Community Colleges Can Do It : Feds’ slashing attack on loan defaults will cripple innocents

Federal officials are justifiably concerned about huge defaults in student loan programs, and 225 institutions are on the hit list. The government shouldn’t throw away money on deadbeats. But it should reconsider its threat to deny loans not only to students at trade schools but also at community colleges that have high default rates. That’s a meat-ax approach to a sensitive issue.

No doubt changes are in order. One in five student borrowers is ignoring a student loan obligation. The losses are expected to approach $3 billion this fiscal year.

To boost the repayment rate, the federal government should tighten management and change the rules on who qualifies for aid. Trade schools deserve special scrutiny because of a default rate that hovers around a shameful 27%.

Some legitimate vocational schools have improved their financial aid programs. But too many beauty colleges, computer schools and the like are schools in name only. These institutions promise skills and jobs but deliver nothing. Their administrators pressure students to apply for federal loans, collect that money and stage worthless graduations. Fraudulent schools should be banned from federal programs.

But community colleges belong in a separate category. Public two-year colleges are often a bargain. Tuition is cheap and the typical student lives at home. But some poor students need loans just to cover living expenses. Rather than wipe out the loan program for community colleges, the federal government should allow campus administrators to decide who’s a good risk and who’s not. Marginal students and repeat dropouts should be denied loans. Financial aid should be reserved for economically disadvantaged students who maximize the benefit and are likely to repay the debt.

The U. S. Department of Education deserves credit for having developed new rules a year ago to help schools better manage financial aid programs. Stronger penalties are needed, but deserving students should not be forced to forfeit financial aid because of delinquent classmates.