Black colleges: Obama's loan forgiveness rules could bankrupt us

Black colleges: Obama's loan forgiveness rules could bankrupt us
© Getty Images

A group of historically black colleges say the Obama administration’s new loan forgiveness rules could put them out of business.

ADVERTISEMENT

The Department of Education proposed new college repayment rules in June that would make it easier for current and former students to seek loan forgiveness. But several historically black colleges say it would “open the floodgates” to lawsuits from “disgruntled” students.

“In fact, the proposed regulation language could undermine the financial viability of a number of academic institutions and could possibly bankrupt less-financially secured colleges and universities,” they wrote in a letter sent Thursday to Education Secretary John King.

Currently, students must prove their school committed “fraud” in order to discharge their loans, but under the proposed changes, they would only need to show misrepresentation.

This would lower the standard for loan forgiveness, the schools say.

While larger schools may be able to the weather the storm, school leaders who signed the letter said many of their schools do not have the financial backing necessary to withstand lengthy court battles.

They requested a 30-day extension of the comment period, which is scheduled to end Aug. 1.

The schools officials that signed the letter represent Bennet College for Women, Clark Atlanta University, Wiley College, Rust College, and the University of Memphis. Rev. Jesse Jackson also signed the letter.