This is a very common question, and a good one to ask! After all, shredded paper is still paper, and paper can be recycled - right?
Let's look at it this way...Have you ever thrown confetti or done an art project with glitter? If so, then you have experienced first-hand how it gets everywhere, into everything, and you find it hiding away months later!
In a Materials Recovery Facility, shredded paper acts much the same way. The tiny shreds can't be captured in the sorting process, they cling to other objects and flutter around the facility. This causes contamination of other materials. In addition, the small shreddings become embedded in machinery and clog up the sorting equipment.
So, shred at home if needed, but avoid contamination in the recycle stream. Be sure to put shredded paper into the trash, NOT the recycle cart!