Virginia HBCUs Rank High in Loan Defaults

October 25, 2010

By Angel Booth

When Joy Shaw, 32, graduated in 2008, her situation looked pretty bleak.

While attending Virginia Union University, she worked full time to pay a portion of her college tuition. However, before her senior year, hopes of self-financing her college education fizzled as Shaw was laid off from her job and left to enter the weakest workforce in decades with more than $25,000 in federal student loans.

“I expected to get a job in my field,” said Shaw, who began filing unemployment insurance to help pay back her debts after her severance pay was exhausted.

Shaw is one of many alumni of historically black colleges and universities (HBCU) who have had difficulty repaying the student loans they received from the federal government.

In 2008, HBCUs accounted for four of the five schools with the highest student loan default rates in Virginia, according to the latest data released by the U.S Department of Education. The data represented borrowers who entered repayment in the 2008 fiscal year but defaulted before Sept. 30, 2009.

Virginia’s HBCUs had a combined default rate of almost 11 percent, nearly three times the average for the state.

Edie Irons, communications director for the Project on Student Debt, an initiative of the Institute for College Access & Success, said the higher numbers are due in part to the larger concentration low-income students who come to these campuses with pre-existing hurdles.

“Low income students and first generation graduates are unfortunately more likely to default on federal loans,” she said.  She points to the high percentage of students at each school receiving Pell Grants to finance their education.  According to the Project on Student Debt, the percent of students at Virginia HBCUs receiving Pell Grants was 30 percent or greater, almost double the Virginia average.

“Student loans are generally a reality for the low-income population, where almost everyone is borrowing,” Irons said.

Earlier this year, the Obama administration pledged $850 million to help fund scholarship programs, strengthen academic standards and improve support services to freshmen at HBCUs.

Last month, President Obama issued a proclamation declaring Sept.12 -18 National Historically Black Colleges and Universities Week.

“HBCUs are important engines of economic growth and community service and will continue to play a vital role in helping America achieve our goal of having the highest proportion of college graduates in the world by 2020,” the president said.

“We can’t get there unless all of you are continuing to make the dream of a college education a reality for more students.  We want to help you do that in every way that we can.”

The Obama administration has expanded programs like income-based repayment and Pell grants to help students in financial need.

Some HBCUs are making progress in reducing their student loan default rate. For example, Saint Paul’s College saw a decrease of three percentage points in its default rate from 2006 to 2008.

However, the default rate for Virginia State University increased over one-third, the highest jump of all Virginia HBCUs.  Virginia State did not respond to interview inquires to speak on their status.

Defaulting is often avoidable with deferments and other payment options said Irons.”There are always ways to manage you debt. But it takes a little savviness on the part of the borrower.”

Virginia State sociology major Tymond Harris plans to use Irons advice to mange his debt after school.

“I’m going to defer until I can pay. And that’s the honest truth,” he said.