Thwarting Student Loan Disaster
Shantella Y. Sherman | 5/31/2012, 4:39 p.m.
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.