Smart Borrower Blog

Ten Percent of Community College Students Do Not Have Access to Federal Student Loans

Oct 19th, 2009 @ 11:32 AM by Debbie Dragon

According to the Project on Student Debt, there are about 900,000 students at community colleges in 31 states who do not have access to federal student loans because their colleges do not participate in federal loan programs. What’s more, 362,000 community college students (2 out of 3 students) who do have access to federal loan programs took out private student loans during the 2007-2008 school year, instead of using the more affordable and safer federal student loan options. This decision to fund education with private student loans may be due to deceptive marketing practices of some private lenders, as well as a lack of marketing of the various federal student loan programs available to students.

The Obama Administration is currently pushing to create a new Consumer Financial Protection Agency (CFPA) to protect consumers from private student loans and other financial services and products that are seen as risky.

Private student loans put students at risk for less than desirable interest rates and lending conditions. When community colleges do not participate in federal student loan options, students who need to borrow money to cover the costs of their education are forced to consider other methods of financing. This increases their risks of defaulting on payments or dropping out of college due to financial concerns.

The brief, “Getting with the Program: Community College Students Need Access to Federal Loans” warns that:

Students who need to borrow may turn to risky and expensive private student loans or credit cards when federal loans are not available. Other students may drop out, work excessive hours, or take fewer classes – all choices that reduce their odds of earning a degree or certificate.

“It’s important that community colleges provide access to federal loans for students who need them,” said U.S. Under Secretary of Education Martha Kanter. “I would urge community college leaders and administrators to read this report carefully and consider their institutions’ stance on this issue.”

About Debbie Dragon
Debbie Dragon is a full time freelance writer and the co-owner of

Leave a Reply