The need to support Historically Black Colleges and Universities is more important today than it has ever been. With reports surfacing about some of the nationâ€™s biggest HBCUs facing financial woes, as fewer students enroll in college due to new regulations on federal loan programs, itâ€™s clear that we need to take action now to make sure that our institutions donâ€™t fall behind in the education market. According to the United Negro College Fund, changes in the criteria for Parent Plus loans have led to fewer than 17,000 students attending black colleges, costing the schools more than $150 million in revenue.
Black Enterprise.com caught up with UNCF President and CEO Dr. Michael Lomax to discuss the financial problems that African American students and institutions face, what needs to be done in order to fix this problem and the role that UNCF Better Futures campaign plays in granting black students access to higher education opportunities.
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BlackEnterprise.com: Talk to me a little bit about UNCF Better Futures campaign.
We launched this new campaign in June of last year and weâ€™re 40 years into doing campaigns with the ad counsel and using the public service announcement platform. This has really been a remarkable engine for building awareness and generating financial support for UNCF. As we began planning for this campaign nearly three years ago, we wanted to build a campaign that would do a couple of things. One, we wanted it to bring UNCF very dramatically back in front of all Americans and in particularly those who donate to educational causes. But we also wanted the campaign to speak in new ways to a new generation of not just donors but the people whose lives are most touched by the work of UNCF and that are students and their families. We felt that we needed to find a more compelling way to speak about our work and make it be perceived as more than a charitable act, but really something that was vitally in the interest of the nation, the African American community and individual students.
With this campaign, we did a couple of different things. One is, we used the metaphor of an investment as opposed to a charitable donation and we felt that Americans are increasingly savvy around issues of financial investment. So investment and return on investment were metaphors that were direct and dramatic and understandable by a broad range of people. We also felt that we had to speak in ways that would capture the attention of the African American community and the donor community and we decided for the first time in the history of our campaign that we would tap into real narratives from real students. Every person whose voice you hear in that campaign is a real student voice telling his/her story and that brings a certain kind of authenticity and power to the narrative that we are very excited about. In this campaign we also made a change in our iconic motto, â€śA mind is a terrible thing to waste,â€ť and added â€śbut itâ€™s also a wonderful thing to invest in.â€ť And this campaign has been very warmly received by the media community. In the first nine months, we received $35 million in free media placement and weâ€™re optimistic that by the end of the 12-month period we will be in the $50 million range, which is a very strong endorsement of the power value and appreciation of the campaign.
You talk a lot about investment. How important do you think it is for African American entrepreneurs to be involved in the education market?
I would say I donâ€™t think thereâ€™s any group in the country more than African American businesses and professionals who understand the value of education. Most of them have worked very hard to ensure that they have the knowledge, skills and training to compete in the 21st century. In terms of their own personal history, I think African American businessmen and women, entrepreneurs and professionals understand that education is the foundation for so much of their own success. That said, I think thereâ€™s another opportunity for the African American business sector and African American entrepreneurs, and that is to recognize that industries of the mind are really growth industries and that human development and education are businesses that are expanding. You canâ€™t turn on the television today without seeing education companies that are competing either with nonprofit and public colleges, but even now competing with the K-12 system. With online education, for example, new businesses are saying our niche is going to be to provide personalized instructions for families and their kids who donâ€™t want to use the public education system. Part of the untold story is that online education is particularly appealing to African Americans. So [we] are getting it in terms of [our] own lives. We are becoming a big part of the market for education, but what I donâ€™t think we are doing enough of is owning the businesses and starting them up ourselves.
Now, itâ€™s no secret that HBCUs are going through a major financial crisis. What do you think can be done to fix this crisis and keep HBCUâ€™s just as competitive as other universities?
Itâ€™s more important than ever that HBCUs be financially strong and viable. One of the stories that hasnâ€™t been told is that over the last decade there has been a 75% increase in the applications to HBCUs. And thereâ€™s been about a 60 plus percent increase in the acceptance of these students who want to attend HBCUs. But, the enrollment in HBCUs has not grown at the same pace. The big question is, “Why is it that with the increase in demand are we not seeing a growth in enrollment?” And I would say there are a couple of reasons. First reason is that even though private HBCUs are about 30 percent less expensive than majority institutions, our institutions do not have big endowments. Nor do they have the same opportunities to raise funds in the private sectors that majority institutions have. Therefore, they are almost exclusively dependent on tuition, room and board, and because we donâ€™t have significant scholarships that are funded by endowments, 75 % of our students at HBCUs, versus 40% in the general population, rely upon Pell grants and federal loans. So, the real focus of attention on why our schools are financially challenged and in crisis is that they rely disproportionately on tuition, room and board, and their students rely disproportionately on Pell grants and federal loans. This is happening at a time when the Pell grants buying power is not keeping pace with the cost of higher education, and itâ€™s coming at a time when the federal government has reduced by 50% the number of families that theyâ€™re allowing to borrow from its program. So many African American students who would attend HBCUs are the first in their family to go to college and they come from low to moderate income backgrounds, and they tend to be loan-averse. They are looking at federal loan programs, which this July may double the interest rate being charged, and costly origination fees. On the parent PLUS loan, the origination fee is 6% and the interest rate is just under 5%. So parents and their families are paying 11% on a loan. The government accountability office estimates that the profit from the federal loan programs will soar to $66 billion. So loan income students and their families who borrowed between 2007 and 2012 will be enriching the federal government by $66 billion from a program thatâ€™s designed to help low and moderate income students gain access to a college degree.
Well what can be done to help fix this financial problem because in turn a lot of students are not enrolling in college because they quickly rule themselves out with the assumption that itâ€™s too expensive?
Itâ€™s not that theyâ€™re just not enrolling, theyâ€™re not even applying. A large number of high performing, low-income African American kids are not even applying to college because theyâ€™re just making the assumption that college isnâ€™t affordable and thatâ€™s why I would say we need a revamp. A comprehensive revamp of the federal financial aid program because they are broken and this has to happen as a part of the reauthorization of the higher education act. But you know when Republicans wonâ€™t speak to Democrats and Democrats wonâ€™t speak to Republicans and they canâ€™t agree on the time of day, the prospect of reauthorizing the higher education act seems very slim. And thatâ€™s why the work of UNCF is critically important.
This is UNCFâ€™s 70th anniversary. We have raised over $4 billion. We have supported over 400,000 students in their quest to earn a college degree. We will award over $100 million in scholarships and support over 12,000 students this year, thatâ€™s the good news. The bad news is that for every student we award a scholarship to, we have to turn down 10 highly qualified students because we donâ€™t have enough money. Thatâ€™s why weâ€™ve launched Better Futures. Thatâ€™s why weâ€™re out there aggressively raising funds all across the United States. That is why we are telling our story as compelling as we can, but there is more demand than there is ability to meet it. UNCF cannot wait until the federal government gets its act together. We are out there asking every American, including every African American to invest in better futures.