Are Tacoma Community College students working full- or part-time to support their studies less worthy of student loans than those attending the University of Washington?
Of course not. Because community college students are more likely to come from low-income backgrounds, they could be considered even more deserving of low-interest, federally subsidized loans.
But that doesn’t cut any slack with some of the nation’s largest lenders. As a result of the current credit crunch, some of the nation’s biggest banks, including Citibank and KeyBank, have stopped making such loans to students attending two-year schools and even some small four-year institutions.
Such moves are already affecting the availability of student loans to enrollees in Washington’s community colleges. At TCC, for example, President Pamela Transue reports that the number of lenders providing student loans dropped rapidly in recent weeks from 10 to four. The latest blow came Thursday when Wells Fargo informed the school it would not offer loans to new student applicants.
Bank officials say they are discontinuing loans at institutions where student loans tend to be fewer, smaller and have shorter repayment periods – in other words, where banks earn less interest and less profit.
It’s a business decision – a particularly shabby one given the fact that the government guarantees 95 percent of the value of such loans.
In a letter of protest to Washington’s congressional representatives, TCC’s Transue called the bank actions “an unfair blow to those who need the loans most.”
“It is disgraceful and contrary to the interest of the United States” to treat students at two-year schools differently that those who attend four-year schools, she added.
Transue notes that the average age of TCC students is 28. The school serves an urban population with many non-traditional students – immigrants and many students who are the first in their families to attend college. More than 60 percent work while attending classes, and most have low incomes. The economic downturn and rising fuel prices are making it even harder for students to afford a college education.
This turn of events is all the more ironic given that as a result of kickback scandals, colleges have been pressed to offer students more choices of lenders, rather than steer students to one or two preferred loan programs.
Many community college students now have to spend more time and effort hunting for willing lenders. The neediest may have to drop out temporarily, take additional work, or take out loans with more demanding terms.
About 40 percent of U.S. undergraduates attend community colleges. This is an enormous stock of human potential. The government should keep more financial roadblocks from being thrown in their path.
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