The full force of the underwriting shift began to be felt in the summer of 2012, when parents applied for loans for their children in advance of the fall term.
For all colleges nationwide, the dollar volume of federal loans approved for parents in the 2012-13 school year fell 11 percent compared with the total in 2011-12, according to a Washington Post analysis of federal data for the first three quarters of each year.
For historically black colleges and universities (HBCU), the parent loan volume fell 36 percent. That translated to an annual cut of more than $150 million.
The figures suggest that tighter underwriting standards affected many colleges and universities, but with a disproportionate impact on schools such as HBCUs that serve a high share of disadvantaged students. Such students, compared with affluent peers, are more likely to have parents with checkered credit records.
The Post analysis also found that the number of parents borrowing to support HBCU students plummeted. There were about 18,800 borrowers in 2012-13 at about 90 HBCUs in the federal database, compared to 35,400 the year before — a 47 percent drop. The decline in borrowers for all schools was 19 percent.
As a result, HBCUs were forced to find alternative financing for students or slash their budgets. Many students, college leaders say, were sidelined at least temporarily from school or had their academic schedules disrupted.
Government officials, responding to upheaval they had not anticipated, urged parents who had been denied loans to file appeals.
In March, Education Secretary Arne Duncan told radio interviewer Roland Martin that parents could call a toll-free number to have applications reconsidered, with approval possible “sometimes within six minutes.”
Duncan acknowledged that some students had been forced out of college for lack of money. “We desperately want to get them back into school,” Duncan said.
But Duncan indicated that he was also concerned about whether parents are taking on debts they can’t repay.
“We’re committed to the program,” he said, “but we don’t want to put families in a financial situation they can’t recover from. That’s not right.”
Education officials estimate that 80 percent of students whose parents were denied a federal PLUS loan ultimately enrolled in school.