HBCUs Still Waiting for Solution to Parent PLUS Loan Crisis

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by Reginald Stuart

Higher education institutions across the nation began closing this week for the winter break with no news from the U.S. Department of Education on whether it will resolve disputes over the popular Parent PLUS Loan (PPL) program in time to avoid another blow to the fall 2014 recruiting season, now in high gear.

Last-minute efforts earlier this month to alleviate differences between college presidents and the DOE collapsed at the last minute when a planned meeting in Washington, organized by the Congressional Black Caucus, was canceled with no future date set. Some 15 presidents of Historically Black Colleges and Universities (HBCUs) were scheduled to participate with several members of Congress and DOE Secretary Arne Duncan.

One president, when asked if he knew why the meeting was canceled, said he was told to “blame it on the weather.”

The PPL program, which an increasing number of families utilized in the last decade for federal loans to help send their child or children to college, was popular despite having an interest rate slightly higher than other college loans. It made choosing a higher priced institution ostensibly more appealing because, until 2012, there was no cap on the loan amount.

The revisions in loan criteria, which took effect in the fall of 2012 and have since slammed enrollment at PPL-popular institutions, especially HBCUs, were issued with little public notice and no rule making procedures. DOE officials said the loan criteria change was considered “technical” and not requiring a formal rule change. In reality, the new criteria forced the government to deny thousands of PPL applications, prompting significant and widespread last-minute dropouts at dozens of institutions, costing them millions of dollars in expected income.

During most of 2013, complaints about the tighter loan criteria have been hot and heavy, coming from frustrated institution presidents, their advocacy organizations in Washington and members of the Congressional Black Caucus. The planned meeting this month that was abruptly canceled was anticipated as one that could have led to resolution.

College enrollment expert Arlene Cash said the controversial PPL loan criteria are not likely to be changed, despite the uproar.

“They have pulled up anchor and said the changes are here,” said Cash, vice provost for enrollment at the University of the Pacific and former vice president for enrollment for 10 years at Spelman College in Atlanta.

Cash, who has consulted this year with several institutions negatively impacted by the PPL rule changes, said she does not expect the DOE to issue any substantial changes in the policy issued in 2012, despite appeals to do so. She said the agency’s move this summer to put an appeals process in the rule for denied applications is about as far as the agency is going in terms of revisiting the tougher PPL criteria.

Following considerable uproar from college administrators and lawmakers this year, the DOE instituted a process by which parents whose loan applications were denied could request reconsideration. It made a point of telling denied applicants there was a good prospect of an application being approved on appeal. However, by the time the appeals process was introduced, fall 2013 enrollment deadlines had passed and many students simply dropped out of college for lack of funds, several studies showed.

Officials at several institutions said this week, as they were closing for the year, that the situation would repeat itself, absent significant changes soon by the Department of Education.

“Howard students have experienced significant success with appeals,” said Dr.  Kerry-Ann Hamilton, spokesperson for Howard University. “However, fewer students are applying with almost a 20 percent decline. The PLUS remains an important funding option for students, and access is critical.”

The story is much the same at peer institutions.

“They’ve (the PPL loan criteria changes) had an impact on us,” said Delaware State University spokesman Carlos Holmes, referring to the tighter PPL criteria. “The fact of the matter is the policy is still in effect. There needs to be a change here. This is not helpful.”

An official at the DOE said the agency was still planning to issue a proposed rule this spring aimed at addressing the PPL matter. The rule would then go out for public comment, after which a final order would be posted.

When asked if that time frame would stretch beyond the time most institutions set for firming up financial aid plans for prospective fall 2014 students, the official said that was probably the case.

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