ED Backs Continued Default-Rate Exemption for HBCUs
The U.S. Department of Education (ED) has asked Congress to extend
the current exemption from default-rate penalties for historically
Black colleges and universities.
HBCUs and tribally controlled colleges are exempt from the penalty
framework, through which ED can deny access to loans and grants for
students who attend schools with high default rates.
Under ED’s plan, the exemption would continue through the year
2000. At that point, exemptions would continue for those institutions
“showing improvement in their default rates.”
Supporters of HBCUs and tribal colleges have called the exemption
essential for institutions that serve a large number of low-income,
disadvantaged students. Past studies have shown that many HBCUs would
face default sanctions without the exemption.
However, the proposed change could leave some HBCUs vulnerable to
default penalties if they fail to demonstrate progress, based on ED’s
draft. Those that face sanctions also may encounter a new default
penalty system, if ED gets its way.
Another change sought by the department would cut the number of
ways a school could face default penalties from two to one. Under the
new plan, schools could lose access to all financial aid — including
grants and loans — for three-year default rates in excess of 25
percent.
