The United Negro College Fund, the nation?s oldest and most successful minority higher education organization, has released a statement in support of the final regulation released by the U.S. Department of Education that will re-open the doors of college to thousands of students nationwide, by implementing new credit standards for the federal Parent PLUS Loan program ? a college loan program used by parents of college students.
?UNCF member institutions and the students they serve have suffered three years of hardships under the Department?s ill-considered PLUS Loan policy, which drained hundreds of millions from HBCU campuses,? said Dr. Michael L. Lomax, president and CEO of UNCF.? ?A college education is an essential investment for individuals and society, paying dividends in increased lifetime earnings, enhanced quality of life, better health and greater civic engagement.? For these reasons, we should be doing more, not less, to help more Americans earn college degrees.? I applaud the Department?s action to put new credit rules in place, and encourage their swift implementation, so that students can go back to their classrooms and the rest of us can return to the larger conversation about how we can send more students to and through college. ?
PLUS Loans is a part of federal student financial aid, particularly for many low-income families who are willing to sacrifice financially to break the cycle of poverty and disadvantage for their children.? Nearly 13% of students at HBCUs rely on PLUS Loans to pay their college expenses.
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In October 2011, the U.S. Department of Education, abruptly imposed harsh underwriting creditworthiness standards for PLUS Loans. These standards were more typical for commercial loans and made it more difficult for low-income students to pay for college, particularly at HBCUs.? In the first academic year after the new standards were implemented, 400,000 students, including 28,000 HBCU students, were initially rejected for PLUS Loans that many received the year prior.? As a result, the number of students attending HBCUs with PLUS Loans in academic year 2012-13 dropped by 45% ? more than 17,000 students.? HBCUs lost $155 million in PLUS Loan funds ? a 35% reduction ? from already tight budgets.
Subsequent to the drop in student enrollment, UNCF led a vigorous three-year campaign, along with other HBCU stakeholders, to reverse the Education Department?s 2011 policy and secure a more reasonable set of credit standards. UNCF Member Institution presidents ? Dr. David Swinton, president of Benedict College, and Dr. George T. French, Jr., president of Miles College ? led negotiations on this issue as members of a diverse panel of stakeholders selected by the Department and on behalf of all HBCUs.
?I am pleased that the Education Department will implement the negotiating committee?s PLUS Loan recommendations. By exempting minor blemishes on parents? credit records and shortening look-back periods for these credit checks, the proposed regulation honors the fundamental purpose of Parent PLUS Loans as an essential financial aid program aimed at providing students with the means to obtain a college education,? said Dr. Swinton.? ?Under this final rule, tens of thousands of HBCU students whose parents have minimal overdue payments on their credit records will no longer be automatically denied a PLUS Loan.?
Dr. French added, ?I strongly support the final PLUS Loan regulation and urge its swift implementation.? Although it is not the ideal resolution to the debate over Parent PLUS Loan standards, the new rule represents a reasonable compromise that will help ensure that parents are not unfairly denied access to college aid for their children.?
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As long as the combination of rising tuition and lack of grant aid continues to place college beyond the resources of too many low- and moderate-income families, loan programs like Parent PLUS must be maintained and enhanced.? But at the same time, the Obama Administration and those, like UNCF, are committed to helping all qualified students go to college and graduate, must work together to create a national strategy?a college-going strategy with focus, force and funding where student and parent loans are affordable, accessible and increasingly unnecessary.
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