Giving Compass' Take:

A new study finds that even though community colleges are discouraging students from taking out loans, these students are not the ones that end up with the most debt.

Can community colleges help students with the financial burden of higher education?

•  Read about the causes of the student loan debt crisis.


Community colleges often discourage their students from taking out loans to cover their education, but new research suggests students who receive some forms of loan aid perform better and have higher earnings when they graduate, according to a new report in EducationNext.

Because student borrowing has been called a crisis, many colleges are trying to reduce students' debt by offering less loan aid. To gauge the impact on students of colleges' efforts to reduce borrowing, a pair of researchers looked at outcomes for two groups of 10,000 students at a single large community college who received zero or nonzero loan awards.

An October article from the Wharton School at the University of Pennsylvania called student debt "one of the creeping threats of our time," noting its levels have more than tripled since 2004, leaving graduates "holding promissory notes worth an average of $37,000." It suggested debt could limit student borrowers' ability to buy a house, get married, have children and save for retirement.

Yet, the report notes, less than 5% of graduates have the burdensome $100,000 in debt that has been described in the media. It points out such high levels are generally accumulated by students who seek advanced degrees and that about 40% of students with debt owed $10,000 or less.

Colleges are also concerned poor loan repayment rates would cause them to lose their eligibility to offer federal student loans and grants. Various options for handling student debt are coming up in discussions over a possible reauthorization of the Higher Education Act.

Read the full article about loans for community college by James Paterson at Education Dive