HBCUs Face New Challenges Under Parent Plus Loan Limits

With a maximum Pell grant of $7,395 (that’s just 17% of the average tuition and fees at a four-year private school) and the amount undergraduates can borrow themselves from Uncle Sam limited, Parent Plus has become a last resort for families of limited means. “We’ll be excluding people who are otherwise qualified for the education and can be contributors nationally to our needs,” Brown says.

It’s unclear how many families will have needs that exceed the new loan limits, but changes to Parent Plus over a decade ago provide a potential window into what could be on the horizon. In 2011, President Barack Obama’s Department of Education tightened credit standards for the program, leading to a 46% drop in the share of families at HBCUs with Plus loans and an enrollment decline of 3.4% at the schools, research from the Education Department’s Institute of Education Sciences shows. The government later relaxed the requirements.

“What people have to realize is that any minor tweak to the Parent Plus loan system, no matter how well intentioned, could have drastic implications,” says the Century Foundation’s Jordan Nellums, a senior policy associate.

Another problem for Tuskegee: the looming end of Grad Plus, which had allowed graduate students to borrow their full costs. Masters and PhD students beginning their studies after July 1, 2026 will be limited to borrowing $20,500 per year (and $100,000 in all), while those in medical, dental, veterinary and law schools will be limited to $50,000 annually (and $200,000 in all).

Tuskegee’s College of Veterinary Medicine, where around 60 new students will start next fall, is the only one of the nation’s 33 accredited veterinary schools affiliated with an HBCU. Yet over 70% of the country’s Black veterinarians graduated from the school founded by Booker T. Washington. (HBCUs also have educated 40% of Black engineers in the U.S. and 70% of Black doctors.)

Up to half of Tuskegee’s future veterinary students could face problems paying for their education with the elimination of Grad Plus, Brown says. The average debt for its graduating students is $280,000. “I think economically, it’s a bad decision because there are some majors and some needs in terms of skill sets, especially in a country that appears to want to turn within for talent,” he says. “You have to have a pipeline for that.”

Brown says the school is trying to raise an additional $32 million to bring its endowment to $200 million to expand institutional aid for its students. Given Tuskegee’s enrollment of around 3,300 students, that would work out to under $61,000 per student. By contrast, the wealthiest private schools have endowments exceeding $2 million per student. Typically, nearly half the dollars college endowments dole out each year goes to student aid.

Both Tuskegee and its students also stand to benefit from UNCF’s current $1 billion capital campaign–the one billionaire Scott just gave a big boost to with her $70 million. UNCF is already the second-largest private provider of scholarships in the U.S. “We have to find the policy sweet spot so that all of these students can get access without being saddled (with debt) for the rest of their lives,” says Lodriguez Murray, UNCF’s senior vice president for public policy and government affairs.

A few years before Sweeney started at Morehouse, Robert F. Smith, founder and CEO of Vista Equity Partners, packed a surprise into his commencement address there: He’d be wiping out the debt of an entire graduating class. Smith followed up that one-time $34 million gift by donating $50 million directly and $50 million from his Fund II Foundation to launch the Student Freedom Initiative, which has also gotten $150 million from Cisco. The initiative now provides loans of up to $20,000 per year ($40,000 total) to sophomores, juniors and seniors at more than 70 HBCUs, minority-serving institutions and tribal colleges, charging interest two percentage points below the Parent Plus rate. The nonprofit doesn’t conduct a credit check, require a cosigner or charge origination fees—all of which can be barriers to students getting private loans. Instead, it’s making a bet on students’ future earnings–it has so far directed about $24 million in loans to students in what President and CEO Keith Shoates describes as “market-driven” majors like finance and STEM (science, technology, engineering and mathematics). Smith chairs the initiative and Tuskegee’s Brown sits on its board.

Student Freedom plans to launch a pilot program for HBCU graduate students in the 2029 academic year, when the elimination of Grad Plus will start to be felt most acutely by students and institutions, since current students are grandfathered in. It will start by allowing students in a select group of medical, dental and pharmacy schools to borrow $30,000 each year for four years.

With the coming restrictions on Parent Plus, Shoates also expects more demand for its undergraduate loans–but how much the organization can dole out depends on the additional amount it can raise from donors and what student borrowers repay into its revolving fund.

“What we care about is this bridge to the middle class, and that bridge to the middle class still tends to be education,” Shoates tells Forbes. “And so we want to make sure we stay true to that in terms of how that wealth trap called student debt precludes people from fully funding their retirement plans or buying their first home or starting a family.”