Paper here gets shredded, mixed in with other yard and household green waste, and picked up by the municipality for composting. I used to feed it to my own little colony of worms, but worried about them digesting toner. So now, they just get the good stuff.
We shred everything.....then it's picked up by the city re cycler with the rest of the recycled items. I don't know for certain, but I hope that it's then added to the recycled newspapers.....since by shredding it I have done some of the recycle work for them already.
Don't use that compost for your vegetable garden - the printed paper we receive in the mail has a lot of chemicals in it. That compost should be used for non-consumable plants. I would rather you recycle though because forest trees are being chopped down by the thousands and we need to recycle as much as possible. If everyone composted their paper, thousands of additional forest trees would be chopped down every year.
Newspaper is fine as long as it uses soy ink. So are brown paper bags, most paper towels. Cardboard is normally OK except it can have a lot of glue of unknown type. Glossy print is no good. Generally good sources of material are food scraps and yard waste.