Every year it seems like the United States Congress has to reauthorize the student loan rate, keeping it fixed so college students can continue to attend school or repaying their loans. Because of the uncertainty with the changes, it's causing students at minority schools and HBCUs to risk dropping out for several hundred dollars less than they could be approved for. That makes all the difference.
For instance, the federal Parent PLUS Loan program allows parents of undergraduate students to help pay for their children's college. While qualifying for these loans only required a credit check, the Department of Education in 2011 unexpectedly tightened the fine print to include charge-offs and medical bill collections, leaving thousands of parents ineligible.
And it's causing advocates for minority and low-income students to focus on swaying legislators to reverse the changes to PLUS loans and other outrageous student loan reforms. That hope comes in the form of the Higher Education Act, a 50-year old law that lays out guidelines for distributing student aid that is due for reauthorization next year.
In a recent joint letter, National Association for Equal Opportunity in Higher Education, the United Negro College Fund and the Thurgood Marshall College Fund asked Congress to broaden the criteria for PLUS loans and ensure that eligibility does not depend only on prior credit history. The groups also want the income threshold for automatic maximum Pell Grant awards to be returned to $32,000. The Department of Education recently dropped the maximum income to $27,000 for Pell Grant aid to low-income students.
And, the groups want lawmakers to reduce the interest rates and origination fees on PLUS loans. A new law that ties student loan interest rates to 6.41 percent could spike up to 10.5 percent as the economy improves.
"That one took our schools and the higher education community by surprise, because no one knew it was coming," said Cheryl Smith, senior VP of public policy and government affairs for UNCF, in a report by Reuters. "They did it without telling anybody."
Education Secretary Arne Duncan has since apologized for the poor communication and said his department will start a new rule-making process early next year.
As a result of the changes, PLUS loan approvals have dropped 32 percent for initial applicants, according to a UNCF analysis. A survey found roughly 10,000 students from minority-serving colleges and universities have already dropped out of school this academic year as a result. This comes at a bad time for black students as the unemployment rate stands at 13 percent compared to 6.4 percent for whites and 9.3 for Hispanics. The nation's rate is 7.3 percent.
Are the changes to student loans negatively impacting your chance at a good education?
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