WASHINGTON, DC - The Congressional Black Caucus (CBC), together with the National Association for Equal Opportunity in Higher Education (NAFEO), the United Negro College (UNCF), and the President’s Advisory Board on Historically Black Colleges and Universities (HBCUs) hail today’s release by the U.S. Department of Education of new eligibility rules for the federal Parent PLUS Loan program –which provides college loans to parents for their children –and urge their swift implementation.  The final PLUS Loan regulation will stem the loss of thousands of students and millions of dollars from HBCUs and other colleges and universities across the country by making nearly 400,000 students eligible for these college loans who previously would have been denied. 

CBC Chairwoman Marcia Fudge: "I am encouraged by today's news, and applaud the Department of Education 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. 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."

Congresswoman Corrine Brown: “I am very pleased that the Department of Education released its new eligibility guidelines for the federal Parent PLUS Loan program, and I wholeheartedly urge their swift implementation. Since October, 2011, HBCU’s and their students have struggled terribly because of the sudden change in the Department of Education’s Parent PLUS loan guidelines. For three years, the Congressional Black Caucus, along with the HBCU advocacy community, has battled arduously with the Department of Education to correct this administrative injustice.  Although the goal of the Caucus was to return the PLUS Loans rule back to where it was prior to 2011, I am pleased that the Department’s new regulations will begin to stem the loss of thousands of students and millions of dollars from HBCU’s and colleges across the nation.”

Congressman Cedric Richmond: “Finalizing this rule is an important step towards re-opening the doors of higher education that were closed to students across the nation by the previous unfair standards. We should not be making it harder for students to afford an education at a college or university they qualified for, and I am glad the Department of Education shares this sentiment. My colleagues in the CBC, the HBCU community, and I have worked diligently to resolve this matter. I look forward to the quick implementation of the new standards so that hundreds of thousands of students in the 2nd district and throughout the country can get the help they deserve as they pursue a college education.”

NAFEO President and CEO, Lezli Baskerville: "The regulations released by the Department today are a hard won victory for HBCUs and their stakeholder communities including the students, their families, and champions of HBCUs--NAFEO, UNCF, the President's Board of Advisers on HBCUs, the Congressional Black Caucus and others. 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. ^[1]We will remain vigilant in ensuring that the Department acts with alacrity to immediately implement the Parent Plus regulations as it indicated it will."

UNCF President and CEO, Michael L. Lomax: “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.  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.”

The final PLUS Loan regulation revises the credit standards used to determine whether parents can receive loans to pay for college expenses for their children. It reverses stringent credit standards imposed by the Department in 2011 that had a devastating impact on families and students across the country. Hundreds of thousands of families who previously had received PLUS Loans for their children found their applications for renewal rejected and their appeals denied. 

The CBC engaged in a tough, three-year fight to reverse the harsh 2011 Department policy that exploded among low-income students and families like a financial grenade. Representatives Danny Davis (D-IL) and Chaka Fattah (D-PA) co-chaired the CBC Education Task Force. The CBC –and the HBCU coalition leaders –demanded action from President Obama and Secretary Arne Duncan to reverse the damage and stop the bleeding. The final PLUS Loan regulation released today takes significant steps to accomplish that. 

HBCU Value Proposition

HBCUs disproportionately enroll low-income, first-generation and academically underprepared college students –precisely the students that the country most needs to obtain college degrees.  More than 75 percent of students at HBCUs rely on Pell Grants and nearly 13 percent rely on PLUS Loans to meet their college expenses.  HBCUs have one-eighth of the average size of endowments for historically white colleges and universities. Against these odds, HBCUs historically have provided an affordable education to millions of students of color, graduating the majority of America’s African American teachers, doctors, judges, engineers, and other scientific and technological professionals.

Background

The final regulation issued by the Department of Education (Department) updates the definition of “adverse credit history”for PLUS loan applicants.  Under the final regulation:

•          Parents with small amounts of overdue payments on their credit records will no longer be penalized and automatically denied a PLUS Loan due to a $2,085 exemption for delinquent debt that will be indexed over time for inflation.

