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The Institute for College Access & Success has updated the fact sheet "Quick Facts About Financial Aid and Community Colleges, 2007-08," where we focus on community college students who apply for financial aid and attend full time.

About one in four full-time college students in the U.S. -- 2.2 million students -- attends a community college. Of full-time community students who applied for financial aid, 80 percent did not get as much aid as they needed in 2007-08. We also found that although a relatively small percentage of community college students take out private student loans, these borrowers were much more likely than their peers at four-year institutions to miss out on cheaper federal loans.

Additional findings from the fact sheet include:

  • While community college students are more likely to receive federal Pell Grants than four-year college students because of their lower incomes, they are less like to receive state or school grants, or federal work-study.
  • Community college students are most likely to have "unmet need" after taking advantage of available sources of financial aid. For these students, the gap between what they can afford, including aid, and the full cost of college is similar to students at public four-year colleges.
  • Federal Stafford loans, which any student can qualify for regardless of income, are safer and more affordable than private loans. Relatively few community college students borrow student loans of any type, but those who do unnecessarily turn to private loans more frequently than students at other types of colleges.

Read the fact sheet here

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New federal data show that the percentage of all undergraduate students who borrowed private student loans jumped from 5 percent in 2003-04, to 14 percent in 2007-08. At proprietary (for-profit) colleges and universities, the percentage of students who took out these loans skyrocketed from 13 percent in the 2003-04 school year, to 42 percent last year.

Private student loans are typically more expensive than federal student loans, with higher, variable interest rates and far fewer options for borrowers in repayment. Even though financial aid experts agree that these loans should be used only as a last resort, one in four private student loan borrowers in 2007-08 didn’t take out any federal Stafford loans that year. Federal Stafford loans are available to almost all students, regardless of income.

“These data are troubling because private student loans are more like credit cards than financial aid, and have very little in common with federal student loans,” said Lauren Asher, Acting President of the Institute for College Access & Success, which runs the Project on Student Debt. “Too many students are missing out on federal loans and going straight to one of the riskiest borrowing options.”

Students at proprietary schools of all levels and private nonprofit four-year schools are disproportionately represented among private student loan borrowers in 2007-08. Only about 13 percent of all undergraduates attend nonprofit four-year schools, but they make up 22 percent of all private loan borrowers. About 9 percent of undergraduates attend proprietary schools, but they represent 27 percent of private loan borrowers.

These data reflect borrowing levels before the credit crunch, which hit the private student loan industry hard in the spring of 2008. Still, lenders aggressively market private loans directly to students, and although private loans are more likely now to require a co-signer and a higher credit score, these loans are still available, especially from large banks.

“Unfortunately, private loan borrowers remain at the mercy of their lenders if they are having trouble making payments in these tough times,” said Asher. The Project on Student Debt supports stronger consumer protections for private loans, such as clearer disclosure of terms for prospective borrowers and fair treatment of this risky debt in bankruptcy, positions outlined in their 2009 Policy Agenda.

The figures in this release were calculated by the Project on Student Debt using data from the National Postsecondary Student Aid Study, a federal survey of college students conducted every four years by the National Center for Education Statistics that was released last week. The data reflect borrowing activity by undergraduate students who are US citizens or permanent residents, during one academic year at all types of postsecondary institutions. The data should not be confused with cumulative figures for graduating seniors, which will not be released until next month. The Project on Student Debt will calculate and release more facts about student debt at that time.

Click here for quick facts about private borrowing

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The Project on Student Debt has created a Facebook group, which we're using to promote the Income-Based Repayment and Public Service Loan Forgiveness programs. Income-Based Repayment becomes available on July 1, so we’re spreading the word about this new federal program and IBRinfo in every way we can. The Project's Facebook group is not only a way to raise awareness about our work, but a forum for borrowers to ask questions about their student loan debt or share their stories. Join us on Facebook Visit IBRinfo.org and tell your friends

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The Institute for College Access & Success' acting president Lauren Asher appears on CNN's American Morning.

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Statement of Deborah Frankle Cochrane Program Director, The Institute for College Access & Success

After months of arduous budget negotiations, the California legislature today passed an 18-month budget that maintains the state’s investment in student aid. This budget protects Cal Grants from attempts to cut both eligibility and grant levels, which would have had a devastating impact on California students. Cal Grants are the state’s primary source of financial aid and helped 300,000 students pay for college last year. This move comes just days after President Obama signed the federal economic stimulus package into law, which includes the largest Pell Grant increase in the program’s history. Together, these commitments to college affordability will help Californians get the education and skills they need to help our state stay economically competitive in these difficult times.

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It's a new year with a new administration in Washington, and the dire economic situation has made college affordability a top concern for policymakers and consumers alike. Our new policy agenda for 2009 aims to limit the growth and risks of student debt by increasing grant aid, strengthening consumer protections, and ensuring easy access to new affordable repayment options.

The Project on Student Debt's current priorities include:

  • Increase access to need-based grant aid
  • Strengthen consumer protections for private student loan borrowers
  • Ensure easy access to Income-Based Repayment and Public Service Loan Forgiveness

Read the policy agenda in its entirety here

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Newly confirmed Secretary of Education Arne Duncan responds to comments and ideas submitted to the Citizen's Briefing Book on Change.gov about the future of higher education under the Obama Administration. He focuses on FAFSA simplification, loan forgiveness and tax credits for public service, and increasing the Pell Grant.

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The Delta Cost Project recently released the study “Trends in College Spending: Where does the money come from? Where does it go?” which analyzed enrollment patterns, revenue trends, spending for education, and spending increases between 2002 and 2006 at 1944 colleges and universities. The report found that students are carrying a greater share of the cost of their education, even as institutions spend less on instruction.

Additional findings include:

  • The fastest growth in enrollment occurred at public community colleges with the least resources and with the greatest evidence of budget cuts.
  • At public institutions, spending on instruction declined from 2002 to 2005, and increased in 2006, but the increases did not make up for earlier reductions.
  • Private universities have increased spending through tuition and endowment increases. Total educational spending per student increased by 10 percent at $33,000, while spending at public universities remained stagnant and totaled less than $14,000 per year.

Read the report here.

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