Historically Black Colleges and Universities (37082)

Historically Black Colleges and Universities (HBCUs) are in a tight corner now that many schools are suing in response to the Obama administration’s implementation of major changes to financial aid, particularly the PLUS loan.

Reports indicate that changes to the criteria for the PLUS loan affect parents of children who attend HBCUs. The program now looks for account blemishes acquired in the last five years. Foreclosures, bankruptcies, wage garnishments, repossessions and tax liens, in addition to past due payments on bills, such as utilities, are now taken into consideration.

According to one study, nationwide, there were 790,600 PLUS loans for students in 2007-2008, with the average for each student at about $10,000. Of those, 30,300 were for students enrolled at an HBCU. Students at Black colleges made up 33 percent of the students who received the PLUS loan during that same year.

The National Association for Equal Opportunity in Higher Education (NAFEO) sent in a letter to U.S. Department of Education Secretary Arne Duncan. The letter was also drafted by Hampton University President William Harvey and United Negro College Fund President and CEO Michael Lomax.

“This is having a devastating impact on enrollment at our institutions and our institutions’ ability to serve their students,” NAFEO President and CEO Lezli Baskerville said. “It is having an even more devastating impact on the students who have worked hard to get to college and have had to cut short their college careers, as well as on their families who have dreamed of and sacrificed for their sons and daughters going to college.”

The letter goes on to say that the changes to the PLUS loan do not align with President Barack Obama’s effort to have the largest number of college graduates in the world by the year 2020.

According to NAFEO, last year at Benedict College, a private HBCU in South Carolina, 926 students (30 percent who applied) were deemed eligible and received Parent PLUS or FEFL loans totaling $13,567,321. This year, 237 students (9 percent of those who applied) were deemed eligible and received such loans, totaling $3,754,938.

When the financial aid official at Benedict contacted her Department of Education (DOE) liaison to inquire as to why a large number of Parent PLUS loans were being denied for parents whose children attend Benedict, she was told that “as of October 2011, the government changed its credit criteria.”

“Benedict is not alone,” Baskerville said. “We have been reaching out to our institutions to document the impact of DOE’s new interpretation and implementation of the credit history regulation and new practice and method of evaluating eligibility for Parent PLUS loans. The HBCU presidents with whom we have conferenced about this matter have said that thus far this academic year, they have experienced on average $5 million in budget losses per school, which is crippling for many of our institutions.”

Officials from the DOE said that the changes to the PLUS loan are to make government lending programs more up to industry standards. The department is also trying to cut the number of defaults on loans.