Conventional wisdom and advice given in this blog suggest that starting your higher ed career at a community or junior college and then transferring to a four-year school will save you a lot of money in the long run. But a recently released four-page report by the Texas Guaranteed Student Loan Corporation (TGSLC) calls into question the notion that beginning at a community college and transferring to a four-year university will significantly lower debt for transfer students.
TGSLC is a nonprofit firm that offers resources to help students and families plan for college, learn about money management and repay their federal student loans. The group’s conclusions are based on data showing that transfer students are not afforded as much financial aid upon entering a four-year institution as are the “native” students — i.e., those students who spend their entire college career at a four-year school.
The data used in this report were for academic year 2007-2008 and contend that transfer students in their final year of school borrowed more money than their native peers. The report looks at median institutional aid, median overall grant aid and median loan aid awarded for public versus private four-year institutions, by sector. The data were filtered to include only students whose dependent or independent income was at or below the median of all students in the 2008-09 Baccalaureate and Beyond Longitudinal Study database, which was $88,836 for dependent students and $25,457 for independent students.
The report notes that the greatest difference in monies awarded was the institutional aid awarded to native versus transfer students at private four-year universities, where native students received $3,700 more than transfer students; the transfer students borrowed $800 more than their native peers. At public four-year universities, the difference in institutional aid was a mere $300 more for native versus transfer students, but transfer students borrowed $1,050 more than native students.
As far as the median overall grant aid, there was a $200 increase awarded to native versus transfer students. The report states that less grant money awarded likely contributed to higher borrowing levels for transfer students when compared to native students, although other considerations were also likely factors. The report did not state what these other likely contributing factors were.
The report also breaks down median institution aid, median grant aid and median loan aid by race/ethnicity. It concludes that the median amounts borrowed by each student group, native or transfer, did not vary widely. The discussion states that students who started at a two-year college and graduated from a four-year university borrow as often and as much as students who started at a four-year university.
The report concludes that, for those students who borrowed money, the median cumulative student loan debt of both transfer and native students at public four-year universities was about $20,000, while in the private four-year sector, transfer students borrowed about $27,000, compared to about $25,000 for native students. Furthermore, it is stated that savings from the time spent at a lower-cost community college often vanish as transfer students borrow more than their native peers during the final years.
Considering the vast difference in tuition between a four-year versus a community college, and the enormous savings afforded during the two years spent at a community college, one may find it difficult to grasp the report’s conclusions as to the nearly equal cumulative debt of the transfer and native students.
Given that the FAFSA is used to determine need for both student groups, it would follow that other individual factors might account for the need-based discrepancies. But according the TGSLC data, native students in at least some, if not most, instances receive more institutional aid than do transfer students. Given the competitive nature of many of these scholarships, without a more complete picture, one would be hard pressed to determine if this is due to bias or not.
It is possible that this is due to transfer students taking longer to graduate due to a lack of direction while at the community college and course transfer issues upon arriving at the four-year university.
Dr. Walter Bumphus, president of the American Association of Community Colleges, states, “The value of an associate degree has never been higher. When one factors in the quality of an associate degree associated with the costs … there are wonderful opportunities to go directly into the work force. An individual is able to go directly into the work force and into a high-paying job, sometimes exceeding the pay that would have been obtained with a baccalaureate degree.”
When asked about the monetary savings to be had in beginning at a community college and then transferring to a four-year university, Bumphus states, “The savings afforded depend on the packaging.”
He goes on to say that it also depends on the state and the local area. There could be substantial savings depending on how the degree pathway is structured. “When the time is taken to look at transferrable courses, with a specific goal in mind, rather than taking random courses, the savings could add up considerably.”