College and university officials across the nation are getting anxious over the potential financial damage they face this fall if the federal government stands its ground in declining thousands of applications for parental loans to help students in college and stiffening rules governing other grant and loan programs.
“The early figures are not looking good,” said Dr. Lezli Baskerville, president and chief executive officer of the National Association for Equal Opportunity in Higher Education (NAFEO), echoing the sentiments of others. NAFEO is taking a survey of its more than 100-member institution, she said, explaining that “the pattern that existed in the last semester appears to be continuing.”
In the late summer of 2012, thousands of students and their institutions had based their college aspirations on the ability of their parents to renew or secure new federal loans through the Department of Education’s Parent Plus Loan (PPL) program.
At enrollment time, they were shocked to learn new and tighter loan rules took effect a few months earlier and disqualified them from securing the anticipated funds. At HBCUs alone, more than 12,000 students were affected at institutions of every stature and size, collectively costing the institutions tens of millions of dollars in anticipated income.
“We were blindsided by the volume of denials and scrambled for answers and ways to assist students,” said Akua Matherson, associate vice chancellor for enrollment management at North Carolina A&T State University.
In her comments last month, at a Department of Education field hearing in Atlanta, Matherson said the university processed 2,691 PPL loan applications for the fall of 2012. The government rejected 2,093 of the applications based on the new rules. The university’s experience mirrored that of most institutions with students whose parents relied on the PPL program.
The heightened sense of worry today stems from the fact that the Department of Education shows no sign of yielding in time for the coming school year. It has held four public hearings on the negative impact of the new rules, including the one in Atlanta, and said it is still receiving public comments with the aim of a negotiated revision of the new rules. That approach could stretch into next year, said Baskerville and others.
Meanwhile, NAFEO and other major organizations and some university presidents have called or written Education Secretary Arne Duncan and President Obama seeking relief. Despite their appeals, there has been no decisive action in response. The issue was not officially addressed last month at the regular meeting of HBCU leaders at the meeting of the White House Initiative on Historically Black Colleges and Universities.
Howard University, the flagship of the nation’s HBCU’s, had some 600 students rejected for PPL loans last year and said last month the rejection rate for the coming year is running at a 10 percent higher rate than for the fall of 2012. Other institutions are also reporting rejection rates as bad, if not worse, than this time a year ago.
“My thinking is if we don’t get a permanent fix before kids come back, we’re going to get hit with another round of challenges,” said Dr. William Harvey, president of Hampton University, referring to a list of federal college aid programs that have been cut and slashed in various forms by Congress and the U.S. Department of Education.
Last fall, Hampton, a prestigious historically Black private college in Virginia, lost approximately $6 million in anticipated revenue when the parents of hundreds of existing students and applicants learned as school began that the government was declining their loan applications based on the new rules.
Harvey said Hampton was fortunate enough to be able to move about $6 million in its resources into its student aid fund, an emergency move that helped avoid a sharp fall-off in enrollment and graduation.
Noting such moves cannot be done year after year by his institution, let alone others with fewer resources, Harvey said his university and others are suffering cut-by-cut from a series of federal actions aimed at reducing federal taxpayer spending on higher education during a time when President Obama is touting the need to strengthen it.
The PPL loan denials last year cost Howard some $8 million in anticipated revenue, the university said. If it must come to the rescue again this year it will be at a time when it faces the loss of some $22 million in annual federal budget allocations stemming from the 5 percent across-the-board budget cut approved by Congress. Howard is the beneficiary of a guaranteed line item allocation from the federal budget each year.
“It’s very devastating,” said Dr. Christopher Brown, president of Alcorn State University. Some 387 students who were upperclassmen returning to continue their education were among the hundreds who were suddenly short of needed funds after learning the new, tighter PPL rules had resulted in their parents being denied loan renewals.
Brown, reflecting on his tour of duty in the federal bureaucracy in Washington, said the federal government failed to follow established procedures for revising rules in deciding to change the PPL rules and echoed his colleagues in saying the government needs to correct its actions.
“As a higher education researcher, I know when policy is revisited, there is preparation, implementation and grandfathering,” said Brown.
“There was no implementation plan, no grandfathering,” said Brown, referring to a long established practice in government of ensuring most new laws and rules are not retroactive. Because this change was, it covered students who were already in school and whose parents had secured PPL loans in the past.
At the Thurgood Marshall Fund, president Johnny Taylor said that organizations like his, NAFEO and other HBCU boosters are near the end of their ropes in hoping the government will provide near-term relief to their institutions and others that serve under-resourced populations.
Students and institutions are in need of clear guidance for the 2013-2014 school year, Taylor said, noting that anecdotal information from schools and calls from parents are prompting “word on the street” that loans are being denied and parents are getting discouraged from even applying. “It logically follows you are going to have a chilling effect” on enrollment efforts, he said.
Some institutions are already responding by “being much more conservative” in their hiring of faculty and staff for the coming year, said Taylor. At least one institution has advised him it is cutting vendor service contracts, including the Washington lobbyist who represents the institution in applying for and helping make cases for federal aid. Some students, meanwhile, are opting to take fewer hours of classes this fall or sitting out a semester.
“We’re in that critical time when we need to make a decision (this month) on whether we need intervention by a third party,” Taylor said, referring to the loosely knit coalition of higher education organizations that have approached the Department of Education and White House in search of relief. “We’ve tried every other angle at this point.”
UNCF member colleges are “deeply concerned” the Department of Education “remains focused on improving a failed process that relies on denying loans to parent, rather than properly assessing each loan application in the first instance using fair and balanced criteria,” said Cheryl L. Smith, senior vice president for publicly policy and government affairs at the UNCF, the association of most private Black colleges.
“The bottom line is that our member presidents want to protect under-represented students who desire and need a college education,” said Smith whose group has been among those actively engaged in discussions with NAFEO, the Thurgood Marshall Fund and Department of Education officials.