•          Onerous credit history checks extending back five years or more will be replaced with more reasonable two-year credit history checks for PLUS Loan applicants with delinquent balances exceeding $2,085. 

•          PLUS Loan applicants who are considered for approval after an initial denial will be required to complete loan counseling provided by the Department.

•          The Department will implement the new rules as soon as possible after the publication of the final regulation, prior to the start of the 2015 academic year (July 1, 2015).

Timeline

•          October 2011:  The Department, without notice to stakeholders, reinterprets Parent PLUS Loan eligibility standards to exclude parents with “charge-offs”and collection accounts for the past five years—a period that coincides with the 2008 recession.

•          September 2012: Leaders of UNCF (the United Negro College Fund), the National Association for Equal Opportunity in Higher Education (NAFEO), and the Thurgood Marshall College Fund (TMCF) meet with Education Secretary Arne Duncan to urge reversal of the new Parent PLUS Loan standards and to provide students and institutions with immediate relief

•          October 2012:  HBCU coalition leaders meet again with Secretary Duncan, who refuses to roll back new standards but promises a plan of action for the second semester; it never materializes.

•          April 2013:  Eighteen months after its initial decision, the Department announces that its definition of “adverse credit history”under the Parent PLUS Loan program could be a topic for a negotiated rulemaking committee this year and that it would hold hearings to obtain public input.

•          May 2013:  The Department holds its first public hearing on 2013 negotiating rulemaking topics. UNCF President Michael L. Lomax, NAFEO President Lezli Baskerville and U.S. Reps. Corinne Brown (D-Fla.), Danny Davis (D-Ill.), and Cedric Richmond (D-La.)  testify.

•          June 2013:  Seventeen HBCU presidents and senior officials and students gather at Spelman College to impress upon ED officials the negative impact restrictive Parent PLUS Loan standards have on college accessibility.

•          July 2013:  The CBC meets with President Obama and demands action on Parent PLUS Loan standards.

•          August 2013:  In a letter to U.S. Rep. Marcia Fudge, the CBC chairwoman, Secretary Duncan slightly expands Parent PLUS Loan standards but delays rulemaking until spring 2014.  CBC Chairwoman Fudge rejects the proposal and demands a “real solution.”

•          August 2013:  The CBC, UNCF, NAFEO, TMCF and the President’s Advisory Board on HBCUs release a joint statement committing to working together to advocate for students harmed by the change to the Parent PLUS loan standards.

•          November 2013:  The CBC convenes HBCU presidents to discuss the crisis and requests a meeting with Secretary Duncan.

•          January 2014:  The CBC, together with a dozen HBCU presidents, meets with Secretary Duncan to again seek Parent PLUS Loan relief on behalf of thousands of HBCU students.

•          February 2014:  The Departmentconvenes a negotiated rulemaking committee to consider the definition of “adverse credit history”for the Parent PLUS Loan program and names Dr. David H. Swinton, president of Benedict College, and Dr. George T. French, Jr., president of Miles College, as negotiators for minority-serving institutions.

•          May 2014:  The Department’s negotiated rulemaking committee concludes its deliberations, led by Drs. Swinton and French, and reaches consensus on new underwriting standards for the Parent PLUS Loan program.

•          June 2014: UNCF and NAFEO submit a joint letter to Secretary Duncan, endorsing the consensus Parent PLUS Loan regulations recommended by the negotiated rulemaking committee.

•          July 2014:  CBC Members write to Secretary Duncan endorsing the consensus Parent PLUS Loan regulations.

•          August 2014:  The Departmentpublishes proposed new PLUS Loan regulations that include the consensus underwriting standards recommended by the negotiated rulemaking committee, and announces a public comment period.  In addition, the Department releases new estimates that 372,000 students would become eligible for PLUS Loans under the proposed credit criteria.

•          September 2014:  The CBC and other HBCU supporters and stakeholders send in more than 500 positive letters and comments to the Education Department supporting the proposed PLUS Loan regulation. 

•          October 2014:  ED releases a final PLUS Loan regulation reversing its 2011 policy and implementing new credit criteria for PLUS Loans.