WASHINGTON – Millions of dollars in federal financial aid go unclaimed each year by eligible low-income students at community colleges, according to the inaugural report from the College Board’s new Advocacy & Policy Center.

The study notes that community college students are less likely than their four-year counterparts to complete the Free Application for Federal Student Aid. During the 2007-8 academic year, 57.8 percent of Pell Grant-eligible community college students applied for federal financial aid, while 76.8 percent of eligible students at public four-year institutions did so.

Ronald Williams, vice president of the College Board, told a group of educators gathered for the report’s release that boosting the number of community college students receiving federal financial aid was critical to the “completion agenda” that the Obama administration and numerous advocacy groups have embraced with the goal of drastically improving graduation rates at two-year institutions.

The failure to fill out a FAFSA and therefore to qualify for financial aid can negatively affect students' ability to complete college, the report notes. For example, a student might choose to attend community college part-time, or work more than 20 hours a week while studying full-time. Numerous studies show that students who attend part-time or work while attending college are less likely to complete a degree.

George Boggs, president of the American Association of Community Colleges, described as a "breakdown in the system" the fact that so many students qualify for aid but do not apply for it. Students are shortchanged by community colleges, he noted, when they do not receive consistent, early and accurate information about their financial aid options before enrolling. College officials, he said, should focus on improving the financial literacy of both students and parents.

Among other suggestions for remedying this financial illiteracy, the report recommends that community colleges “involve families of students when providing financial aid materials and activities,” “provide bilingual services and materials,” and “link financial aid application and followup with college enrollment or registration.”

Williams, former president of Prince George's Community College, said that financial aid offices need to be more “proactive” than “reactive,” noting that many help students through the aid process only if they ask for assistance. Debt counseling, he added, is an important part of this process that needs to be addressed early on, especially for low-income students, who may be more reluctant to borrow or take on debt to pay for their college education.

Williams acknowledged, however, that some groups of community college students may distrust government agencies that ask students to provide personal information in order to qualify for aid. In these cases, he suggests that community colleges work with community organizations that serve minority and immigrant communities and use them as a “broker” -- since they are perceived as a trusted, non-government source -- to relay relevant financial aid information to these groups.

The report highlights numerous examples of community colleges that have made changes to their financial aid structures with success. The Connecticut Community College System, for example, streamlined its financial aid practices and regulations across its 12 institutions about a decade ago.

Marc Herzog, chancellor of the system, noted that the system now uses the FAFSA alone to determine aid eligibility instead of the FAFSA plus 12 different institution-specific applications. The reduction in paperwork has simplified the process and encouraged more students to apply for aid, he said. Among other changes, he said, the colleges also adopted the same “satisfactory academic progress” requirement for students who receive aid and those who do not, whereas most institutions have two different standards. This change, he said, lessens the burden on institutions to determine continuing eligibility for financial aid, allowing financial aid officials to concentrate on getting students aid in the first place.

Since the system streamlined its financial aid operations and created a centralized aid office for its 12 institutions in 2001, it has seen “the number of students applying for and receiving aid more than double at a time when enrollment has grown by 25 percent.” Last academic year, 63 percent of the system’s students applied for federal aid, while only 42.5 percent of community college students nationwide did so.