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Report: Nearly 1 million community colleges don't offer federal student loans

By Amy R. Connolly
A new report from The Institute for College Access & Success found one in 10 community college students don't have access to federal student loans. Photo by lenetstan/Shutterstock
A new report from The Institute for College Access & Success found one in 10 community college students don't have access to federal student loans. Photo by lenetstan/Shutterstock

WASHINGTON, June 30 (UPI) -- A new report from The Institute for College Access & Success found one in 10 community college students don't have access to federal student loans, compelling them to turn to private loans or credit cards to finance their education.

The nonprofit group found more than a third, or 37 percent, of students who attend two-year colleges and complete degrees have borrowed to pay for school. Almost 1 million students across 32 states do not have access to federal loans because their schools do not offer them, the report found.

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"Despite relatively low tuition and fees, community college students still face average total costs of $15,000. Federal loans are the lowest cost option for students who need to borrow to stay in school, but too many schools take that option off the table," said Debbie Cochrane, research director at TICAS and co-author of the report, States of Denial: Where Community College Students Lack Access to Federal Student Loans.

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The report found the following:

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-- One in 10 of the nation's community colleges, or about 9 percent, has no access to federal student loans. Nearly half of the 1 million students without access are in California or North Carolina.

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-- In eight states -- Alaska, Alabama, Georgia, Louisiana, Montana, North Carolina, Tennessee, and Utah -- more than 20 percent of community college students attend schools that do not participate in the federal loan program.

-- Minority students are "disproportionately denied access to federal loans." Among all community college students, 10.5 percent of Latinos, 12.7 percent of African Americans and 22.2 percent of Native Americans lack access to federal loans. That is compared to 8.3 percent of Caucasians and 4.5 percent of Asian students.

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-- Many community colleges that do not offer federal loans steer students to riskier private loans.

Institutions that do not offer federal loans commonly cite concerns about loan defaults. Too many student loan defaults can prevent colleges from getting access to other types of federal financial aid.

The new report comes as the interest rate for new federal student loans, issued after July 1, will hit a historic low. New loans will be about half a percentage point cheaper than the previous year.

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