More than one million community college students can’t apply for federal loans because their colleges don’t participate in the programs, according to a report by the Project on Student Debt.
Still Denied (pdf) found that 9.2 percent of community college students can’t access federal loans.
Community colleges have been reluctant to participate in federal programs because they fear loss of Pell Grants and other government subsidies in the event of student defaults. They also contend that community college tuition is generally low enough to make borrowing unnecessary, and that access to low-risk loans will launch students into debt for no reason.
Colleges should offer federal loans and financial counseling to help students stay enrolled, argues Debbie Cochrane, the report’s primary author