In the fall of 2011, the U.S. Department of Education, with neither notice to nor participation from any stakeholders, tightened the credit criteria for parents seeking PLUS loans by redefining “adverse credit history.” A PLUS Loan is a student loan that parents of students enrolled at least half time in college may obtain. This modification has caused a dramatic adverse effect on HBCUs as parents of students attending college seek to borrow money to meet tuition and other financial needs.
Prior to this change, parents usually were approved for the PLUS loan if they did not have any delinquencies of more than 90 days and no foreclosures, bankruptcies, or defaults. The new definition of delinquency now include debts that had been charged off or sent to collections even if they had been repaid by the borrower.
The change has affected as many as 400,000 students nationwide, and has caused a disproportionate impact on HBCUs. HBCUs collectively lost more than $150 million, including $2 million at Spelman College, $3 million at Morehouse College, $3 million at Tennessee State, $4 million at Morgan State, and $6 million at Hampton. The tightening of lending polices resulted in both the loss of revenue and a decline in student enrollment.
Most students in HBCUs are on some type of financial aid, and many colleges use Parent PLUS loans to fill the financial gap. This new credit criteria resulted in thousands of previously approved recipients having their loans declined under the new restrictions resulting in over 200,000 fewer recipients in 2013 than it did in 2011.
As President of an HBCU, I joined with other presidents most impacted by these new lending policies in meeting with the Administration to urge President Obama and the Secretary of Education to reverse the eligibility changes. Higher education is no longer just a moral obligation but an economic necessity, and we must act to reverse the trend that not only threatens economic independence for the students who need it the most, but also threaten the continued existence of our HBCUs. I encourage each of you to become involved to reverse these policies.
Here are five things you can do:
1. Write to your members of the Senate and Congress to voice your concerns and ask that they help restore more flexible lending policies
2. Engage your church, civic and social organizations to write and use social media to spread the word about the restrictive policies and join in efforts to get them reversed
3. If you are a member of a Sorority or Fraternity, make this issue a part of your political advocacy agenda
4. Encourage young people who are planning to go to college to become involved
5. Involve educators and the community by hosting awareness events
Glenda Baskin Glover is President of Tennessee State University in Nashville, Tennessee