As Bankruptcy from Student Loans Rise, Community Colleges Seen as Low Cost Alternative

A brief released today by the American Association of Community Colleges affirms that community colleges are a primary gateway to higher education for nearly half of low-income and minority students. The report, called Why Access Matters, shows the importance of community colleges maintaining this role.

The report finds that community colleges "provide access to nearly half of all minority undergraduate students and more than 40 percent of undergraduate students living in poverty.” 

A few days ago the The Century Foundation announced the creation of a taskforce that will come up with recommendations to make community colleges more mixed income.  Dubbed the "Task Force on Preventing Community Colleges from Becoming Separate and Unequal," the group will include representatives from two-year and four-year schools, scholars of higher education, and members of the business, philanthropic, and civil rights communities.  One of the main areas that the task force will examine is why the racial and socioeconomic divide between two- and four-year institutions is growing.

Eduardo Padron, president of Miami Dade Community College and taskforce co-chair, explains the importance of community colleges recruiting more middle class class students:

“Community colleges should be open to, and attractive to, students of all economic, racial, and ethnic backgrounds,” said Padrón.  “While two-year institutions must always provide access to low-income and working-class students, community colleges need to find ways to recruit middle-class students as well, or the political and financial support for the two-year sector will continue to decline.”

There is an important balancing act to be had here.  If community colleges experience an influx of middle-income studets, will low-income students be displaced?  In this context, unless four year schools do a MUCH better job of recruiting and supporting low-income and minority students, Padron’s strategy could mean overall less access for low-income students. 

Demos has written about the vast differences in grant aid received by community colleges and four-year schools.  In 2007-08, community colleges, enrolled about 6.65 million undergraduate students and distributed $666 million in institutional grants.  In comparison, public four-year colleges, which enrolled about 5.95 million undergraduates, distributed $5 billion.  The end result is that community college students -- again, most of whom come from low-income families -- have a higher level of unmet need than many four-year students. 

Increasing access for middle-income students as a way to attract political and financial support for community colleges is an avenue worth considering, but as the American Association of Community Colleges Warns in the brief it released today, there is a real danger to "incentivizing colleges and universities to be more discerning about whom they enroll."  If community colleges begin to enroll students who are less dependent on financial aid, will that make those schools less likely advocate for the financial aid needed by low-income students to work less, study more, and graduate successfully?

The pressure for community colleges to deliver more value to middle-income students will only continue to grow as college costs rise and high levels of student loan debt becomes a difficult and complicated burden. This afternoon, the National Association of Consumer Bankruptcy Attorneys released a report showing that the number of former college students who are going bankrupt due to student loans is on the rise. The report states that:

  • More than four out of five bankruptcy attorneys (81 percent) say that potential clients with student loan debt have increased “significantly” or “somewhat” in the last three-four years.  Overall, about half (48 percent) of bankruptcy attorneys reported significant increases in such potential clients.
  • Nearly two out of five of bankruptcy attorneys (39 percent) have seen potential student loan client cases jump 25-50 percent in the last three-four years.   An additional quarter (23 percent) of bankruptcy attorneys have seen such cases jump by 50 percent to more than 100 percent.
  • Students are not alone in borrowing at record rates, so too are their parents.  Loans to parents for the college education of children have jumped 75 percent since the 2005-2006 academic year.  Parents have an average of $34,000 in student loans and that figure rises to about $50,000 over a standard 10-year loan repayment period. An estimated 17 percent of parents whose children graduated in 2010 took out loans, up from 5.6 percent in 1992-1993.

Give the real and lasting financial burden that attending a four-year school now lays on students and their families, community colleges will continue to see their enrollments swell as a perceived lower-cost alternative.   As long as tuition costs rise, the pressure is on from all angles. There is a large danger, however, that community colleges and many low-income students, could end up caught in the middle.