Historically black colleges hit hard by tightening of PLUS loan rules

WASHINGTON - A change in federal education loan policies has left many students at some of the nation’s historically black colleges and universities struggling to fill a gap in their financial aid and has forced hundreds to leave school.

A more rigorous system of credit checks has denied certain loans available to parents to help with their children’s undergraduate expenses. The loans are available to all students at all schools. But the changes have had a severe effect on thousands of students at historically black colleges, advocates for those schools say.

“It’s been devastating,” said Rep. Corrine Brown, D-Fla., a member of the Congressional Black Caucus. “The loan helped bridge the gap. For students and colleges that didn’t have additional resources, those students had to go home. And to me that’s just unacceptable.”

The loans are known as PLUS loans and are available to parents of dependent undergraduate students, as well as graduate students. But a change in 2011 disqualified borrowers with unpaid debts over the past five years that had been referred to collection agencies or ruled as uncollectable.

Parents of nearly 15,000 students at historically black colleges were denied PLUS loans as of last fall, with only 1,900 cases reversed on appeal, according to the National Association for Equal Opportunity in Higher Education, an umbrella organization for black colleges. The loan issue was a major topic at a recent association conference in Washington.

Brown said figures provided to her by the Department of Education show that as of February, parents of about 28,000 students at historically black colleges had been denied PLUS loans. Among all schools and students, 400,000 PLUS loan applications were denied as a result of the stiffer credit criteria, according to Brown.

Education Department spokesman Daren Briscoe declined to provide specific numbers. But he said that about 80 percent of the students who were denied PLUS loans ended up enrolling in school anyway. He said the department contacted thousands of borrowers who were denied the loans and reconsidered some cases.

Among historically black colleges, North Carolina Central University in Durham had the highest number of denials of PLUS loans, with 609, according to data from the college association.

The group reported loan denials at other schools, including 607 at Howard University in Washington; 569 at Florida A&M University in Tallahassee, Fla.; 528 at Prairie View A&M University in Texas; 448 at South Carolina State University in Columbia, S.C.; 407 at North Carolina A&T University in Greensboro, N.C.; 260 at Shaw University in Raleigh, N.C.; 130 at Kentucky State University in Frankfort, Ken.; and 66 at Fayetteville State University in Fayetteville, N.C.

At South Carolina State, where more than half of the students come from families earning less than $30,000 annually, enrollment has dropped by about 700 students since last year, largely because of the stricter requirements, said Eric Eaton, assistant vice president for finance.

“What I personally see a lot of, at the beginning and end of the semester, more students are coming to me directly, trying to determine if the university has resources they can tap into,” he said.

A student’s financial-aid package can include student loans, scholarships such as the federal Pell grant for low-income students, and federally funded campus jobs.

But the aid doesn’t usually cover all costs of attending college. Financial-aid offices tell students that their parents can apply for a PLUS loan to cover the amount of money needed to bridge the gap. The Department of Education grants the loans without any consideration of parents’ income but requires a credit approval.

Students at historically black colleges are much more likely to have received PLUS loans, so the change in policy was felt disproportionately there, said Mark Kantrowitz, a financial-aid expert and the publisher of Fastweb.com and FinAid.org, websites that specialize in financial-aid information.

Students have found different ways to cope with financial difficulties.

Julian Melton, who graduated from North Carolina Central University in December, worked an early-morning shift at FedEx and an afternoon and evening job at a Kroger’s store during his junior and senior years, with classes in between. He’d sleep or study in his car during breaks.

He said his scholarship and student loan nearly covered his expenses, but he worked long hours to send money home to help his mother, who was ill. He said he couldn’t have asked her to take out loans. He’s now working at Time Warner Cable in Morrisville, N.C., getting ready to pay back his loans and looking ahead to getting a master’s degree.

Jaleel Hunt, who also attended North Carolina Central, worked for a professor on campus but left school at the beginning of his senior year because his financial aid and employment still did not cover his costs.

Hunt said he could have asked his family about a PLUS loan, but he “didn’t want to put my parents in that financial situation.” Today, he is writing fiction and pushing wheelchairs at Piedmont Triad Airport in Greensboro. He wants to write for a living and doesn’t plan to return to school, but he feels “it was worth every penny, even though I’m in debt.” Information for this article was contributed by William Douglas of the McClatchy Washington Bureau.

Front Section, Pages 5 on 05/06/2013

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