Revise student loan programs now to empower HBCUs

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College doesn’t resume until August. But the low-income students to whom UNCF (the United Negro College Fund) awards 10,000 scholarships a year are in the final stages of putting together their financial aid packages right now. And they’re worried.

They’re worried because, as of July 1, the interest on the largest federal student loan program, the Stafford loans, doubled from 3.4 percent to 6.8 percent. If Congress doesn’t reverse the rate increase, the average borrower will pay $2,600 more for their college education, according to the Congressional Budget Office. Congress has not yet acted on legislation that would keep the interest rate from doubling.

If Congress doesn’t fix that situation, and fast, it will be a double whammy on the low-income students who most need a college education — and whom we, as a nation, most need to go to and through college.

The squeeze on low income students

And if the squeeze on low income students who aspire to college wasn’t tight enough, many are facing a second year without support from the federal Parent PLUS loan program. That’s because before the 2012-13 academic year, the U.S. Department of Education, without public notice, changed the eligibility standards for this, one of its most important college loan programs, excluding tens of thousands of families, many of whom had used the program before with satisfactory repayment histories.

Students lost $1.2 billion in college financial assistance as a result of the new eligibility standard, The Washington Post reports. Nearly 160,300 fewer parents received PLUS Loans in the 2012-13 academic year than the year before due to the tighter credit screening required by the Department of Education (ED) – resulting in a 19 percent reduction in recipients.

In our network of 37 historically black colleges and universities, Parent PLUS Loan approval rates for families with students attending our HBCUs dropped dramatically after ED changed its criteria, from an average approval rate of 45 percent to only 24 percent. Almost 6,000 fewer students at UNCF institutions were approved for PLUS loans in the 2012-2013 school year compared to the previous year – a number equivalent to approximately 10 percent of total enrollment at these institutions.

Debating with ED over these changes

Throughout the year, we’ve engaged in a disconcerting Parent PLUS debate with Secretary Duncan and Department of Education officials. The Department has changed its appeal process, but only a few denied Parent PLUS families have been given loans. The Secretary points out that children of parents who are refused Parent PLUS loans become eligible for other kinds of loans – but these loans do not fully fund their unmet financial need.

But he is holding fast to the policy decision that triggered the debate: to determine Parent PLUS eligibility not based on criteria designed to send the most kids to and through college, but based on the tougher criteria that commercial lenders charge non-education customers. These criteria exclude too many of our parents and students.

The irony in the Parent PLUS debate and the other financial aid debates swirling around Washington like tumbleweed is that we all agree on what we’re trying to do. President Obama, in his first address to a joint session of Congress, declared his goal of restoring American world leadership through increasing the percentage of its students with college educations. And Secretary Duncan has said, most recently to Roland Martin and Tom Joyner on Tom’s radio show, that in order to achieve that goal, “HBCUs [have] to play a huge role there.”

We need a strategy

We’re all committed to the same goal: At UNCF, it’s called the North Star — increasing the number of African-American students receiving college degrees. But obstacles are being thrown in the way of following that shared aspiration. What are those obstacles, and how can we get them out of the way?

From its first days in power, the Obama administration pursued — and devoted major resources to — a well-thought-out strategy to move children from pre-school through high school graduation; everybody remembers the best known piece of that strategy, Race to the Top.

But where’s the to-and-through-college strategy? There are programs aplenty: Pell Grants, Stafford Loans, Perkins Loans, Strengthening HBCUs and Parent PLUS.

But without a unified strategy, you get what’s happening with Parent PLUS and the increased 6.8 percent Stafford Loan rates: different programs pulling in different directions, sometimes in opposite directions, impeding success.

Bringing stakeholders to the table

We just finished our nation’s Independence Day celebrations; maybe we should take a cue from the founding fathers and structure a process that includes the consent of the governed.

Making policy behind closed doors, without negotiated rulemaking in place, runs the risk that only a narrow range of perspectives and interests are represented – and all too often those excluded are those most directly and severely affected. It risks resulting in the wrong policy, which is what we believe happened here.

It engenders misunderstanding and mistrust among those who were not consulted. It denies stakeholders like students, parents and colleges time to prepare. And because our seven decades of experiences teach us that social reform has a much greater chance of success when the beneficiaries of reform are included in the process, a closed-door policy diminishes the chance that whatever the final policy turns out to be is the right policy.

Please: Hold the students harmless

Making policy the right way is never fast. But the students whose education is our most precious asset live on a faster-moving schedule and one far more sensitive to disruption. Reaching the right policy six months or a year from now will be no consolation to the students who have dropped out of school because of the denial of Parent PLUS loans.

They need to be held harmless. We know who they are. If they managed to stay in school, let’s do what it takes to keep them there. If they had to drop out, let’s do what it takes to get them back.

The administration could restore the former Parent PLUS eligibility standards — pending the development of a comprehensive to-and-through-college strategy. Or it could find another program or another source of funds to do what needs to be done. The current policy situation isn’t the students’ fault. Let’s not make them pay for it.

The Department of Education needs to start all over from the beginning. Return to the previous credit standards and review them in an open, transparent process. Announce what standards the Department thinks should be in place, allow the affected public to respond, and then change, if necessary, the credit criteria. Even better, the Department should undertake a comprehensive retooling of the Parent Plus program so that interest rates are lower and made more reasonable, and parents get better counseling on the right amount to borrow and repayment options.

That is an open process that arrives at a fully considered public policy.

Our students deserve no less.

Dr. Michael Lucius Lomax is the president and CEO of the United Negro College Fund.