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JournalSpring2014

EDUCATIONAL Development Adverse Credit and Parent Plus Loans: The Threat to HBCUs For over 150 years, historically black colleges and universities have prepared students aca-demically, socially and professional-ly for leadership and life after gradu-ation. With over 7,000 institutions of higher education in the country, HB-CUs graduate more than 50 percent of African-American professionals and K-12 public school teachers. In addi-tion, 60 percent of African-Americans who received PhDs in STEM areas at-tended an HBCU as undergraduates. The National Science Foundation also observed the undergraduate education received by African-Ameri-can science and engineering PhDs over the past decade. Researchers found that of the top ten colleges, the first eight were HBCUs, placing these institutions of higher learning ahead of elite Ivy League private colleges and flag ship state universities. Regardless of these staggering facts, in October 2011 without any advance notification to students, parents or colleges, without seeking stakeholders input or conducting an impact analysis, The Department of Education made a stringent amend-ment to the Parent PLUS Loan (PPL) regulations defining “adverse credit history.” This defining of the term meant that any debts over 90 days delinquent – including any amount in collections or “charged off” during the last 5 years – count against par-ents, making them ineligible for PLUS Loans. This unexpected change has resulted in a massive spike in loan de-nials, s66 DELTA SIGMA THETA SORORITY, INC. including a number of parents who, in previous years were able to take out loans. Since the enactment of the Par-ent PLUS Loan new adverse credit history regulations, the harsher credit standard has hit HBCUs, their students and families hard, resulting in: lost revenue in 2011 totaling $155 million; 17,000 fewer students attend-ing HBCUs in fall 2013 compared to fall 2011; and two-thirds of all schools experience significant enrollment losses. Why is this important to educating our youth? Unlike direct federal loans, there is not a cap on PPLs, which allows parents to borrow up to the entire cost of attendance, tuition and fees, room and board, books and other ex-penses. With HBCUs suffering from limited endowment funds, low alumni giving, inadequate and reduced state funding support, Pell Grant eligibility cutbacks and sequestration – in addi-tion to families of HBCUs still recov-ering from the 2008 recession, hous-ing crisis, unemployment and other financial crunches – the unexpected PPL change could be the last burden that causes HBCUs to collapse. “These changes in the Parent PLUS Loan program have had di-sastrous consequences for Histori-cally Black Colleges and Universities and students alike. In far too many instances, students have been left without financial assistance for their education as the academic year be-gins,” said Micheal Lomax, president and CEO of the United Negro College Fund, in a statement The Obama Administration set an educational goal for 2020 aiming towards having all adult Americans committed to at least one year of higher education or career training and have the country with the high-est proportion of college graduates in the world. However, with the new regulations in credit criteria for the PPL, many speculate that this goal isn’t attainable. “Particularly troublesome for me is how the administration could possibly reconcile its 2020 goal for the United States to have the highest proportion of college graduates in the world with its changes in Parent PLUS resulting in 28,000 HBCU stu-dents not being able to fill the gap in resources needed to pay for college and a loss of at least $154M in rev- By Shambulia Gadsden Sams continued on page 83


JournalSpring2014
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