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HBCU's Deploy COVID-19 Pandemic Funds to Forgive Millions in Student Debt

By clearing past-due balances, historically Black colleges and universities pave the way for students to re-enroll or get their diplomas

Wall Street Journal, Melissa Korn, July 28, 2021

Almost all 2,000 students at South Carolina State University owed money to the school by the end of spring semester this year. Some owed less than a dollar, others were hundreds or even thousands of dollars past due on expenses such as tuition payments and housing fees.

Without paying off the bills, many students couldn’t register for the next term or, in the case of seniors, get their diplomas.

The school said this month it had wiped away $9.8 million in debt for more than 2,500 students—including current students and some who had already dropped out because they couldn’t afford to pay off their balances and re-enroll.

Historically Black colleges and universities, such as South Carolina State, are springing students from the academic version of debtor’s prison, clearing their account balances so they can continue on with, or complete, school. More than 20 HBCUs are using federal pandemic funds for debt relief, according to a tally by the United Negro College Fund, a scholarship organization for private historically Black colleges and universities.

HBCU's received $2.6 billion of the $40 billion set aside for higher educatiuon under this spring's American Rescue Plan Act. Their students are obverwhelmingly from low-income backgrounds, and many are first generation college students. Schools were told to give priority to the students with the most need when distributing a portion of the funds and say these students were hit particularly har by the COVID-19 pandemic and the related economic downturn.

Fayetteville State University, a predominantly black institution in North Carolina cleared almost $1.7 million in unpaid tuition and fees for 1,442 students. Trinity Washington University in Washington, D.C., a predominantly Black institution, erased the balances of 400 students, for $1.8 million. And Philander Smith College in Little Rock, Ark., spent nearly $2 million clearing debts for almost 500 recent graduates and continuing students.

“We’re just trying to give our students a fresh start,” said Philander Smith President Roderick L. Smothers Sr.

The debts being forgiven only include money owed directly to schools, and not loans made by the federal government. Democratic lawmakers in Washington, D.C., have also called for at least a portion of America’s $1.6 trillion in federal student-loan debt to be wiped out for a swath of borrowers from all types of schools.

About 6.6 million students nationwide can’t access their transcripts because of unpaid balances, according to an October estimate by Ithaka

Many students who attend HBCUs are in “delicate and fragile financial situations,” where a bill for a few hundred dollars can be an insurmountable obstacle, said Lodriguez Murray, senior vice president of public policy and government affairs at the United Negro College Fund. “Financial barriers are the top reason why our students do, on occasion, stop out,” he said.

The schools say they couldn’t have offered the debt forgiveness without the wave of funds the federal government released during the pandemic.

Elizabeth City State University in Elizabeth City, N.C., used a portion of its pandemic-relief funds to wipe 212 students’ balances dating back to May 2020, with the tab totaling $284,500. Delaware State University eliminated $730,000 in debt for 220 members of its senior class this spring, and $200,000 for members of the class of 2020.

“This is happening now because there are the resources to do it,” Mr. Murray said. He called the influx of cash “a godsend” for the schools and the students they serve.

Black Communities were hit disproportionately by job losses during the pandemic, exacerbating what were already sometime precarious financial situations for students. the schools themselves are also often financially strapped, with hefty maintenance backlogs and tiny endowments.

At Shaw University in Raleigh, N.C., 57 seniors who were on track to graduate this spring had their balances cleared—costing a total of $195,330. Their debts ranged from $67 to more than $17,000, said David Byrd, the school’s chief financial officer and vice president for finance and administration.

In a normal year, Mr. Byrd said, fewer than 10 students are unable to graduate because of overdue balances. The pandemic pushed students’ needs to an unprecedented level as they or their families lost jobs, he said. Roughly 80% of Shaw students are eligible for federal Pell grants, which are earmarked for low-income students. Because most historically black colleges rely heavily on tuition revenue to fund their operations, maintaining enrollment numbers is crucial.

“We can relieve them of the debts, get them back into school, get them back into being a paying student, while helping them navigate the process of college,” said South Carolina State’s acting president, Alexander Conyers.

Zykia Young, a rising South Carolina State senior, owed the school more than $10,000 after making some errors on her financial-aid forms, leaving her with less scholarship money than expected. The bills kept piling up, said the 21-year-old social-work major, and she hadn’t been able to work out a payment plan.

Ms. Young was staring down the likelihood of stopping school for the fall semester to work off the debt, which would delay her graduation. She is spending the summer working at a Food Lion grocery store, earning $11.50 an hour, and though her mother offered to try to help pay off the tab, there are three other siblings and additional bills to cover.

“This is truly a blessing,” she said. “I want to finish, and finish strong.”

Wall Street Journal, Melissa Korn, July 28, 2021

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