For well over a century, historically black colleges and universities have served as talent incubators across a myriad of industries. After all, these institutions have produced 23% of the nation’s black college graduates, 40% of black science graduates, and 50% of black teachers and professionals. From the world’s most powerful multinationals to the
be 100s—the nation’s largest black-owned businesses—legions of HBCU grads have made vital contributions to American industry. A bright spotlight have been placed on these institutions as the National HBCU Week Conference, held in Washington, comes to a close this week.
Despite the undeniable impact of these institutions, a number of the 106 institutions face financial straits because of relatively small endowments. Moreover, the Obama administration in recent months has faced criticism from HBCU presidents, Congressional Black Caucus members, and even the chair of the president’s Board of Advisors on HBCUs regarding changes that adversely affected eligibility for Parent PLUS Loans. As a result, HBCUs reportedly lost $160 million in tuition and fees last year; 11 leading institutions—including Howard and Morgan State—wrote a letter to President Obama citing that the new lending restrictions would have a “devastating impact on student enrollment.” Moreover, the Department of Education reports that non-financial aid investments fell from roughly $748 million in FY 2010 to $684 million in FY 2012, making it tougher for these institutions to remain innovative and competitive.
Black Enterprise Editor-in-Chief Derek T. Dingle interviewed U.S. Education Secretary Arne Duncan, the point man for the president’s 2020 education agenda, which mandates that the U.S. will once again have the highest proportion of college graduates in the world within the next decade. Acting Deputy Secretary James H. Shelton III and then-Acting Executive Director of the White House Initiative on HBCUs Joel Harrell, Ed.D. also participated in the Q&A. (Shortly after this Interview, President Obama named Dr. George Cooper as the Initiative’s Executive Director, and Dr. Ivory Toldson to serve as Deputy Director). Duncan discussed the president’s new program to make college affordable, his plan to reverse PLUS loan rejection – Duncan recently apologized to HBCU college presidents about how the department handled this matter – and what it will take to advance innovation at HBCUs.
President Obama’s recent proposal seeks to rate colleges before the 2015 school year based on measures such as tuition, graduation rates, debt and earnings of graduates, and percentage of lower-income students who attend. If it wins Congressional approval, federal financial aid would be tied, in part, to those ratings. With current graduation rates at HBCUs, wouldn’t the rating system put these institutions at a disadvantage?
Arne Duncan: Not if we’re thoughtful about how we do it. I’m looking at places where [these institutions are] making progress, where they’re improving. I’m much less interested in absolute graduation rates. To be clear, we want a year to think about this. We know all the risk factors. How can we [offer] the right incentives but on top of that, we want to put in place something that rewards good behavior. So if folks are doing a better job of increasing graduation rates among Pell Grant recipients, many of whom happen to be going to HBCUs, you want them to get more money. If we do this thoughtfully, it should really help create the right incentive structure so that folks are continuing to improve, and it could help to strengthen HBCUs.
So you’re looking for input from the HBCU community?
Duncan: We’re going to travel the country and talk to college presidents, professors, students, and parents. We have no agenda other than to help us hit the president’s goal of leading the world in college graduation rates. I’m convinced we can only get there by continuing to support and strengthen our nation’s HBCUs, and so many do an amazing job of helping very, very at-risk, first-generation college-goers not just have access, but graduate. Others need to continue to improve, quite frankly, and we need to have that honest conversation.
One criticism aimed at the Department of Education has involved the eligibility requirements for Parent PLUS loans. What is being done to address this issue?
Jim Shelton: The concerns were around two basic points: charge-offs and collections. We didn’t change the rules. We brought two programs that were operating differently [and] brought them together to consistently operate the same way.
Before these two conditions were added, if you were a family that was, say, 90 days late on a $700 bill, you would probably be denied a loan. If you had stopped paying seven months ago, and it got charged off, you might be qualified for a loan if you were still current on your other bills. We’ve been missing two of the criteria that almost every other program uses. If I got called to Congress, how do I explain why this parent that stopped paying their $7,000 bill nine months ago is getting a loan [while] this family that is a few months behind on $700 isn’t? How do I explain that? We’ve got to adhere to the regulation. So then they put in the two criteria. There wasn’t a ton of analysis on what schools are impacted more.
But a number of HBCU presidents have said that this move has caused a collective loss of tuition income of $160 million.
Shelton: That’s not quite true. Two things: First, when you don’t qualify for PLUS, you qualify for an unsubsidized loan [unsubsidized loans are not based on need]. When you look at how much money HBCUs got in aggregate … so loss plus gain in unsubsidized loans—it’s actually a net positive.
Joel Harrell: We recognized that schools are being challenged and parents are being denied. So we have an extensive reconsideration process that’s been going on for over a year. We’ve had outreach efforts to all the HBCUs starting back in April.
Duncan: This year we expanded the reconsideration room so that more folks who were denied in the past could get back in. We e-mail folks directly. This is data we’re giving to schools every week, so this is real time.
With cuts in funding levels, how can HBCUs reach the president’s 20/20 goal?
Duncan: One thing that has hurt everyone, including HBCUs, is sequester [which triggered roughly $1 trillion in automatic federal budget cuts]. Sequester is the embodiment of Washington dysfunction, and that’s been a real 5% cut across the board. Institutions like HBCUs that don’t have huge endowments are stretched thin. We desperately need college presidents and alumni to let folks in Congress know that these [cuts] are having a devastating impact on our schools and communities.
There’s a set of folks in Congress, many in the Republican Party, who think of education as an expense and something that we can cut back on in tough economic times, and I just fundamentally disagree. I think we have to educate our way to a better economy. I think in tough economic times, we have to double down on that investment.
What should HBCUs do to become more innovative in their preparation of the 21st-century workforce?
Duncan: We think the STEM fields are so important. For me, building cultures not just around access but around completion is really big. I see tremendous innovation at many, many HBCUs. The question is how do we scale those best practices?
But they need funding in order to upgrade facilities and provide research that will make them competitive with other institutions.
Duncan: Absolutely. When you look at places like Morehouse where a disproportionate number of our nation’s scientists and doctors are coming from, that’s huge. For me, one of the many reasons I think HBCUs are important is basically half of our black teachers come from HBCUs across the country. I worry about the lack of diversity of our nation’s teachers, and so whether it’s doctors, having more male teachers, or more teachers of color, HBCUs, I think, are just an extraordinarily important pipeline into that profession.
How have you engaged the African American business community to support the department’s efforts to strengthen HBCUs?
Harrell: We’re trying to find ways to partner with that community in terms of creating new opportunities for economic growth and development. For example, one of the sessions at the HBCU annual conference focuses on helping HBCUs, through the business school and STEM community, come up with models to get into the arena of patent development.
Any other partnership opportunities?
Harrell: The White House Initiative on HBCUs has an MOU [Memorandum of Understanding] with the Federal Deposit Insurance Corp. in which we are looking at ways to use Community Reinvestment Act funding along with the banking community to reach out to particular HBCUs. We just had a pilot [program] we did with Stillman College in Tuscaloosa, Alabama. The idea was to use a model in which students end up getting, in this case, through the accounting program, jobs [in] income tax preparation.
Some HBCU presidents have called for the Department of Education’s Office for Civil Rights to investigate disparities in funding on the state level. Will you move forward on that action?
Duncan: We have states that are disinvesting in higher education [and] K-12. And we want to challenge those situations as vigorously as we can. A significant part of the president’s Race to the Top for higher education is challenging states to continue their investment, not disinvest. Forty states cut funding to higher ed. No one gets hit more than HBCUs when that happens. Find out if 40 states cut funding to prisons. I promise you it didn’t happen.