90% of HBCUs Meet Federal Loan Default Standards, Two HBCUs In Jeopardy of Losing Financial Aid Access

More than 90% of historically black colleges and universities eligible for federal funding are below the U.S. Department of Education’s threshold for student loan default rates, based upon three-year repayment data.

It is the first year since 2015 that HBCUs did not post a 100% compliance rate with graduates and former students successfully starting the repayment process for federal loans.

According to officials, a cohort default rate is the percentage of a school’s borrowers who enter repayment on certain federal loans during a particular federal fiscal year (FY), October 1 to September 30, and default or meet other specified conditions prior to the end of the second following fiscal year.

From the U.S. Department of Education:

As of September 2020, 90 eligible HBCUs have official FY 2017 cohort default rates that fall below regulatory thresholds. For the FY 2017 official CDR cycle, only one HBCU is subject to cohort default rate sanctions or the consequent loss of Title IV student financial assistance program eligibility.
HBCUs have deployed innovative approaches towards default management and reduction. Such strategies include implementation of a default management plan that engages stakeholders, identifies approaches to reducing default rates, and tracks measurable goals. These schools have increased borrower awareness of obligations through incorporating borrower topics at orientation sessions and providing enhanced entrance and exit counseling. Other best practices include borrower tracking, increased contact with delinquent borrowers, taking advantage of the cohort default rate challenge/adjustment/appeal processes, and partnering with other stakeholders to optimize default prevention, resolution, and reduction.

Denmark Technical College was cited for the second consecutive year for being above 40% for the 2017 entering cohort. Last year, the school appealed to be removed from sanctions according to ED public information, but face possible ineligibility to receive financial aid for students going forward.

Arkansas Baptist College was cited for being above the 30% default rate for the third consecutive year. Three other HBCUs, Rust College, Lane College, and the Virginia University of Lynchburg, all posted default rates above 30% for the first time in the last three cohorts.

The national student loan default rate for all colleges and universities in the 2017 cohort is 9.7 percent, a decrease of more than .4% for all borrower default rates from 2015 cohort data.