likely to receive federal loans to help finance their expenses. More and more schools are not taking part in the federal loan program, leaving over one million college students looking for alternative, often more expensive ways to pay for their education. The schools claim that they are trying to keep college students from heavy borrowing, but others say that not having this option is more harmful than helpful.

How This Hurts Students

The study is to be released on April 24th by the Project on Student Debt group from California. The schools believe that students are going to receive more aid than they need to attend these cheaper, two-year schools and that they will get into more debt than needed. However, the makers of the study as well as financial aid administrators, disagree with the schools’ decisions, believing that students will be required to work more or find other ways to finance their schooling, such as through private loans and credit cards.

Federal loans, including Stafford loans, contributed to $50 billion in financial aid last year. However, the current credit crisis and subsidy cuts are causing lenders to be less enthusiastic about investing in such loans, creating less money to go around for college students. Adding to this is the fact that students are now being denied federal loans because of the school they choose.


One in 10 community college students will be affected by this crisis throughout the country. However, these statistics are much higher in the southern states, particularly in Georgia, Alabama, North Carolina and Louisiana where 47 percent of the students in these states could be affected. Minorities are also largely impacted by this problem. In some states, less than half of all black students will qualify for a loan while only 8 percent of Native Americans will qualify in states such as Montana. Meanwhile, white students’ odds stay around 90 percent.

Low-income students are also at a higher risk for not receiving these loans, and they are the ones who benefit the most from them. When attending community college especially, the loans can even cover the costs of other expenses after classes are paid for, such as books and bus fare. This is because the average tuition fee at a community college is about a third of the cost of the average public school cost, about $2,361 each year.

Though only 10 percent of community college students are said to use federal loans, those who are denied them will be forced to find more expensive alternatives, including those that take a toll on their academic performance, such as working more hours to make up the difference.