Californians can take great pride in a broad community college system that boasts an admirable history of open admissions. That sound policy has allowed greater access to higher education for millions of students who otherwise could not have afforded to continue their educations. It is threatened by a new federal law aimed at preventing the huge defaults in the government-backed student loan program from growing larger.
The law requires new community college students who lack high school diplomas or equivalency certificates to take a test to determine how well they can be expected to perform. Schools that fail to comply with the new law stand to lose federal aid. California’s 107-campus community college system could lose as much as $283 million, roughly 10% of its budget.
The new requirement was scheduled to take effect just before the new semester got under way. But a California judge imposed a temporary restraining order, which gives educators time to make their case in Washington. They have a good one.
The tests, which must be administered independently of the college, would replace an open-door policy that allows any student to enroll regardless of his or her academic record, and continue, as long as he or she passes the courses. In theory, these tests would weed out students who are likely to either drop out or flunk out quickly and never pay off the government-backed loans.
But few community college students ever even seek loans to pay the tuition, which is a bargain $50 per semester or a maximum of $100 per year.
Of the state’s 1.5 million community college students, only 18,000 have guaranteed student loans. Fewer than one-quarter lack high school diplomas. Why create a massive testing program to deal with the problems of so few?
To further reduce defaults, community college administrators have recommended that they be allowed to advise banks or other lending institution on who is a serious student and a good risk. That would help the banks make a sound decision.
The educators also want banks out of the business of making loans without risk. Commercial banks typically lend $12 billion annually in the government-backed loans. The financial institutions make $1 billion on these deals in service fees.
The Bush Administration agrees; it has recommended that students should work exclusively through their colleges to get the guaranteed loans and borrow directly from the federal government.
American taxpayers are expected to pay back a total of $2.5 billion in defaulted student loans from community, four-year and trade-school loans this year alone. The magnitude of the problem requires multiple remedies--but blanket testing for community college students is not one.