With GOP Cuts And Plus Loan Eligibility Changes, Obama Administration Looks To Get HBCUs Back On Track

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Plus Loan HBCU pell grants

To high acclaim, President Barack Obama renewed the White House Initiative on Historical Black Colleges and Universities (HBCUs) in 2010. The initiative proposed nearly $100 million in new funds for the 2011 fiscal year, with many HBCUs looking forward to a reinvigorated focus on their institutions as well as the communities they serve.

But these days, the President’s enthusiastic commitment to HBCUs feels more like a distant memory as earmarked dollars have dried up with a recalcitrant Congress that would rather see significant subjects, such as education, increasingly drop further down the list of priorities. In addition, the Administration’s changes to Plus loans, which has had a crippling effect on both HBCUs and their students, have morphed what was supposed to be an empowered period of growth and excellence for these storied institutions into a time of precarious desperation to keep their doors open.

In a meeting with Secretary of Education Arne Duncan (pictured above, center) and Acting Deputy Secretary Jim Shelton (pictured above, far left) as well as recently appointed White House HBCU Executive Director Dr. George Cooper and Deputy Director Dr. Ivory Toldson, NewsOne took part in an intimate conversation about how the Administration will help HBCUs fulfill the President’s goal of making America the leader of college graduates by 2020 — in spite of harrowing challenges.

SEE ALSO: REPORT: NewsOne Breaks Down President’s Plans For Black Community In Second Term

A New Day Truncated

When President Obama signed the HBCU initiative, he initially put aside a reported $98 million for HBCUs at the Department of Education, $20.5 million for its capital financing program, $64.5 million for its strengthening Black graduates program, $103 million for its STEM program at the National Science Foundation, and increased the all-important Pell Grant to $5,710. And immediately it appeared that a new chapter had begun for HBCUs; the enthusiasm was palpable.

But shortly after, Obama Administration officials realized that the credit review process for PLUS loans, which parents take out in order to secure an education for their kids, needed to changed.

In 2011, the Department of Education began using stricter criteria to scrutinize the unpaid accounts and collection agencies of potential borrowers for the last five years, which was incidentally the beginning of the Great Recession and the start of staggering rates of unemployment in the Black community.

Shelton explains why the Administration was forced to change their credit review process:

“What had happened for the prior 6, 7 years is, if you were a family who had a $700 debt that you were 90 days behind on, you would probably be denied for a PLUS Loan — this is under the old rules. But if you were a family that is current but has a $7,000 debt that had been charged off 6 months ago, you probably would have gotten approved,” Shelton said. “So the guys who are responsible for running these systems are saying, we have a huge hole in our credit criteria, and there is no way to explain it if I get called up by Congress.”

And according to Shelton, once the Administration realized that their credit review process was faulty, legally, they couldn’t look the other way, “So they fixed it, but what should have happened was a series of communications and supports and all the things that happened this year should have happened right when they were thinking about making that change.

“And that’s what didn’t happen.

“So everybody got caught off guard and then you start to see it snow ball. This is where we are now, where we have all the interventions in place, all the supports, we got the supports directly to the colleges and their financial aid offices.

“From that list of all the applications, we know exactly who those students are [who lost PLUS loan funding], and we know whether they show up at a different campus…. We know what those numbers look like, but everyone is working to close that gap.”

But for some HBCUs, the damage was already done.

The PLUS loan credit changes would have a devastating effect on borrowers and HBCUs, alike, with the parents of HBCU students reportedly being rejected at a rate of 50 percent, according to the Chronicle of Higher Education, and all 105 HBCUs lost millions of dollars due to students who were forced to go to other institutions for their education.

In fact, Politic365 claims that the credit changes to PLUS Loans caused HBCUs to collectively lose $160 million.

Shelton and Secretary Duncan countered that number, though, insisting that while there were undeniable losses to HBCUs, figures, such as $160 million, are out of bounds, “When families don’t qualify for PLUS, their students automatically qualify for unsubsidized loans,” Shelton said. “When you look in aggregate across all the HBCUs, the amount that HBCUs overall got from new unsubsidized loans actually outstripped what was lost in PLUS loans.”

Secretary Duncan explained further, “So this revenue source [PLUS loans] went down, this revenue source [unsubsidized loans] went up, but this revenue source [unsubsidized loans] actually went up more than this one [PLUS loans] went down.”

Congress Starves HBCUs One Cut at a Time

An elephant in the room that could not be ignored was the intermittent fight the President and Sec. Duncan have been having with Congress to not cut funds for education, but beginning on July 1st last year, Congress cut Pell Grants due to the sequester.

RELATED: President On Sequester: ‘The Pain Will Be Real’

The result?

America’s poorest college students — which include many African-American students who rely on Pell Grants the most–lost aid. Not only did Congress cut the funding for the grants, but they also limited the amount of time the grants would be available. Consequently, whereas a student could continue to use the grants for up to 9 years, now students lose their grants if they haven’t completed their degree in six years. And while that may seem like a lot of time, for many students who rely on Pell Grants, being a nontraditional student usually means that they are paying their own way through school or have added responsibilities, such as children.

Another important reason why the cutting of the Pell Grant has a significant impact on our community is because many African-American and Latino students who never received a high school diploma were able to jump start their academic careers by gaining access to college after they took the “ability-to-benefit” test.

