Wayne A. Frederick, interim president of Howard University, at commencement for the Howard College of Medicine, where Frederick was the graduation speaker in 2014. (Photo by Justine Knight)

Howard University is refunding more than a hundred soon-to-be graduates half of the tuition they paid out of pocket this semester, an effort to encourage more students to complete their education on time.

“We talk about student debt a lot in this country, but a part of the problem is students taking five or six years to graduate,” said Howard President Wayne A.I. Frederick. “The goal here was, in part, to give some incentive to finish on time. And to show that as an institution, we’re not just interested in you getting an education, but we’re also interested in you getting a very good start.”

Tuition at Howard for the 2015-2016 academic year rang in at about $23,000, or $11,500 a semester. Graduating seniors whose families paid for the spring term using cash, credit card or an installment plan are eligible for the 50 percent rebate, or up to $5,750. Any portion paid out of pocket is eligible. If a student borrowed to cover half of the tuition and that student’s parents paid the balance in cash, mom and dad would be in for a refund.

Erica Whitehead, 21, divvied up the cost of her final semester at Howard, with her mom and dad making a direct payment of $4,000 to the school. The journalism major said she was shocked to learn that her parents were getting money back, and she couldn’t wait to tell them.

“It helps,” Whitehead said of the rebate. To help pay for her education, Whitehead has taken out $25,000 in student loans during the past four years, while her parents have paid the rest out of pocket. “It’s pretty cool to be giving money back to my parents.”

Rebates started rolling out this week as final grades trickled in and seniors were approved for graduation on May 7. Frederick anticipates the number of refunds will rise in coming days as more students are cleared to receive their degrees. So far, the rebates are costing the school about $250,000, an investment that Frederick says is well worth the money, even though the school is working to reverse years of financial strain.

The president considers the rebate program a step towards a sustainable solution for managing the university’s costs. Howard, he said, spends millions of dollars providing grants to students taking five or six years to graduate. Shaving a year or two off the time it takes to earn a degree would be a win for everyone, he said.

“If we can give an incentive to push students to finish in four years, we’re actually going to save money,” Frederick said. “Plus we get newly minted alumni earlier, we get them situated better earlier, so their ability to turn around and support the institution happens more quickly.”

Frederick came up with the idea for the rebate after noticing that few students were making direct payments to the school, instead relying on federal and private loans to cover costs. In addition to encouraging students to graduate on time, he hopes the program encourages families to pay more of their college expenses out of pocket. That may prove difficult at a school where more than 60 percent of the student population is eligible for federal need-based Pell grants.

“If families are looking at their finances when students come in the first year, we want them planning for that fourth year as well,” Frederick said. “If you plan well in advance, there are rewards you can reap.”

The president points out that the rebate is part of a broader financial aid effort that includes grants to cover the remaining tuition and fees for the neediest students who are on track to graduate. Howard awarded more than $2 million to such students this spring.

A small, but growing, number of universities are offering seniors financial carrots to complete their degrees. Washington College, a liberal arts school in Chestertown, Md., recently gave all graduating seniors who took out federal student loans this semester a grant to repay the debt. Awards varied, but the 119 seniors who borrowed will have their debt reduced by an average $2,630.

Frederick is not ruling out the possibility of at some point extending the rebate to students who paid for school with loans, but he said Howard officials are reviewing the feasibility of such a move. He said the school is still determining whether to expand the rebate to include both semesters of senior year, but he wanted to kick off the program this year to give an incentive to other classes.

“Some people may say ‘Well, the people who can afford to write you a check are the richest parents.’ But I would argue that we don’t have such students at Howard,” Frederick said. “People who are making direct payments are just making a decision that they don’t want the student loan burden to be very high, and are making the effort to get the cash together.”

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