Parent Plus Loan requirements updated
By Lauren Victoria Burke NNPA Columnist
Three years ago, the Department of Education tightened the loan standards for Parent PLUS Loans. The change affected more than 30,000 students at Historically Black Colleges and Universities (HBCUs) at a collective loss in tuition to the schools of more than $150 million. Secretary of Education Arne Duncan apologized for the impact of the change.
After a contentious three years of meetings and negotiations with HBCU advocates and members of Congress, the Department of Education announced the new and final rule update for Parent PLUS Loans, scheduled to take effect next July.
Representatives at the Department of Education have expressed concern that Parent PLUS loans were a bad risk for low-income borrowers. Skyrocketing costs for higher education and record student loan debt in America are the backdrop.
“The new regulations will both expand student access to post secondary education and safeguard taxpayer dollars by reflecting economic and programmatic changes that have occurred since the program was established more than 20 years ago,” Duncan said in a statement.
“The final regulations update the definition of “adverse credit history” for PLUS loan applicants, and implement a streamlined application process for borrowers to obtain a PLUS loan, specifically for those with adverse credit histories,” the department announced last week. The Department of Education also informed reporters they will release school-by-school data on rates of default and PLUS Loan default details.
“While the regulations do not restore the pool of ‘creditworthy’ applicants to the pre-2011 level as NAFEO and its colleagues fought indefatigably to achieve, it is a step in the right direction,” said Lezli Baskerville, president of the National Association for Equal Opportunity in Higher Education (NAGEO). “The regulations will make 370,000 PLUS loan applicants who failed to pass the new ‘adverse credit history’ criteria, now eligible borrowers for the PLUS Loan gap funding; expand higher education access, and increase the likelihood of success for 691,900 additional students.”
United Negro College Fund President Michael Lomax noted, “HBCUs and the students they serve have endured three years of hardships caused by denied access to PLUS Loans. This has been a distraction from the real work that needs to be done – preparing students with the skills needed in a competitive, global economy.”
Lomax added that the department’s action, “reverses stringent credit standards imposed by the Department in 2011 that had a devastating impact on families and students.” Lomax came under sharp criticism this year after UNCF accepted $25 million from the Koch Brothers. During an interview with Roland Martin in June, Lomax revealed UNCF took the money from the Koch Brothers in part because their donation included a $4 million unrestricted contribution to UNCF’s member institutions, “in order to make up for losses institutions had around the Parent PLUS loan issue.”
Many HBCU advocates aren’t thrilled the implementation of the new rules won’t take effect until 2015.
Thurgood Marshall Fund President Johnny Taylor said, “The delayed implementation of PPL regulations is as disturbing as the unlikely scenario of our government issuing a statement indicating they have a cure for Ebola and then announcing the cure will not be released until July 2015.”
The chair of the Congressional Black Caucus was less critical.
“I am encouraged by today’s news, and applaud the Department of Education for finally taking this step to begin leveling the playing field for so many students and families of color and modest means – those who most benefit from the Parent PLUS Loan Program,” said CBC Chair Marcia Fudge (D-Ohio).
Representatives Corrine Brown (D-Fla.) and Cedric Richmond (D-La.) offered legislation to change the Parent PLUS Loan rules back to what they were in 2011. Brown and Richmond, who have many HBCU’s in their districts, expressed general satisfaction with the rule change but their praise was joined with a glance backward at the last three years.
“HBCU’s and their students have struggled terribly because of the sudden change in the Department of Education’s Parent PLUS loan guidelines. For three years, the Congressional Black Caucus, along with the HBCU advocacy community, has battled arduously with the Department of Education to correct this administrative injustice,” Congresswoman Brown stated.
“Although the goal of the Caucus was to return the PLUS Loans rule back to where it was prior to 2011, I am pleased that the Department’s new regulations will begin to stem the loss of thousands of students and millions of dollars from HBCU’s and colleges across the nation,” Rep. Brown added.
“Finalizing this rule is an important step towards re-opening the doors of higher education that were closed to students across the nation by the previous unfair standards. We should not be making it harder for students to afford an education at a college or university they qualified for, and I am glad the Department of Education shares this sentiment,” said Rep. Richmond.
As reported by Rachel Fishman in EdCentral.org: Under the Department’s final rule, PLUS borrowers will fail the credit check for the loan if they have one or more debts with a total combined outstanding balance greater than $2,085 that are 90 or more days delinquent, charged off, or in collections in the past two years or have been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write off of a debt under title IV in the past five years….”