Changes to student loan program threatens future of black students, HBCUs

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HBCU leaders make discontent clear

Unpublished figures provided by ED to several sources reveal that of the nearly 400,000 PLUS loan rejections issued last fall, nearly 28,000 impacted students attending HBCUs as of February 2013.

Michael L. Lomax, president and CEO of the United Negro College Fund, Lezli Baskerville, president and CEO of the National Association for Equal Opportunity in Higher Education, and William R. Harvey, president of Hampton University and chair of the President’s Board of Advisors on HBCUs wrote a letter to ED Secretary Duncan about the significant reduction in revenues experienced by these organizations.

They stated that the HBCU presidents with whom they have consulted have reported an average budgetary loss of five million dollars per school through the beginning of the September 2012 academic year.

“If you’re on a campus where 95 percent of students are black, the impact is more profound because we have a higher concentration of underprivileged people,” Taylor said. “I don’t know any business that could experience that type of loss in just a year,” and survive in the long term, he added.

Students whose parents have been denied the PLUS loan do have some recourse, however.

“Students who are denied a PLUS loan should appeal the denial,” Kantrowitz advised. “The U.S. Department of Education seems to be using the appeals process for extenuating circumstances to approve PLUS loans in some cases, especially if the borrower was approved last year. Otherwise, a dependent undergraduate student whose parent is a denied a PLUS loan will be eligible for the higher unsubsidized Stafford loan limits available to independent students.”

Taylor doubts the appeals process will have a significant effect on the high rate of denials. Along with other organizations, the Thurgood Marshall Fund is considering challenging the policy changes in court.

Taking it to the courts

“We don’t want to sue the Obama administration,” Taylor said, “but we have to remember that it was Thurgood Marshall who challenged the Board of Education [in order to end segregation]. You have to be willing to tell the government when their position is wrong and we are willing to take this issue on as Thurgood Marshall would.”

Taylor hopes ED can be persuaded to reverse the decision, reverting its credit requirements for PLUS loans to previous standards.

As a stopgap measure, he suggests that any student currently in school who has received a PLUS loan be automatically preapproved by ED for continuing loans until the student graduates.

“What sense does it make to have a student in school, taking on debt, then not being able to graduate,” Taylor said. “That will only lead to significant erosion of our graduation rates, due to dropouts, and ultimately higher default rates. A true grandfathering will solve the immediate problem and give us three or four years to figure this out.”

In the coming months, Taylor said he will continue to seek a compromise with ED administrators. “I will show up tomorrow if [Secretary Duncan] is ready to meet.”

TMCF has also elicited the support of the Congressional Black Caucus and other members of Congress to address the ED policy changes regarding PLUS loans.

If by mid-July 2013 there is no sustainable resolution, the last remaining course of action is to sue, Taylor said.

Follow Donovan X. Ramsey at @iDXR