Report: HBCU Enrollment, PLUS Loan Awards Decline After Credit Standards Change

Quick Takeaways:

  • Enrollment at Historically black colleges and universities (HBCUs) dropped 3.4 percent in the year following the tightening of credit standards for the PLUS loan program
  • During that same year, HBCUs saw a 46 percent decline in their share of families with PLUS loans and a 36 percent decline in the dollar amount of PLUS loans
  • While many families may have turned to other forms of federal aid, it only made up for about one tenth of the drop in PLUS loan amounts

By Brittany Hackett, Communication Staff

Historically black colleges and universities (HBCUs) saw declines in enrollment, loan dollar amounts, and participants in the Federal PLUS Loan program in the year following the tightening of credit standards, according to a recent report from the Department of Education’s (ED) Institute of Education Sciences.

ED in 2011 tightened the credit standards for PLUS to bring them in line with those of banks, which resulted in an 11 percent drop in the total dollar amount of federal loans approved for parents during the 2012-13 academic year. According to the report, the changes had the potential to disproportionately impact HBCUs, which typically enroll large shares of students from low-income and minority families. 

The report examines the enrollment changes at four-year HBCUs following the PLUS credit changes, using data from the Integrated Postsecondary Education Data System, the Title IV Program Volume Reports, the Bureau of Labor Statistics, and the Federal Housing Finance Agency.

During the year following the tightened credit standards (academic year 2012-13),  HBCUs saw a 3.4 percent decline in enrollment, which was largely due to a decline in full-time enrollment, as well as a larger decline in first-year students than continuing students. This enrollment drop occurred at the same that other types of institutions saw increases in enrollment, including institutions that serve similar populations of students. However, the report notes that the drop seen by all types of institutions was more severe for black students than it was for any other races or ethnicities. 

According to the report, the enrollment decline experienced by HBCUs “may be associated” with the decline in PLUS loan recipients at HBCUs.

In 2012-13, HBCUs saw a 46 percent decline in their share of families with PLUS loans and a 36 percent decline in the dollar amount of PLUS loans. According to the report, non-HBCUs serving low-income families saw only a 28 percent decline in the number of PLUS recipients and a 23 percent decline in the total dollar amount of PLUS loans. The decline occurred at both public and private HBCUs, though of the two groups, public HBCUs saw a larger decline. 

When examining the data on undergraduates, the report shows that the share of these students receiving PLUS loans declined from 15.4 percent to 8.6 percent at HBCUs – a 6.8 percent drop compared to the less than 1 percent drop seen at non-HBCUs serving low-income families. 

Because they were deemed ineligible for PLUS loans, many families may have increased their use of other forms of Title IV financial aid – such as direct subsidized or unsubsidized loans, campus-based Perkins loans, or work-study aid -- to make up for the loss of PLUS dollars. However, the use of direct unsubsidized loans at HBCUs with decreased PLUS loan dollar amounts only made up for about one tenth of the drop in PLUS loan amounts. A small increase in Perkins loans and decreases in direct subsidized loans and work-study aid was also seen at these HBCUs, according to the report.

The steep decline in PLUS loan recipients at HBCUs “is related statistically to the demographic composition of HBCU students,” according to the report. “Institutions with larger proportions of low-income and black students experienced a larger decline in PLUS loans, perhaps because low-income and black families were more likely to be affected by the tightened credit standards,” the report notes.

However, the report states that this theory “should be interpreted with caution, because there are very few non-HBCUs with black student populations comparable to those of HBCUs.”

 

Publication Date: 4/20/2015


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