As I’ve written in an earlier blog, the some of the largest lending institutions have ceased providing loans to students at community colleges or some for-profit colleges. Now, some community college presidents have decided to cut the availability of federal loans to some of their students, too.

What does it matter anyway? Why are federal loans important to community college goers? Well, the most important factors are access to 1) lower interest rates and 2) less risky. And it’s much better to have a loan than to pay for tuition on a credit card that easily rack up very high rates and excess fees.

And when you may already be working one job to put yourself through a few classes, it can be nearly impossible to find the time to take a second or third job. So either taking a loan or quitting school might by the only option for some students. And why wouldn’t community colleges want to give their students more options for financing?

As always in business, it’s not quite that simple. The main alarm for community college presidents is that their college can be held responsible if too many students default on their loans. The federal government will cut other federal aid programs not even connected to debt.

The Project on Student Debt conducted a survey to determine the number of students who take out loans, how many of them complete their schooling, and which colleges don’t provide the option to take out federal loans. They found that more than 33% of the students who graduated from a community college in 2003-04 had taken student loans averaging less than $10,000 per person. I suppose the real survey question should be, four years later, how many students have kept up their payments?