U.S. Education Secretary Arne Duncan apologized this week to leaders of historically black colleges for the Obama administration’s “poor” communications in a recent switch to tighter standards for issuing loans to parents.
The shift in lending criteria had an outsize impact on those colleges, including Howard University in Northwest Washington, because they serve a large number of students whose parents rely on federal PLUS loans to help cover tuition. Skeptics of the PLUS loan program say it sometimes leaves families in too much debt.
The transition left many college students scrambling for funds in 2012 and this year, forcing some to leave school at least temporarily. Enrollment fell at Howard and many other schools in the fall of 2012, though Howard officials say their student count rebounded this fall.
“Our department is required to carry out the law as it was designed to protect parents and taxpayers against unaffordable loans,” Duncan said in a speech Thursday in Washington to a gathering of leaders of historically black colleges and universities, known as HBCUs. “But we could have and should have handled the process better. Communications internally and externally was poor, and I apologize for that and for the real impact it has had.”
Duncan added: “I have talked with many of the people here in this room about the PLUS loan challenge. It has been hard, it has been frustrating, and I know some of you are angry.”
Some HBCU leaders and advocates have said the administration should reverse the lending shift, which expanded a list of reasons for denial of applications. Added to the list were certain kinds of unpaid bills on a credit record that had been written off or referred to collection agencies.
“I appreciate the Secretary’s apology, but my position remains the same. The process was bad, and it produced a bad and badly introduced policy,” said Michael Lomax, president and chief executive of the United Negro College Fund, which works with and advocates for HBCUs. “The department should return to the old policy and undertake a review that is open, transparent and inclusive.”
Though the administration has not reversed the changes, it has taken steps to make it easier for parents to appeal loan denials.
“Some have said we are choosing not to reverse the policy because we don’t care, and nothing — nothing — could be further from the truth,” Duncan said.
PLUS loans currently have an interest rate of 6.41 percent, which is higher than rates on other federal education loans. The federal Stafford student loan rate for undergraduates is 3.86 percent. There are fixed limits on how much students can borrow from the Stafford program, but the PLUS loans are only limited by the cost of attending college.