“Federal money and grant money, it seems, are about the only two vehicles we have for innovation these days,” Holcombe said. “Our states are struggling to provide us with just the basic funding.”

Frank Chong, the U.S. Department of Education's deputy assistant secretary for community colleges, said the $2 billion is “something of a down payment'' on the graduation initiative.

“We need to use those funds to move the cause forward,” said Chong, former president of Laney College, the flagship of California's Peralta Community College District. “We know our work is not done yet.”

Given the economic climate, community colleges' role in job development is rightly the top priority, said Jamie Merisotis, president of the Indianapolis-based Lumina Foundation for Education, one of several foundations that have invested heavily in community colleges and boosted their profile. 

Merisotis and others are pushing for accelerated programs to get students through community colleges faster, which would both improve graduation rates and ease space pressures. But, he said, that would require colleges to find money to realign curriculum and give stipends to students so they don't work so much.

For now, community colleges are doing what they've always done – more with less.

One case in point is Northern Virginia Community College, the setting for Obama's student loan bill-signing ceremony. (The White House also used the opportunity to announce that Dr. Jill Biden, the vice president's wife and an instructor at the college, will convene a summit on community colleges this fall).

 The Virginia school has experienced a 23 percent cut in state funding and 24 percent enrollment growth in the past three years. Yet it has expanded online offerings to better combine e-learning with classroom instruction and used its world language program to attract international students who pay higher tuition.

“A significant portion of higher education is hunkered down, trying to wait out the storm,” said college President Robert Templin. “We've taken the approach that while things will get better, they will never get back to the way they were. We're going to have to find new ways to do our work.”