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WASHINGTON WATCH: HBCU Students Adversely Impacted By Changes To The PLUS Loan Program (VIDEO)

The Obama Administration may be the target of a lawsuit by the nation’s historically black colleges and universities, or HBCUs. The potential lawsuit stems from new federal financial aid policies that hit hard at students at majority-black institutions.

The new policies make it more difficult for parents to get the so-called “PLUS” loans for their children’s education. African-American students are twice as likely to use PLUS loans to pay for their college expenses, and now a large number of black parents are ineligible.

Roland Martin talks with Johnny Taylor, president and CEO of the Thurgood Marshall College Fund about the changes made to the PLUS Loan program.

MR. MARTIN: Welcome back.

The Obama Administration may be the target of a lawsuit by the nation’s historically black colleges and universities, or HBCUs. The potential lawsuit stems from new federal financial aid policies that hit hard at students at majority-black institutions.

The new policies make it more difficult for parents to get the so-called “PLUS” loans for their children’s education. African-American students are twice as likely to use PLUS loans to pay for their college expenses, and now a large number of black parents are ineligible.

We’re talking about that today with Johnny Taylor, president and CEO of the Thurgood Marshall College Fund.

Johnny, welcome to the show.

MR. JOHNNY TAYLOR: Thank you. Thank you.

MR. MARTIN: Before we start, also we did reach out to the Department of Education to have Secretary Arne Duncan on the show and some other officials; but unfortunately, we couldn’t get anybody on the show. But I’m also going to play a clip a little bit later of Secretary Duncan on “The Tom Joyner Morning Show” talking about this very issue.

But, Johnny, set this up for us. For our listening audience, what exactly is the College PLUS program?

MR. TAYLOR: So, overall … students who are considering college [are given] a package. It includes things like the Pell grant, if someone’s eligible; state grants; Stafford loans, which are the lower loans, subsidized, some unsubsidized – not important to know. But at the end of the day, if there’s a gap … [if] it costs $15,000 to attend school, and you and your parents, after all of those loans and the contributions from parents can only come up with 9, then the PLUS loan is an opportunity where your parents can apply for this loan and fill the gap so that the student can attend college.

MR. MARTIN: So, what was changed? Was it the credit report? What was changed?

MR. TAYLOR: The definition of “adverse credit history” essentially was changed. So, there’s this Code of Federal Regulations, Chapter [sic – Title] 34, and essentially it said, “We’re going to look at two things.” And by the way, that didn’t change. That was always law. Secretary Arne Duncan is absolutely right. The law always said that “adverse credit history” means one of two things. You have a … bad history during the prior 90 days, before applying for the application, or within five years: car [re]possessions, bankruptcies, foreclosures. All those sorts of things can be used against you, and those are called “adverse credit history.”

So, we’re going along this program. October of 2011, the government says for whatever reason – and that’s the big issue here. October of 2011, they told us all, “We’re going to change these rules” – or, at least “our interpretation,” or “our enforcement” – whatever language you want to use. But immediately, last year we saw 14,000 students, many of whom had received the parent PLUS loans in the past, become immediately ineligible.

MR. MARTIN: Now, my understanding is also because, look, 90 percent of a lot of the budgets of HBCUs are based upon the financial aid of students –

MR. TAYLOR: That’s right.

MR. MARTIN: — and so all of a sudden, on some of these campus when four or 500 students didn’t show up – I was told that at Morehouse, they had to furlough employees –

MR. TAYLOR: That’s right.

MR. MARTIN: — because of a budget shortfall. Other universities had to dip into their reserve funds to cover the gap as well.

MR. TAYLOR: Worse yet, many of those schools just sent the kids home. They said, “We can’t go to other places. We can’t furlough enough people. We can’t turn off enough lights. These are just expenses” – “We have to send these kids home,” and that was the travesty. That’s what happened last year that got us all in an uproar about this.

MR. MARTIN: Now, again, folks, earlier this week on “The Tom Joyner Morning Show,” I interviewed Secretary Duncan, and he said that they are working with parents and, in some cases, they have a system set up where some folks can call in and actually get the loan improved even in six minutes.

Here’s what he had to say.

[BEGIN AUDIO CLIP.]

SEC’Y. ARNE DUNCAN: The big thing for your listeners to understand is where young people had these loans in the past and were denied, we can absolutely reconsider them. We’ve reconsidered many, and if I could, I’d like to give out a phone number.

MR. MARTIN: Sure.

SEC’Y. DUNCAN: We staff, like, 12 hours a day. That number is 1.800.557.7394. We also have a website, studentaid.gov, and if students or families have any questions, please call.

And, again, where people have had this, we’ve had the loans reinstalled … sometimes within six minutes on the phone.

