AUGUSTA, Ga. (WJBF) – As Paine College awaits a decision from the Southern Association of Colleges and Schools Commission on College following an appeal hearing in Atlanta Monday, we now know more about how the school had money troubles in the first place.
We’ve told you that the school saw financial issues when it brought on a football team. We also spoke with leaders about how previous leaders spent more money than the school had. But a change to a federal loan awarded to parents is being linked to the plight of Paine’s problems too.
Provost and Vice President of Academic Affairs Cheryl Evans Jones spoke with NewsChannel 6 exclusively about the impact of the U.S. Department of Education’s changes to the Direct PLUS Loans.
She described that impact as being ‘significantly and adversely’ in terms of enrollment.
Parents have been applying for a Direct PLUS Loan, commonly called the parent PLUS loan since the 1980s, according to Augusta University Associate Vice President for Enrollment Services David Barron. But a change in 2011 is one of the reasons Paine College leaders believe they’re fighting through financial probation.
“The U.S. Department of Education tightened its requirements for credit check criteria,” Evans Jones explained.
In October 2011, the department changed its underwriting standards. Charge-off accounts and accounts in collections within five years, if they had not been repaid, would now count against applicants for PLUS loans.
That same article goes one to state that historically black colleges are disproportionately affected.
Evans Jones tells me the parents of 400,000 students didn’t get PLUS loan approvals nation-wide. Of those, around 28,000 HBCU students were impacted.
“What happened at Paine was in 2011-2012, 163 students and their families were approved for parent PLUS loans. But the following year, 2012-2013 that number dropped to 56 which represented a decrease of 66 percent.
Complaints to the Department’s changes from 2011 prompted a more recent change in 2015. Those changes came to the definition of adverse credit history, the portion of the loan that was the source of many parents being denied.
The term adverse credit history now means a parent was 90 or more days delinquent on any debt or defaulted, had a bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a debt under title IV of the Act during the five years preceding the credit report. This means parents can’t be granted money for their students to go to college.
The drastic drop in PLUS loan approvals starting in 2011-12 brought Paine’s financial woes, according to school’s leadership. They presented that argument to SACS.
“In dollar amounts, that represented approximately $1.2 million in revenue for Paine college,” Evans Jones said.
She added its also the reason the school’s enrollment dropped.
“It was almost a Catch 22. Students didn’t have loan money, but we were saying to students that you could not enroll if you had large bills at the institution.”
August University saw changes in the PLUS loan too, but the impact was different.
“If someone is denied the parent PLUS loan, they’re eligible for another Unsubsidized Stafford Loan of up to $4,000. In fact, some parents want to be denied the PLUS loan because the Stafford has a lower interest rate,” Barron said.
Barron, who has worked in financial aid for two decades, said students who attend public schools like AU fair out better.
“The only real folks that this would be a detriment to is if it was a very expensive college and the additional $4,000 was not enough to cover the cost of attendance,” he explained.