NASFAA Mention: Study: Cutting Federal Graduate Loans Would Harm Black Students, HBCUs

"Cuts to federal student loans for graduate and professional students could be devastating to African-Americans and, in a ripple effect, historically Black colleges and universities, according to a study by the AccessLex Institute," Diverse: Issues in Higher Eductaion reports

"As Congress wrestles with reauthorization of the Higher Education Act, some lawmakers have proposed limiting federal loans to graduate students as a way to reduce over-borrowing and high loan debt levels for students – even though professional and grad students have some of the best repayment rates.

Black students take out federal student loans at the highest rate of any racial group, and HBCUs and their students tend to rely more heavily on those funds than their White counterparts.

AccessLex researchers said reducing or eliminating federal loan options such as Grad PLUS would force many Black students to either not pursue graduate studies or apply for private-sector educational loans, which have stricter criteria and higher interest rates.

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Ultimately, the scale would tip in favor of 'more well-resourced students' and set up a 'bifurcated system of complexity, which we’re all trying to get away from, in terms of multiple lenders,' said Karen McCarthy, director of policy analysis at the National Association of Student Financial Aid Administrators.

Graduate students already have fewer financing options than undergraduates, she pointed out, and private student loans often lack the borrower protections contained in federal ones.

'Over the long term,' McCarthy said, the funding shift 'could decrease the levels of diversity in graduate programs and therefore in employment and employment options that require a graduate degree. We think there are better solutions than simply perhaps removing access to Grad PLUS altogether – some type of middle ground in there.'"

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Publication Date: 7/23/2019

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