HBCU Leaders Say “Borrower Defense To Repayment” Plan Could Hit Smaller Schools Hardest

Washington, D.C., July 21, 2016 — In a letter to Education Secretary John King, eight current and former presidents of historically black colleges and universities (HBCUs) and other prominent leaders in the African-American community said that the Department of Education’s proposed changes to the “Defense to Repayment” regulation would, “place smaller schools such as HBCUs in vulnerable financial circumstances that could diminish services HBCUs provide to students.”

The comment period for the proposed rule, published in June, closes on August 1.

Under the proposal, former students would be able to file claims for loan forgiveness if they felt their institution made a “misrepresentation” in promoting the school.   Currently, students can seek a discharge of their loan if the school committed “fraud.”  The proposed expansion of the law to include “misrepresentation” is one of the primary concerns of the proposal’s critics.

Specifically, the HBCU letter says:

Should a disgruntled former or current student feel an HBCU “misrepresented” their institution by any means, the broad language outlined in the new ED rule could open the floodgates for frivolous lawsuits that will only adversely affect the greater HBCU student body.

Though HBCUs provide excellent academic opportunities for their students, they do not have the monetary security non-HBCUs share. For example, a top-rated HBCU Morehouse College has an endowment of around $130 million, whereas a top-rated non-HBCU such as Harvard University has the refuge of upwards of $36 billion. 

Signatories to the letter include: Andrea Harris, Trustee, Bennett College for Women; Rev. Jesse L. Jackson, Sr., Founder and President Rainbow/PUSH Coalition; Dr. Ronald Johnson, President, Clark Atlanta University; Dr. Julianne Malveaux, former President, Bennett College for Women; Janice Mathis, Esq., President and CEO National Council of Negro Women; Dr. Haywood Strickland, President, Wiley College; Angela R. Sailor, former Deputy Chief of Staff, U.S. Department of Education; Dr. David Beckley, President, Rust College; and Dr. Jerrie Cobb Scott, Professor, University of Memphis.

The letter also cites the schools’ small endowments and the requirement that schools obtain “letters of credit” as placing a severe financial burden on small schools, including HBCUs.

The letter to Secretary John B. King calls for the comment period to be extended 60 days so that the education leaders have an opportunity to discuss alternatives to the current proposal.

The letter can be found here.