HBCU Prez on PLUS Loan Crisis: $160M Lost “Worst Situation I’ve Seen in 35 Years”

HBCU Prez on PLUS Loan Crisis: $160M Lost “Worst Situation I’ve Seen in 35 Years”

“This is the worst situation I’ve seen in my 35 years as President,” said Dr. William Harvey, who has been the President of Hampton University in Virginia since 1978, yesterday in Washington DC. Dr. Harvey is the Chair of President Obama’s Board of Advisors on Historically Black Colleges and Universities.

Harvey was referring to the problem that hit America’s historically Black colleges and universities disproportionately last fall after the Department of Education changed the way they interpreted “credit worthiness” and “adverse credit history” for applicants for Parent PLUS loans. As a result in the change in how applicant’s credit was evaluated (code of federal regulations 34 CFR 682.201 (c)(2) — from a 90 day evaluation to 5 years — at spike of PLUS loan denials occurred before the fall 2012 semester. Over 14,600 students at HBCUs were declined loans. The five hardest hit HBCUs can be found here.

Dr. Harvey

Harvey echoed what Stillman College President Dr. Ernest McNealey also told Politic365 this week. That is, that he could remember no other time when thousands of HBCU students had to leave their studies en masse as they did in the fall of 2012. Several HBCU Presidents stated they only discovered the problem after they noticed a decline in enrollment for the fall 2012 semester and they began contacting each other.

There was talk of a law suit against the Obama Administration on the Parent PLUS problem but a collective decision by HBCU advocates to wait until after the 2012 election was arrived at.

On March 21, 2013 during an interview, Education Secretary Arne Duncan said schools were notified there would be a “reinterpretation” of PLUS loan qualifications in October 2011. But HBCU advocates say there was no required public announcement on the changes.

“Some 14,000 HBCU students came to our campuses last year, learned that their Parent PLUS applications had been denied and were sent back home.  If we just take that 14,000, multiply that by $12,000 — and tuition is much more than that, some is much lower.  I took the figure of $12,000 — when you multiply that by 14,000 students — that’s a financial impact on our institutions of $168 million dollars. That’s a lot of money,” Harvey said during a speech at the annual National Association for Equal Opportunity conference (NAFEO) on April 15.

“If you add to that the $148 million dollars less that we received last year from the federal agencies than we did the year before we’re talking about a $300 million dollar impact to our institutions. There may be people running around telling you something different — but I’m telling you: it is not so,” Harvey strongly told the audience.

In the fall of 2012, there were 371 students declined PLUS loans at Hampton University. At Tuskeegee University in Alabama, 268 students were declined PLUS loans. During an interview with Roland Martin on March 21, 2013 on the PLUS loan situation, Duncan gave out a phone number (1-800-557-7394) for loans to be re-evaluated. Duncan said approvals can be granted in 6 minutes.

“The approval rate on Tuskegee University’s Parent PLUS loans plummeted from 55% last year to 23% this year,” Tuskegee President Dr. Gilbert Rochon told Politic365 yesterday. “The only way we were able to stay ‘evenboard’ with that debacle was to disgorge half a million dollars from our base budget into Perkins Loans,” Rochon added. “But that’s not a sustainable situation,” he concluded.

Dr. Julianne Malveaux said, “in the previous academic year we had 400 parents apply and 250 got it. The following year 400 applied and 72 got it.” Dr. Malveaux was the President of Bennett College in North Carolina from 2007 to 2012.  Several speakers at the NAFEO conference addressed the PLUS loan problem.

NAFEO conference

“HBCUs lost literally millions of dollars in revenue. The impact at my own institution — Hampton University — was some $6 million dollars. Some of our schools may not be able to, or may not ever, recover. Some schools lost students to nearby community colleges,” Harvey said.

“During this time of turmoil we do not have anybody advocating for us. Most of you would know that the White House Initiative on HBCUs is supposed to be out ‘in’ for the Administration. Given the budget sequestration , Pell and Parent PLUS, there is not a more critical time for us to have a fully functioning White House Initiative Office.  Unfortunately the White House Initiative  on HBCUs has not had a permanent executive director since Dr. John Wilson left to become President of Morehouse College,” Harvey said to a room of about 200 people.

President Obama is scheduled to speak at Morehouse’s commencement on May 19. The school was forced to furlough employees after an enrollment drop. Last fall, 161 students Morehouse were declined Parent PLUS loans. A 5.1% cut to HBCUs due to the sequester did not help matters.  The first lady will also speak at an HBCU next month, Bowie State in Maryland.

“It is very unfair to the Black college community that the White House Initiative on HBCUs has been without leadership for so long at such a critical time,” Harvey added.  Harvey also referenced decreases in grants and alternative ways for students to pay for college.  “Don’t be fooled by some of the statistics that you hear. Yes, overall Pell Grants  recipients went up — but guess what — they went down at HBCUs,” Harvey said.

Many President’s of HBCU are in Washington this week for the annual NAFEO conference. Comments about the PLUS loan situation has been pointed. Today a group of students will rally at the U.S. Capitol and meet with members of Congress. They are also using the hashtag HBCUsFeedtheFuture on twitter today.

Dr. Rochon

But through all of his comments yesterday, Harvey had nothing negative to say about Education Secretary Arne Duncan. Harvey and NAFEO President Dr. Lezli Baskerville have held off on criticizing Duncan. “The good news is, when we brought this to Secretary Duncan’s attention he put his team on it and we worked out that temporary fix.  Now we have to get a permanent fix,” Harvey said.

“I trust Secretary Duncan. I trust him and I will trust him until he proves otherwise. Just like I said publicly I’m saying it to you. I don’t say anything that I don’t mean.  I’m always very straightforward and I trust Secretary Duncan,” Harvey added during an interview with Politic365 after his speech.

How should the Department of Education have handled the loan problem back in the fall of 2012? President Rochon of Tuskegee answered that question.

“The fix that was proposed by the Department of Education to then reduce requirements and to allow retroactive applications — that was not helpful.  By then, the bulk of the students whose parents were impacted were [inaudible]. So they were just gone forever and a day and either went to a junior college or not at all.  What should have happened — and they already had the people’s applications on file — they should have sent them a second letter saying ‘we’ve re-evaluated your application based upon our new criteria and congratulations here is your check’ that’s what they should have done,” Rochon said.

“We don’t have anybody advocating for  in my judgement it is very unfair to the Black college community that the White House Initiative on HBCUs has been without leadership for so long at such a critical time,” said Harvey.  “That fact that the federal support to HBCUs is dismal ought not be a reason why these reports are not circulating,” he added.

When asked where the situation stands today, Harvey answered, “It’s in limbo right now — we don’t know what’s going to happen.  We’ve got this temporary fix, the Secretary could clarify what is meant by “adverse credit history.”

“This is a crisis until we receive the permanent fix,” Harvey concluded.

Though Secretary Duncan was unable to attend the NAFEO conference, other representatives from the Department of Education attended the NAFEO Conference.

Calls and e-mails to the Department of Education regarding this story were unreturned.