Student Loan Blog : AACC

Community Colleges Want to Control How Much Certain Students Can Borrow in Student Loans

Student Loan Girl — Fri, 20 Jun 2008 23:54:00 GMT

Concerned that some students at two-year schools may borrow more in federal student loans than they can afford to repay, community college officials want the federal government to give community colleges control over how much their students can borrow in federal aid.

Community colleges want the authority to deny some of their own students the right to take out federally subsidized loans, because the schools believe that some students may not earn enough after graduation to repay their student loan debt, according to an article in The Chronicle of Higher Education (“Community Colleges Want Their Authority, Not Banks,’ Over Student Borrowing,” June 18, 2008).

The change is needed because colleges currently have no way of preventing a student from taking out a college loan that doesn’t make economic sense given the student’s long-term job prospects, says David Baime, vice president of government relations for the American Association of Community Colleges.

The association, which represents more than 1,200 institutions nationwide, is pushing for legislation that would give community colleges the right to control how much their students can borrow, rather than being at the mercy of private lenders who can stop lending to certain schools at any time. The AACC is lobbying for this authority after a recent move by some of the nation’s biggest banks to stop offering student loans to certain community colleges and other two-year institutions.

The banks’ decision to cease lending to these schools also prompted Democratic Senators Patty Murray and Christopher Dodd to introduce legislation that would prohibit lenders from ‘cherry-picking’ which schools they do business with.

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Back from Surgery, Kennedy Calls On Community Colleges to Switch to Direct Lending

Student Loan Girl — Tue, 17 Jun 2008 18:11:00 GMT

Sen. Edward Kennedy, D-Mass., sent a letter Monday to the American Association of Community Colleges, urging its members to enroll in the government’s Direct Loan Program in order to ensure community college students have access to student loans for the 2008–09 academic year.

Kennedy, the chairman of the Senate Committee on Health, Education, Labor, and Pensions who is recovering from surgery to remove part of a malignant brain tumor, encouraged AACC member colleges to sign up for the direct lending program, which allows students and parents to take out student loans directly from the U.S. Department of Education.

Almost 100 lenders in the rival Federal Family Education Loan Program, in which student loans are provided by private lenders, have reduced or stopped offering borrower incentives, or have dropped out of the FFEL program altogether.

Government subsidy cuts and the fallout from the subprime mortgage crisis have hurt lenders and have prompted some to announce they will no longer offer student loans to certain community colleges and other two-year institutions whose borrowers tend to carry smaller, less-profitable loans.

"Since lenders continue to say they may have to limit new loans to certain colleges, it’s possible that the neediest students, particularly those at community colleges, will need an alternative to the bank-based FFEL program," Kennedy wrote.

David Baime, vice president of government affairs for the AACC, countered that the problem is not that student loans are inaccessible, but that community college students tend to borrow more money than they can afford to repay ("Kennedy Urges Community Colleges to Enroll in Direct-Loan Program," June 17, 2008).

That’s why the association is pushing a measure through Congress, Baime says, that would give colleges the authority to reduce maximum college loan amounts that students could borrow under the federal student loan programs.

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Trade Schools Are Better Than Community Colleges, Say Americans in Poll

Student Loan Girl — Thu, 12 Jun 2008 01:38:00 GMT

Results of a recent public opinion poll point to a strong belief among Americans that career and technical schools may be better than community colleges at preparing students for today’s competitive workforce, reports The Chronicle of Higher Education (“Americans Favor Career and Technical Colleges Over Community Colleges, Report Says,” June 4, 2008).

The poll results, released by the Career College Association, reveal 40 percent of the 830 respondents choosing career colleges as the best alternative to four-year institutions, versus the 17 percent who favored community colleges.

Community college officials have taken issue with the survey’s findings, pointing out that the growth in enrollment at community colleges has dwarfed increases in enrollment at career schools in the for-profit sector — a fact administrators consider to be a vote of confidence in the community college system.

“I don’t deny some [technical school] programs are good programs, but to draw a comparison like that and write a survey on it seems to me to be a curious way to use their resources,” said David Baime, vice president for government relations at the American Association of Community Colleges.

Survey Reveals Shift Away From ‘Education for Education’s Sake’

Instead of indicating the superiority of one type of institution over another, the survey results may indicate a subtle shift in education values, say CCA executives, with a greater number of students each year choosing the skills-based training at career or technical colleges over the traditional “book-learning” education found at other two- and four-year colleges.

“Spending four years cloistered on campus is growing increasingly unlikely for a growing number of Americans — Americans still in need of the skills and abilities delivered through higher education,” the report’s authors concluded.

The growing trend among college students has been toward viewing higher education as a pathway to a specific job or career, notes Harris Miller, CCA president. “Apparently, today they’re not convinced that traditional higher education, for all of its important strengths, really serves that purpose very well.”

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