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Saturday, June 3, 2023

Department Of Education Fixes PLUS Loan Program

By Freddie Allen
NNPA Senior Washington Correspondent

WASHINGTON (NNPA) After an arduous debate that stretched over three years, higher education advocates overwhelmingly supported the updated guidelines for the Federal Direct PLUS Loan Program recently issued by the Department of Education (DOE). The changes will impact nearly 400,000 students nationwide and provide much needed relief for Black students who disproportionately depend on the PLUS loan program to make it through college.

In a press release on the final rule change, United States Secretary of Education Arne Duncan said that the updated borrowing standards for the PLUS loan program demonstrated the department’s “commitment to ensuring families have access to the financing they need to reach their goal, while being good stewards of taxpayer money.”

According to the updated borrowing standards, the Education Department set the threshold debt amount to $2,085. The department considers a potential borrower that crosses that threshold to have an adverse credit history for purposes of the PLUS loan program. Education Department officials also said that the new standards reduce the number of years that “charge offs” will affect a borrower’s credit history from five years to the last two years. A charge off is “debt that a creditor has written off as a loss, but that is still subject to collection action,” according to DOE officials.

The revised guidelines ease the onerous credit requirements for the PLUS loan program that took effect in 2011, a move by the Education Department that sidelined thousands of Black college students and cost historically Black colleges and universities (HBCUs) millions of dollars, forcing the cash-strapped schools to slash budgets and furlough faculty and staff.

Jim Shelton, the deputy secretary for the Education Department and executive director of the My Brother’s Keeper task force said that a review of the credit criteria for the PLUS loan program prompted the 2011 changes.

Not only were the credit requirements different from almost all the other loan programs, but “a weird loophole” also made it easier for applicants with bad credit to get approved for loans while others with better credit histories were being denied.

Shelton said that level of technical assistance that was given to schools to help them understand how the 2011 changes would impact how they needed to craft financial aid packages for students that had been receiving PLUS loans, didn’t reach the level of visibility that the department would have liked.

“Colleges didn’t really pick up on it until they started seeing students get denied,” said Shelton.

In 2013, Secretary Duncan apologized for how the DOE handled the 2011 update to the PLUS loan program.

In a joint press release, higher education advocates and lawmakers applauded the final rule change to the PLUS loan program aimed at repairing the damage to schools and students that was done after the 2011 changes.

Michael L. Lomax, president and CEO of the United Negro College Fund said that 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,” said Lomax. “UNCF and our member presidents have rolled up their sleeves and worked hard to find a solution to this crisis, and we are pleased that this final regulation embraces that work.”

Lezli Baskerville, president and CEO of National Association for Equal Opportunity in Higher Education (NAFEO), a non-profit group focused on the needs of HBCUs and predominantly Black institutions (PBIs), said that the most recent PLUS loan regulations were a hard won victory for HBCUs and their stakeholder communities including the students, their families.

Baskerville added: “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. 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.”

Rep. Marcia Fudge (D-Ohio), said that she was encouraged by the news of the revised guidelines for the PLUS loan program and praised the Department of Education for “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.”

Fudge continued: “Access to higher education has long been the key to achieving upward socioeconomic mobility in this country. It is my sincere hope that we will reinforce our commitment to these students and families by implementing these new rules quickly and without further delay.”

Jim Shelton, the deputy secretary for the Education Department said that students will be able to access the PLUS loan program under the new rules in March 2015, four months earlier than previously reported.

Johnny Taylor, the president and CEO of the Thurgood Marshall College Fund, a group that works with schools in its network to increase access, retention and graduation rates of students said that if the department can move the start date from July 2015 to March 2015 they should be able to move it from March 2015 to November 2014, so that students preparing to enroll for the spring semester can benefit.

Taylor said that he’s frustrated because he feels like the Black community is letting the Education Department off lightly by heaping praise on the agency that tinkered with the PLUS loan program, created a significant financial burden for students and HBCUs, then took three years to fix it.

“Imagine if law enforcement officials told the folks in Ferguson, Mo., we’ll get back to you all in three and half years,” said Taylor.

Taylor said that he’s not trying to diminish the seriousness of what happened in Ferguson, Mo., where Michael Brown and unarmed Black teenager was shot to death by Darren Wilson, a White police officer, but he said Education Department’s delay in finding a solution to the 2011 changes is as equally as damaging to young, Black men.

“If I thought people didn’t know, maybe I’d be less bothered, but if 28,000 students have been negatively impacted, then you should have 28,000 people raising hell,” said Taylor. “It’s not because they don’t know. The kids that are sitting at home right now, that were in school, they know exactly why they’re at home.”

Although, Taylor agreed that the final rule changes were an improvement, he argued that the original standards weren’t broken to begin with, partly because the PLUS loan default rate is much lower than the default rates of other federal financial aid products.

Shelton said, that this time around, the level of communication and technical assistance provided to the schools, especially the smaller schools and HBCUs, to help them match students to the best financial aid packages has increased dramatically.

The Office of Federal Student Aid will also provide loan counseling for every family so that they can understand what their options are and what their repayment plan is going to look like on the backside.

“[It was] a very painful process to get here,” said Shelton. “It’s been a rough road to get to this place, but I’m extremely gratified to be here.”

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