If you or someone you love is looking for a federal loan to get through community college, good luck. Chances are, you'll need it.
Nearly a million community college students attend schools that do not participate in the federal student loan program, leaving them with few good options for financing their education, a new study found.
About 250,000 students in California alone lack access to federal student loans, according to the study. And in seven states, 20 percent of students are shut out of those programs.
Without access to federal loans, students may resort to costly credit card debt or private loans, hurting their financial future, or enroll in fewer courses so they can take on more outside work, reducing the odds that they will graduate.
The new research, published by The Institute for College Access and Success, also found that African American, Hispanic and Native American students were disproportionately affected by the lack of access.
That is in part because community colleges "are much more likely to be the colleges where African American students, Latino students and first-generation students enroll," said Debbie Cochrane, research director for the Institute and the lead author of the new report.
About 19 percent of the students enrolled in community colleges in the fall of 2012 were Hispanic and 14 percent were African American, according to the American Association of Community Colleges. But community college students account for 56 percent of Hispanic college students and 48 percent of African American students.
Also, non-white students are more likely to enroll in community colleges that do not participate in federal loan programs, the study found. Some 7.5 percent of white community college students attend non-participating schools, well below the 10.5 percent for Hispanic students, 12.4 percent for African American students and 20.1 percent for Native American students.
Access to federal loans also varies across the country, since the decision to participate in the federal loan program tends to be left to individual schools. And while a large number of students in California lack access, "to the extent there is a regional issue here, it's really the South," said Cochrane. Five of the seven states where more than 20 percent of students lacked federal loan access are there.
Complicating matters further, schools can often change their policies on participating in the federal loan programs. Take North Carolina, for example. In 2010, about 57 percent of community college students had no access to federal student loans, and the state legislature imposed a requirement that North Carolina community colleges had to offer federal loans, the report found. But groups of legislators passed bills exempting individual colleges from the mandate, and eventually the whole requirement was overturned.
One school, Central Piedmont Community College, started offering the loans in 2011-2012, but has already announced it will stop doing so.
Community colleges that don't offer access to federal loans often cite concerns about the risks they pose to students.
Central Piedmont, for example, said its concern was that it had no authority to screen federal loan applicants, and if their default rate rose too high, it would endanger other types of federal aid.
But the Institute's Cochrane said many community colleges, which tend to have fairly low federal borrowing rates, may be eligible for exemption from such penalties.
One thing is for certain: An associate's degree makes a big difference in long-term earnings power. Data from the College Board shows that those with associate's degrees can expect lifetime earnings 27 percent higher than those for high school graduates.
That's why Cochrane is hopeful that the Department of Education will help community colleges better understand what the risks of offering federal student loans really are.
"There really is a problem of federal loan underutilization," she said.
—By Kelley Holland, Special to CNBC