PLUS Loan Fix Comes Too Late for Some Students

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By Freddie Allen
NNPA Senior Washington Correspondent

WASHINGTON (NNPA) – A few weeks before thousands of Black college students returned to college campuses to begin the fall semester, the Department of Education issued updated standards for the PLUS loan program, but the changes may come too late for students already forced to delay their dreams of a college education, according to activists.

Since the summer of 2011, groups working to increase graduation rates among Black students have railed against changes that the Education Department made to PLUS loan requirements that disqualified families with shaky credit histories, because the changes seemed to ignore the impact of the economic downturn that followed Great Recession that left many parents unemployed, underwater on mortgages or both. In an effort to shield parents from taking on more debt, the department effectively slammed the door on the college dreams of thousands of Black students.

In August, the department announced that it would relax those rules, but the changes won’t take effect until next school year.

The changes include decreasing “the time period a borrower’s credit history is reviewed from the last five years to the last two years for charge offs and collections to determine adverse credit history” and adjusting “the combined outstanding balance adverse debt threshold of $2,085 as necessary.”

Until the final rules are published in November, parents that failed to qualify for PLUS loans under the 2011 requirements can go through a reconsideration process.

In a press release about the proposed changes, Johnny Taylor, president and CEO of the Thurgood Marshall College Fund, said that the proposed reform with a 2015 effective date, doesn’t help the students forced to withdraw two years ago or the students hoping to begin their college career this fall.

“The Education Department repeatedly ignored proposals from higher education leaders that would’ve substantially mitigated the damage done to children from lower and middle-income families devastated by the Great Recession,” said Taylor. “This reform is too little, too late. We are literally watching some of our best students and colleges suffer needlessly as a result of this continued delay. I am urging HBCU leaders, advocates, students, and alumni to comment on the [PLUS loan] reform and speak out to help the tens of thousands of students denied college access.”

During a meeting with journalists on July 23, Jim Shelton, deputy secretary for the Department of Education and executive director of the task force for the My Brother’s Keeper initiative, said that since the 2011 rule changes that affected the PLUS loan program, Education Department officials “were able to get 76 percent of students enrolled into the colleges that they applied to originally” and “over 90 percent of students” that didn’t receive PLUS loans into other Title IV schools through the reconsideration process and other programs designed for financially-strapped students.

However, Taylor accused the Department of Education of being disingenuous when it calculates the number of students it claims to have helped.

“It’s gamesmanship at its best,” said Taylor, adding that the reconsideration process did not prove to be very effective, largely because it assumed that once rejected, every parent would be willing to go through the process. “Families that had already been rejected, you’re talking about first generation people, many of these kids had to convince and cajole their parents and grandparents and aunts and uncles to do this. So once rejected, they couldn’t get that person to go back through the process.”

Taylor explained that other parents were concerned that going through the reconsideration process meant that they would also have to go through a second credit check. Parents in that situation felt that if it wasn’t going to work anyway, they didn’t want the second inquiry on their credit reports which could lower their overall credit score in the short run. Some parents were lost during the process and couldn’t be contacted.

Said Taylor: “[The Education Department] goes around touting this 90 percent success rate and we would say, ‘90 percent of what?’”

Taylor said, “Nothing has changed for the fall of 2014, period,” said Taylor. “Many of these schools, especially the private schools, will not be able to survive without the PLUS loan program.”

After the 2011 rule changes went into effect, PLUS loan rejections skyrocketed at Grambling State University in Louisiana. During the 2011-2012 school year, GSU officials reported 1,350 PLUS loan denials and 937 PLUS loan approvals and the school received $8,420,931 in tuition for students through the program. The following school year, 1,848 loan requests were denied and only 413 were approved. The school brought in $3,869,402 in tuition through the PLUS loan program that year.

Last school year, 1,642 PLUS loan requests were rejected and 443 were approved and the school received $4,638,631 in PLUS loans for students.

In the three years, since the rule changes, PLUS loan approvals at GSU have been cut nearly half.

Cynthia Warrick, interim president of Grambling State University, said that as a result, kids that are in college are being sent home and students who want to go to college can no longer afford to go.

“I don’t think that’s the outcome that the [Education Department] wanted to see,” said Warrick, adding that Black students from low-income families are often forced to work to support themselves while they attend college.

According to a report by the National Urban League on factors that influence graduation rates for Black students, “The majority of African American undergraduates (65 percent) are independent” and “African American independent students tend to be employees first, balancing work and family responsibilities while going to school.”

Black independent students were more than twice as likely (48 percent) to be single parents than their White peers (23 percent).

“You have students that are working and going to school and then they are not doing well in a class, so they drop the class,” said Warrick. “Then they drop another class and before long, they figure out that they didn’t meet the 67 percent rule for progression,” that affects a number of aid programs including Pell grants and PLUS loans.

When those students don’t complete 67 percent of attempted credits, they lose that financial aid and have to go through an appeals process to get it back.

Warrick said that she would be in favor of rolling back the PLUS loan program to the “pre-2011” rules.

“The main point is that when these students are not provided enough financial support, they don’t go to college, so the whole point of building this workforce of the future is lost,” said Warrick. “[The Department of Education] is pretty much shooting themselves in the foot.”

Warrick added that it’s not just an Education Department issue, because historically Black colleges and universities (HBCUs) produce more Black STEM (science, technology, engineering and math) graduates than majority-White schools.

According to data from the National Center for Education Statistics, HBCUs graduate nearly twice as many Black female bachelors in STEM than all colleges and universities in the United States. Even though less than 20 percent of Black students graduate from HBCUs, almost 30 percent of Blacks that major in STEM fields graduate from Black schools.

Warrick said that if the Energy Department, the Defense Department, the Agriculture Department and Health and Human Services all need STEM graduates, then they needed to step up and provide support to HBCUs to help students stay in school.

“New programs can be developed through other agencies that can provide additional support through training and research,” said Warrick. “These other agencies need to step up where the Department of Education has stepped back.”

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