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Fed Looks at Student Loans and Community Colleges

Wednesday, July 1, 2009

Bankers might find two separate reports from the St. Louis Federal Reserve useful when considering loans for higher education.

Rajeev Bhaskar and Yadav Gopalan, research associates at the St. Louis Fed, explore the difficulty of getting school loans these days, even as college costs are rising. Their study, explored in the summer issue of the Bridges newsletter (, takes a closer look at various aspects of the financial needs of college-bound students, from what makes up the overall cost to what types of student loans are available. The authors also look at the rising cost of college and the impact of the credit crisis on student loans.

Second, economist Natalia Kolesnikova has written a report titled Community Colleges: A Route of Upward Economic Mobility. It looks at the advantages and disadvantages of attending community colleges and the characteristics of their students. Among the advantages are affordability, an open-admission policy and, ultimately, higher wages compared with the pay earned by those who have only a high school diploma. The study found that there is an increase in annual earnings of 5 percent to 8 percent for each year of community college education. Those who obtain an associate degree earn 16 percent to 17 percent more on average than high school graduates. Kolesnikova has been presenting the results of her study to audiences around the Eighth District of the Fed.

>>Only online

View a clip of Kolesnikova's presentation

Community Colleges report