[END OF AUDIO CLIP.]

MR. MARTIN: Now, Johnny, you heard the whole [with] Education Secretary Arne Duncan.

MR. TAYLOR: I did.

MR. MARTIN: Your thoughts on what he had to say.

MR. TAYLOR: First of all, the Secretary did meet with us last year – he and a number of very senior officials in this administration – so, I don’t want to suggest that they haven’t been listening to us.

What we said to them, however, was, “What you’re doing is insufficient.” And we’re trying to understand why, at the end of the day, you have 14,000 students; and the fact is only 1900 reversals occurred.

MR. MARTIN: Now –

MR. TAYLOR:Nineteen hundred.

MR. MARTIN: — now, critics are saying that, look, parents are taking out enormous loans. They’re not going to be able to pay them back because parent PLUS loans don’t have a cap on them.

MR. TAYLOR: That’s right.

MR. MARTIN: And so I’ve read some pieces where they say that the Education Department is simply trying to bring this loan program in line with other loan programs when it comes to looking at credit history.

MR. TAYLOR: Then do that prospectively. You want to talk about something that is lunacy. You would let a student borrow freshman, sophomore, junior year and then call that student and say, “You’re no longer eligible for participating in this program.”

MR. MARTIN: So –

MR. TAYLOR: — illogical.

MR. MARTIN: — so –

MR. TAYLOR: We have said, “Going forward, Mr. Secretary, we absolutely agree with you that we need to cap it.” We need to look at the parents’ credit history to make sure that they have a reasonable –

MR. MARTIN: — right.

MR. TAYLOR: — ability to repay. But we’re saying – and this is the only issue here.

MR. MARTIN: That if –

MR. TAYLOR: We’re –

MR. MARTIN: — kids are in the pipeline –

MR. TAYLOR: — grandfathering.

MR. MARTIN: — gotcha.

MR. TAYLOR: If you’re –

MR. MARTIN: Grandfathering.

MR. TAYLOR: — in the pipeline, it makes no sense.

Get this. A student can borrow for two years $28,000 a year. So, I’m $56,000 in debt, but I can’t return as a junior. Well, guess what? Now you have a higher dropout rate, and you have a higher default rate on those very loans. You’re stacking this such that these students are not going to be able to be successful. And the institutions? At the end of the day, these HBCUs are held accountable by their graduation rates and their default rates. And these are two things that are absolutely going to – graduation rates are going to go down. Default rates are going to go up if you take a student who is midstream and drop them out.

MR. MARTIN: Last question. Will you file the lawsuit?

MR. TAYLOR: Well, we’re going to talk about it. We really – and I don’t mean to dance around this. My goal is not to get into a battle and sue the Obama Administration. My goal is to sit down with the Secretary [and] senior administrators and work it out. If the Secretary says he does not have the authority to do this; that this is congressionally mandated, then we’re going to go to the CBC and others who are supportive of HBCUs, many of whom are Republicans – you take North Carolina. Congressman Burr loves HBCUs because there’re 11 in his state. So, we’re going to sit down and say, “Either, Secretary, use the authority that you have under the “extenuating circumstances” –

MR. MARTIN: Right.

MR. TAYLOR: — “provision, or we may need to change the legislation.”

But, Roland, I have to say this – and this should be [cause for] an uproar for our community – if a student has invested by borrowing 50 or $60,000 in student debt and is a semester away – in some instances, a semester away – from graduating, it is absolutely absurd for us to think it makes sense to change these rules now.

MR. MARTIN: All right. Johnny Taylor, we certainly appreciate it. Thanks a lot.

MR. TAYLOR: Thank you.

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  • http://twitter.com/907611 redshirt2

    Blacks should get together & let the Lepor know how much he is the”Massa’s BOY” this has been the worst administration for blacks since slavery Barack Obama is sickening and should be called out every chance blacks get to call his silly Latino loving ass out he has done nothing but hurt the black community why other blacks don’t see how bad this guy really is really is a mystery to me clearly he has no interest in doing anything to lift up the black community but he will sell his ancestors to help the criminal, lying, murdering illegal aliens This shit will back fire in the faces of the American citizens of course we have no voice in stopping the gang of 8 and other politicians who would sell their mothers to be politically correct. While military vets are unemployed this dumb bastard can only see making a better life for illegal criminals. This is too much for me All should be fired impeached starting with Obama,Janet incompentano, John Morton McCain Lindsey Graham and others who support any path to amnesty this is not their country and they don’t have the right to make destructive decisions for the people of this magnitude without the people having a strong voice. this is soon to be a third world country thanks Obama and company and the rest of the past residents and sicko politiciann this is the 9th amnesty.

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