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US-POLITICS-BIDEN

The U.S. Education Department is granting full forgiveness of $322 million in loans made to four historically black colleges and universities that suffered damage after Hurricanes Katrina and Rita struck the Gulf Coast in 2005.

“This additional disaster relief will lift a huge burden and enable the four HBCUs to continue their focus on serving their students and communities,” Education Secretary Betsy DeVos said in a statement. “This relief provides one more step toward full recovery.”

In the aftermath of the storms, Dillard University, Southern University at New Orleans, Tougaloo College and Xavier University of Louisiana collectively borrowed more than $360 million through the HBCU Capital Financing Program in 2007. The money was used to renovate, refinance existing debt and build new facilities. The schools struggled to repay the debt amid depressed enrollment, and in 2013 received a <a href="https://www.federalregister.gov/documents/2013/03/26/2013-07071/historically-black-college-and-university-hbcu-capital-financing-program-modification-of-terms-and">five-year reprieve</a> on payments that was set to expire this spring.

A provision in the two-year budget deal signed into law this year gave DeVos leeway to forgive the outstanding balance owed by the four schools.

“We are deeply grateful for the bipartisan legislative efforts and to the Trump administration for relief of the Katrina loans to Xavier University of Louisiana,” said C. Reynold Verret, president of Xavier of Louisiana. “Forgiveness of the loans removes a great impediment to innovation and the delivery of superlative education to talented women and men who build and sustain our communities, cities and nations.”

At Dillard, President Walter M. Kimbrough expressed his gratitude and talked about the level of devastation the university faced after the storms. “Dillard had six feet of standing water inside of its buildings, and was the most physically devastated institution of higher education,” he said.

Established in 1992, the HBCU Capital Financing Program provides low-cost capital to help historically black institutions upgrade their campuses and refinance debt. The program is meant to provide a lifeline to schools, many with small endowments, that face challenges in accessing traditional financing at reasonable rates.

The federal government guarantees the payment of principal and interest on qualified bonds, with the proceeds used to finance the loans. To date, the Education Department has approved more than $2 billion in loans to 45 historically black colleges.


<i>
    [Trump questions whether key funding source for historically black colleges is constitutional]
  </i>


The program has had its share of problems. Stillman College in Tuscaloosa, Ala., and Barber-Scotia College in Concord, N.C., defaulted on their loans, while other schools have had spotty repayment records over the years. Proponents of the program say stronger oversight from the advisory board charged with managing it could improve the way the program runs, as could financial counseling for institutions and annual reporting to Congress. Several bills over the years have proposed those solutions but failed to gain much traction.

President Trump cast doubts on the program’s future in May when he questioned its constitutionality. In a signing statement tied to a federal funding measure, the White House said it would treat the financing program “in a manner consistent with the (Constitutional) requirement to afford equal protection of the laws.” The statement left some in the higher education community wondering whether the program’s days were numbered, but the White House said the statement was intended to preserve the president’s legal options down the road.


<i>
    [After White House courts HBCUs, budget disappoints school leaders]
  </i>


The Trump administration has had a rocky relationship with historically black colleges. Barely a month into her tenure, DeVos drew criticism for calling the group of schools forged at the height of racial segregation “pioneers” of “school choice.” University leaders also were dismayed that the first White House budget held the line on their funding, despite what many believed were assurances from the president that they would receive increased appropriations.

The selection of <a href="https://www.washingtonpost.com/news/grade-point/wp/2018/02/27/well-known-advocate-to-lead-white-house-board-on-historically-black-colleges/?utm_term=.ab2be437f75c">Johnny C. Taylor Jr.</a>, a prominent advocate for historically black colleges, to lead a board that advises Trump on the schools has signaled to some that the administration is making an effort to improve its relationship. Taylor previously headed the Thurgood Marshall College Fund, which supports dozens of historically black schools.

“This administration’s support of the congressional action to eliminate over $300 million in Hurricane Katrina loans taken out by four HBCUs was the right thing to do and was a big deal,” Taylor said.

Columbia University, New York University

Danielle Douglas-Gabriel covers the economics of higher education, writing about the financial policies that determine a student's access to education and ability to complete a credential. 