Most community college students don’t need to take out loans to cover college costs, but for those who do, federal student loans are the safest, most affordable form of borrowing. Unlike private loans or credit cards, federal loans come with several consumer protections including fixed interest rates, Income-Based Repayment, and Public Service Loan Forgiveness. Unfortunately, an increasing number of community colleges across the country are choosing not to offer federal loans to their students, and California stands out as the state with the greatest number of community college students – over 200,000 and growing – without access.
Too frequently, colleges make this decision based on inflated concerns about the risks of offering loans to students. Colleges where too many borrowers default on their loans can lose eligibility to offer either loans or grants in future years, but colleges where very few students borrow in the first place – like virtually all the California Community Colleges (CCCs) – have special protections from these sanctions. (See our Cohort Default Rate Resources Page for more on what cohort default rates represent, why they matter, and individual college rates.) But many colleges – including Victor Valley College, the most recent CCC we know of to stop offering federal loans – don’t know about or understand these protections. Given how much unmet need CCC students have, the fact that colleges are choosing to take important financing options away from students is distressing.
In recognition of the critical importance of access to federal loans, the Student Senate for California Community Colleges (SSCCC) recently passed a resolution at its Spring 2012 General Assembly to strongly support CCC student access to federal loans and urge all CCCs to make federal loans available to their students. The California Community College Association of Student Trustees felt the issue was so important that the organization took the unprecedented step of signaling their support of the resolution in advance of the SSCCC vote. We will continue to partner with these student groups to make sure that the colleges are listening to their students, and understand their low risk of sanctions, before making decisions that undermine college affordability and success.