Community College Students Who Borrow Small Amounts Also See Decline in Credit Completion

Community college students who take out student loans can experience lower levels of credit completion, particularly among students who did not intend to borrow and those early in their postsecondary education, when compared to students who do not borrow at all, according to a new study.
According to the study – authored by Dominique J. Baker and William R. Doyle – community college students have begun borrowing more frequently than in the past, despite the sector’s lower tuition rates and tradition among its students of being less likely to take out student loans. These students are also facing growing difficulties in repaying their student loan debt, and experience higher rates of default than their peers who attend four-year institutions and graduate schools.
To better examine a possible connection between early borrowing (within the first two years of enrollment) and credit hour attainment among college students, the researchers used a sample from the 2002-2012 Educational Longitudinal Study (ELS). The sample included students whose first institution was a community college and who completed at least one postsecondary credit during their first year of enrollment. 
Of these students, about 83 percent did not borrow any amount of student loans by 2006, two years after their first enrollment, and had completed an average of 30 credit hours. Among the remaining students in the sample, the average number of credit hours drops to 25 when students borrowed between $1 and $1,999, linking borrowing to a decline in credit hour accumulation within the first years of postsecondary enrollment. According to the authors, the rate of credit completion among community college students who borrowed less than $2,000 was 17 percent lower in 2006 than their peers who did not borrow.
Although the percentage of students who borrow more than $2,000 is “very small,” the authors note that the number of credits completed in the first two years “increases steadily with loan amounts.” Those who borrowed more than $2,000 in 2006 saw an increase in the number of credit hours accumulated by 2012, while those who borrowed less than $2,000 had a rate of credit accumulation that was 10 percent lower by 2012 than those who had not borrowed at all.
The data, the authors write, indicates that community college students who borrow smaller student loans complete fewer credit hours than those who don’t, but the impact “is not significant two years after enrollment.” 
So what can community college leaders and policymakers do? According to the authors, there are two paths they can take, the first being to allow or encourage students to borrow up to the maximum amount. The second would be to ban community college students from borrowing federal student loans. Neither of these solutions, however, would solve the problem of college affordability, even at low-cost institutions like community colleges.
“Student debt must be understood as a symptom of a broader problem in college costs and prices,” the authors write. “Federal policy solutions must focus on ensuring that the need for debt among community college students does not arise in the first place,” which can be achieved by “focusing on rising tuition and inadequate financial aid, as opposed to simply banning community college students from receiving federal loans.”
NASFAA’s proposal to limit student loan borrowing for certain populations of students was cited by the authors as an example of a policy solution that could address the issue.
“Rather than arguing if students are borrowing too much or not enough, policymakers and institutional leaders should focus proactively on more fully understanding the magnitude and implications of debt within the state and institutional context before choosing a policy alternative,” the authors conclude. 


Publication Date: 5/10/2017

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