Some Worry Student Loan Mismanagement Mimics Predatory Housing Market
While college completion rates among African Americans continues to increase exponentially – a growth of more than 45 percent for bachelor's degrees between 1990 and 2000 – that growth brings an equally pressing concern over the funding and support for Black college students at both historically black colleges and universities (HBCUs) and predominantly black institutions (PBIs).
Organizations and think tanks, including the National Association for Equal Opportunity in Higher Education, insist that the nation's recent economic downturn not only raises the ire over federal funding for Black college students, who disproportionately rely on federal education assistance, but also brings to the foreground the growing number of black students who are unable to find gainful employment after graduation and subsequently default on their student loans.
Lynn Huntley, policy expert and immediate past president of the Southern Education Foundation, said that financial difficulties facing many Black college students is likely to escalate as the nation attempts to overhaul Pell Grant and Federal Student Loan programs. Huntley believes creative restructuring and guidelines may strategically offset decreases in funding.
"Instead of just saying it is important to balance money and even to make some cuts, we have to determine more effective ways to achieve that balance. For instance, we cannot have a full-time undergraduate student on Pell Grants for nine years. Six years may even be determined to be too many years, and it does not mean that we necessarily cut these students off, but there have to be ways to use the money we do have more effectively," Huntley said.
Huntley said that there are some clear racial biases that impact financing and repayment indirectly, including the fact that black students with college degrees earn less than white college students with the same college degrees. The result, Huntley said is that many students coming from low-income households, as black college graduates, actually "remain low-income after earning their college degrees; consequently, there is little pay-off to going into debt to earn the degree."
In the face of inequity, some recent graduates, like Jaunice Washington, suggest after graduation, there should be a limit on how much students have to pay monthly. A 2010 graduate of Southern University in Baton Rouge, La., Washington said she has been unable to find employment in her field – criminal justice – with a bachelor's degree. Returning to school for additional training is not an option with student loans and other bills mounting.
"It's a Catch-22. I need the education and the experience in order to get the job I want in my field, but I need more money to pay for school and more school to enhance my marketability," Washington said.
For now, the 22-year-old is working as an assistant manager for a fast food chain and praying the years and money spent on her criminal justice degree will lead to a career beyond burgers and milkshakes.
Washington's anxiety over career opportunities is only one portion of the competitive equation. Competition for financial resources in education is further complicated by the popularity of short-term certificates from for-profit schools among African Americans, like Everett, Kaplan, and Capella. Programs generally range from six months to two years, and are appealing to minorities because of the flexibility, the promised direct link to employment after graduation and the flexibility of classes.
However, the promise of employment rarely materializes and lends itself to buyer's remorse and loan defaults. Industry insiders note that the for-profit college industry makes its money by recruiting students – overwhelmingly poor and minority students – who must depend on federal monies to pay tuition. As much as 90 percent of the revenue of a for-profit college company, in some instances, comes from the federal government, in the form of Pell Grants and student loans.
"Short-term certificates-for-profit schools are more expensive than traditional institutions of higher learning and have an enrollment of roughly 17 percent Black. In fact, undergraduate enrollment of black students at public institutions is 13 percent, while enrollment of this same group of students at for-profit institutions is 22 percent. As a result, there is a higher default rate and it is harder for them to navigate the job market," Huntley said.
Julius L. Cartwright, president / CEO of the National Association of Real Estate Brokers, contends that the answer to financial sustainability among African Americans rests in acknowledging a long-overlooked parallel between education [be it traditional, HBCUs or PBIs] and the currency homeownership affords in being able to finance higher education.
Cartwright said that during the American housing crisis, African Americans lost more than a million dollars of wealth through housing foreclosures.
"The media said we, African Americans, were the cause of the crisis and failure. When sending children to school, the average wealth is a $5,600 difference in the gap between white and African-American families. The difference in the gap is a piece of property – real estate," Cartwright said.
Cartwright and others insist that one of the quickest means of re-establishing that wealth is to promote homeownership among black college students so that within two years of graduation, the students are property owners.
"For African Americans the loss was multi-generational. We must transplant these messages into our young people between the ages of 16 and 25, and they will regain the loss caused by the housing foreclosure disaster because there is a tremendous amount of wealth if one buys a property today," Cartwright said.
"Many lenders require that a buyer put an average of 20 percent down on the property in order to secure the loan. With the housing markets in some areas so exorbitant, the average black person would need 20 years simply to earn the down payment, effectively taking black people back to sharecropping days," Cartwright said.
And while President Barack Obama is an ardent supporter of black colleges, according to Dr. William Harvey, chairman of the President's Board of Advisors on Historically Black Colleges and Universities, the money to support HBCUs did not materialize under his administration. Harvey said that although Obama signed Executive Order 13532, titled "Promoting Excellence, Innovation, and Sustainability at Historically Black Colleges and Universities," the federal funding culture promotes narcissism and familiarity over parity and may impede the order.
Harvey points to a former National Institutes of Health (NIH) executive who upon leaving and joining the research faculty of a university, was able to acquire more than 32 grants from NIH for that school.
"One of the biggest problems that I see is you've got the federal agencies populated with people [who] look out for each other. So whether or not you have Democrats or Republicans in the White House, you've got people in federal agencies, career civil servants [who] are program managers, and some of them come from the University of Chicago and Michigan and Stanford. They look to get proposals, support advisory councils and other kinds of advice from people that they know, and, as a result, a lot of those people get the federal grants," Harvey said.
Morehouse alumnus Malcolm McLemore, 44, believes that without reorganization and prioritizing, the financial collapse of the federal financial aid program is as imminent as the housing crisis.
"We have to return to the things of our past as African Americans and allow our churches and extended families to finance our kids' educations," he said.
"We should nest egg for our children's educations when they are babies without relying on federal aid, even it if means foregoing a larger house or new vehicle. We must sacrifice for our own futures because cuts are coming and if we are caught short, it is our own failure, not the president's and not the federal government," McLemore said.
Former Republican National Committee Chairman Michael Steele weighed in on the dialogue in an exclusive interview with the Washington Informer, saying, when it comes to budgeting, HBCUs are no different than majority institutions and have to prioritize the importance of competing elements such as funding journal subscriptions or upgrading housing.
"Funding resources to programs, materials, and institutions are critical budget issues that every institution has to face. For HBCUs there must be an atmosphere of building the endowment. In other words, ask yourself as a prideful alumnus of a great HBCU, when was last time you wrote a check to the alumni network? " Steele asked.
Steele, 53, said that graduate support of black colleges is about much more than mere intra-racial care.
"It is a two-way street. In order to be relevant, you must be able to maintain state requirements, but also to demonstrate the value of your education. No one should be reliant upon a third party to achieve their educational goals," Steele said.