HBCUs on Board with Direct Lending: System Won't Pose Expensive Administrative Burdens for Private and Small Public Historically Black Schools, HBCU Association Leaders Say

Article excerpt

As Congress moves closer to wrapping up deliberation on the Obama administration s proposal to convert the U.S. higher education student loan system of public and private lending into one fully run by the federal government, historically Black colleges and universities (HBCUs) aren't expected to be among the institutions opposing the reform, HBCU leaders say.

The move last month by the U.S. Education Department to advise higher education officials at 3,000 institutions to prepare their schools for full participation in the department's direct lending program by the 2010-11 academic year ruffled Republican lawmakers and private student loan lending advocates.

Sen. Lamar Alexander, R-Tenn., characterized the department's Oct. 26 letter recommending schools become "Direct Loan-ready" by the 2010-11 academic year as "premature." Sen. Mike Johanns, R-Neb., wrote to Education Secretary Arne Duncan that he was "disappointed in (Duncan's) actions to encourage this conversion when legislation has not yet become law."

"Six months is not enough lead time. We are a small office with two professional staff serving 1,200 students," said Elaine Larson, director of student financial planning at Centre College in Danville, Ky., and a member of ProtectStudentChoice.org--a grassrooots coalition of state and local student loan service professionals.

Yet among the 105 HBCUs, a few dozen of which are private colleges and small public universities, HBCU association and individual school officials report that the majority of their institutions are supportive of the administration's proposal on direct lending.

Lezli Baskerville, president and CEO of the National Association for Equal Opportunity in Higher Education (NAFEO), says Education Department officials have worked diligently since the spring to assure HBCU presidents and financial aid officials that shifting to a 100-percent direct lending system will not pose onerous and expensive administrative burdens on their schools. NAFEO is a Washington-based advocacy organization that represents the interests of HBCUs and predominantly Black institutions.

U.S. higher education institutions are eligible to participate in direct lending as well as the Federal Family Education Loan (FFEL) program, which subsidizes private banks or other lenders as education loan providers. The U.S. Education Department wants to end the FFEL program and move all student lending to the Direct Loan plan, a move the Obama administration contends will free up billions of dollars annually for annual Pell Grant increases and college-completion grants.

"Many schools, not just historically Black colleges and universities but many other private small colleges, have expressed concerns about doing the switch by next year," said Edith Bartley, United Negro College Fund (UNCF) director of government affairs. …