Black colleges to lose students after federal loan changes
Source: Baltimore Sun
Morgan State University is trying to raise $300,000 in donations by the end of the month to give 300 undergraduates emergency scholarships the result of tighter lending standards that have hit historically black colleges and universities particularly hard.
The universities blame changes to the Parent PLUS Loans, which allow holders to borrow the full cost of tuition, fees and living expenses. More loans were denied after credit history requirements were made stricter in late 2011.
Those institutions disproportionately serve a low-income population that's less likely to pass the revised credit check, educators and politicians said. Enrollments are expected to drop because of it, along with graduation rates.
Wilson and the presidents of 10 other historically black institutions including Coppin State and Bowie State universities in Maryland sent a letter to President Barack Obama last week asking that the changes be reversed because they are having a "devastating impact." Rep. Elijah E. Cummings, a Baltimore Democrat, delivered the letter.
Read more: http://www.baltimoresun.com/news/maryland/education/bs-md-ci-morgan-emergency-aid-fund-20130806,0,2487814.story#ixzz2bWuhqhN2
Read more: http://www.baltimoresun.com/news/maryland/education/bs-md-ci-morgan-emergency-aid-fund-20130806,0,2487814.story
JRLeft
(7,010 posts)Hopefully the President takes action.
Rosa Luxemburg
(28,627 posts)Paulie
(8,462 posts)Empty.
msanthrope
(37,549 posts)I think, since this is an underwriting rule, you would need a DOE guidelines change. They tightened up lending/default rules a few years ago.
msanthrope
(37,549 posts)Lezli Baskerville, president and CEO of the National Association for Equal Opportunity in Education, which represents historically black and predominantly black institutions, urged the Education Department to return to the former underwriting criteria. Parent PLUS was not broken, Baskerville said, describing the change as a debacle. The criteria were working effectively for most students at the time.
Many of the 28,000 students at historically black colleges whose parents were denied loans dropped out -- parents who arent approved for a PLUS loan, even with the tighter criteria, are unlikely to be approved for private student loans -- and the UNCF has been unable to find out whether they enrolled at other, less costly institutions.
Representative Corrine Brown, a Florida Democrat, also commented at the hearing Tuesday, saying denials under the newly stringent PLUS loan underwriting criteria were worse than under the banks and criticizing the Education Department for not addressing black colleges concerns.
Read more: http://www.insidehighered.com/news/2013/05/22/education-department-hears-comments-plus-loans-gainful-employment-and-profit#ixzz2bZiG05YX
Inside Higher Ed
I think tightening underwriting rules is a good thing, but not if it works a hardship that keeps kids out of school.
Tightening underwriting loans means fewer defaults and fewer bankruptcies. More bankruptcies mean higher overhead costs, forcing those who don't default to subsidize those who do.
Higher overhead costs hurt everybody--and make defaults more likely because the loans become more expensive.
They often send the wrong message. I've known too many kids whose parents took out loans they didn't actually *need* or for more than was actually required so that they could have the right lifestyle or not have to hurt household budgets. You don't want to have dinner out on Saturday become part of a loan you'll be paying off over a decade.
At the same time, while people look at the "poverty --> low educational achievement" correlation they often like overlooking the "low ed achievement --> poverty" causation because it puts parents on the hook for the next gen's poverty and looks like "blame the victim". If you have low levels of educational achievement you're more likely to be poor; you're more likely to disadvantage your own kids academically by not providing what are euphemistically called "enrichment activities" but which are actually the bedrock that teachers build on. Even if the kids do well in K-12, they grow up with a lack of experiences to fuel their imagination as to what they might want to do and where they might be able to take their lives.
So do we let parents bankrupt themselves to send their kids to college?
I tell my students to go to community college full time and treat home like an apt. or, if they're suddenly co-parents for their siblings, to move out and get a really cheap, scuzzy apt. locally. You're called upon to babysit? Just say no if you have schoolwork. There's an unexpected household expense? Sorry, you don't increase your work hours to cover it for your parents. And parents need to understand that their commitment to raising their kids doesn't stop at their 18th birthday--college is a kind of prolonged adolescence.
msanthrope
(37,549 posts)government tightening of rules on credit/applications/underwriting. This is an objective "good" but it leaves some kids out in the cold based on their parent's poor track record.
I've seen the mistake of financing your child's education based on excess loans, rather than a stark look at what can be afforded. It's an easy trap to fall into.
malthaussen
(17,066 posts)Who'd a thunk that making loans tougher to get and more expensive might act to filter out poorer populations!
-- Mal
Rosa Luxemburg
(28,627 posts)Congress isn't giving some kids a chance