Helping or Hindering? The Effects of Loans on Community College Student Persistence

Abstract

More community college students are taking out loans than ever before and their median debt levels are increasing. This trend is disconcerting because community college borrowers are overrepresented among loan defaulters and those who dropout without having earned a degree. While not without criticism, a growing number of community colleges are choosing not to participate in the federal student loan programs, citing a desire to protect their students from future financial hardships. This study used data from the Beginning Postsecondary Student (BPS:04/09) survey and propensity score matching techniques to examine the effects of loans on persistence for students enrolled in associate's degree programs. Results indicated that borrowing during the 1st year had a positive effect on persistence at the end of year one, but had a negative effect on persistence measured three and 6 years after initial enrollment. As community college students assess their prospects for degree completion and the return on their financial investment in higher education, we hypothesize that borrowers are more likely to become dissatisfied with their investment decision than non-borrowers and choose to dropout rather than take on additional loan debt. Findings from this study suggest the need to carefully reconsider current policies and practices regarding loan use among community college students.

exploration of persistence among successful low-income students in North Carolina

“…Community colleges are designed to provide affordable access to education, particularly for the millions of lower-income individuals and families (McKinney, Burridge, & Backscheider, 2015). Therefore, it is not surprising that a large number of community college students come from low-income families (Fike & Fike, 2008).…”

“…According to the College Board (2016), approximately 31% of these students in the lowest income quartile in the United States attend community colleges (Ma & Baum, 2016, p. 8). Even though the average cost of tuition and fees at community colleges is about one-third of the cost to attend a four-year university, many low-income students still find it difficult to afford the total cost of attending unless they can access student loans (Dowd & Coury, 2006;McKinney et al, 2015). Numerous studies indicate that loans negatively affect persistence (Dowd & Coury, 2006;McKinney et al, 2015).…”

“…Only a few research studies, however, have addressed the issue of community college persistence, and even fewer still have explored this problem amongst lowerincome students (Torres, 2006;Bundy, 2013). This gap deserves attention, given that the average cost of tuition and fees at four-year baccalaureate institutions is approximately twothirds more than the cost to attend a community college, making this educational option often the only affordable one for many low-income students (Dowd & Coury, 2006;McKinney et al, 2015). Even though lower-income students repeatedly exhibit high motivation to stay in school, unexpected obstacles frequently signal the end of promising collegiate careers for disadvantaged populations (Dayton, 2005;Sandoval-Lucero, Maes, & Klingsmith, 2014;Wirth & Padilla, 2008).…”

“…Community colleges are designed to provide affordable access to education, particularly for millions of lower-income individuals and families (Kipp, Price, & Wohlford, 2002;Horn & Nevill, 2006;Boggs, 2011;Meier, 2013;McKinney et al, 2015). In 2009, the average tuition at community colleges was 175% less than the average cost at four-year institutions.…”

“…The relatively low cost to attend a community college makes them the only affordable, postsecondary option for many low-income students (Dowd & Coury, 2006;McKinney et al, 2015). While the cost of tuition and fees are lower at community colleges, numerous other direct and indirect costs make the total cost of attendance much greater.…”