Once test takers passed the exam, they were immediately awarded a Pell Grant to enter a higher-learning academic institution, catapulting students in to college. According to Mercury News, 19 percent of African-American students and 31 percent of Latinos used this test to enter college.

And while Secretary Duncan addressed Congress’ seemingly incessant efforts to target HBCUs, he then explained how Congress’ decisions affect much more than just Black institutions:

“We have a lot of hard work ahead of us. You have a Congress that is very, very tough. And it isn’t necessarily HBCU specific. But when you see things like Sequester, that hurts HBCUs, that hurts K-12, it cuts headstart slots out. That creates real pain. Everywhere I go, I hear that pain, I feel that pain. I think the sequester is the height of dysfunction here, but these kinds of things have consequences.

“We have to do everything we can going forward to help these institutions continue to help folks in to the middle class, build a thriving middle class. But these are tough times. There is just nothing I can do to mitigate the impact of the sequester… Nothing I can do. I go out and see Head Start slots being taken away, kids being told they can’t come back. I can’t tell you how painful that is. Title 1 kids, special ed kids, so yes, it’s an HBCU issue and a higher issue but it is bigger than that.”

When Secretary Duncan was asked what he thought the future of HBCUs are, he said that the real question is whether education is indeed a real priority in this country, “I think we are at a crossroads: the question is do we view education, cradle to career, as an investment or do we view it as an expense? And the President and I think it is the best investment you can make in young people, and the community, and the country. But we got a bunch of folks in Congress who are telling me every time I go up there, ‘We should cut, cut. This is tough times, we should cut back.’ And that’s the challenge we are facing.”

Clearly, if the American people believe that education is a priority, then it is up to Americans to ensure that they vote in ALL elections to ensure that they are electing representatives who reflect the will and needs of the people.

Secretary Duncan agreed with this sentiment, saying, “I just wish — forget politics —  a lot more folks across the political spectrum went to the voting booths to hold elected officials at every level — local, state, federal — accountable. Are they investing in our education or do they think education is something that in tough times it is something you can just throw away?”

Dr. George Cooper, Dr. Ivory Toldson

Righting Wrongs

With the recent hires of Dr. Cooper (pictured right side, far right) and Dr. Toldson (pictured right side, center), the Obama Administration is hoping to find tangible ways — in spite of Congress’ lack of support — to not only throw a lifeline, if you will, but also ensure that HBCUs thrive for generations to come.

Both Drs. Cooper and Toldson have built their careers around HBCUs: Dr. Cooper completed his undergrad at Florida A&M and received his Master’s at Tuskegee. He also served as President of South Carolina University.

Dr. Toldson is currently an associate professor at Howard University and a research analyst for the Congressional Black Caucus. Toldson spoke about what an impact HBCUs have had on his life, and consequently, his commitment to them, “As a faculty member at an HBCU, one thing that I can say is that HBCUs gave me an opportunity to thrive. And the way that they did that is they allowed me to be innovative, they allowed me to use my passion for my people, they didn’t try to put any of my work in a box, they understood my compassion for my community.

“And I was able to have certain levels of success that I honestly believe I wouldn’t have been able to get at any other institution. And one of the things I want to do as Deputy Director is to help others understand the magic of HBCUs. There are certain narratives that are out right now that don’t really shed light on the many great things that are happening at HBCUs.”

Still, these most-recent appointments wouldn’t be the first time that the President looked to career HBCUers to lead his initiative. The President’s HBCU Board of Advisers is filled with a who’s who in HBCU leadership, including Dr. William Harvey of Hampton University, Beverly Tatum of Spelman College, and David Wilson of Morgan State University.

As for what new contributions Drs. Cooper and Toldson plan on making, Dr. Toldon expressed enthusiasm when describing their first event that occurred in September, “The theme of the conference was “HBCUs Facing Forward: A New Paradigm for Educating a 21st century Student, and we believe that is very timely thing because we believe that it is a brink of a new day for HBCUs, where HBCU innovation is going to be central to the overall objectives of President Obama’s administration to have the highest proportion of college graduates in the world here in the United States.”

While Secretary Duncan has emphatically said that these are “tough times” for HBCUs and education overall, this fact cannot be overstated. Beloved institutions, such as Morehouse University furloughed its entire staff and faculty this spring and Howard University cut about 75 staff positions, with board Vice Chairwoman Renee Higginbotham-Brooks controversially predicting that the storied institution “will not be here in three years if we don’t make some crucial decisions now.”

And more recently, Moody’s Investment Service downgraded Howard from an A3 rating to a Baa1 rating, because as the Washington Post reports “a loss of patient revenue and volume at its hospital, cuts in federal funding and other challenges facing the historically Black university.” The downgrade means that the institution is now seen as a moderate credit risk to investors.

And obviously, Howard is not alone.

The aforementioned Morehouse, was also downgraded in May to the same rating, after having a severe drop in enrollment due to the PLUS loans debacle.

When Dr. Cooper was asked what they plan to do to ensure that HBCUs continue serving their communities competitively for generations to come, he responded that partnerships would be a key component to keeping HBCUs’ doors open:

“We are going to be partners with all of the universities, and funding is a real challenge for public and private institutions. We are going to be engaged with the President. We can’t manage their [HBCUs'] budgets, but I think supplemental funds provided by federal agencies will help. It gives us some discretion in using their education and general resources that we generate release time, generate scholarships for the students, and provide some assistance with upgrading facilities and equipment that does help to defray some of the routine expenses that they have at universities,” Dr. Cooper added.

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