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ERIC Number: ED565215
Record Type: Non-Journal
Publication Date: 2015-Jul
Pages: 38
Abstractor: As Provided
Denying Loan Access: The Student-Level Consequences When Community Colleges Opt out of the Stafford Loan Program. A CAPSEE Working Paper
Wiederspan, Mark
Center for Analysis of Postsecondary Education and Employment
The degree to which students are able to make adequate repayments on their student loans and avoid default is of special concern for colleges. If too many former students go into default, the college will face sanctions by the federal government and lose eligibility to provide currently enrolled students federal financial aid, such as the Pell grant. To avoid these sanctions, some colleges have chosen not to participate in federal loan programs by excluding loans from students' financial aid packages. In this paper, I investigate the student-level impacts associated with the decision of community colleges to opt out of the Stafford loan program. Utilizing administrative records from over 50 community colleges located in a single state, I estimate the within-college differences in outcomes for Pell-eligible students before and after an institution opts out of the federal loan program. I find that Pell-eligible students enrolling when the community college offered federal loans were 7.6 percentage points more likely to borrow than Pell-eligible students who enrolled when the institutions opted out. Overall borrowing also increased by $368 a year. I also find that students borrowing a loan attempted 19 additional credits in their first year of enrollment and were more likely to attempt and complete math and science courses than non-borrowers.
Center for Analysis of Postsecondary Education and Employment. Teachers College, Columbia University, 525 West 120th Street Box 174, New York, NY 10027. Tel: 212.678.3091; e-mail:; Web site:
Publication Type: Reports - Research
Education Level: Higher Education; Postsecondary Education; Two Year Colleges
Audience: N/A
Language: English
Sponsor: Institute of Education Sciences (ED)
Authoring Institution: Center for Analysis of Postsecondary Education and Employment (CAPSEE)
Identifiers - Laws, Policies, & Programs: Pell Grant Program; Stafford Student Loan Program
IES Funded: Yes
Grant or Contract Numbers: R305C110011