Tighter federal lending standards yield turmoil for historically black colleges Tighter standards in a federal loan program have dealt a significant blow to Howard University and other historically black colleges and universities over the past year, curtailing funds for thousands of students and contributing in some places to a sudden decline in enrollment. The change in federal lending to parents of college students had an acute impact at Howard, where finances are also under pressure from the federal budget sequester and expenses at its hospital. Howard President Sidney A. Ribeau announced budget cuts in January in response to shortages in revenue from tuition and other sources. Loan drop at historically black schools The numbers: Federal parent loans and historically black colleges Federal data show that parent loans for Howard students fell by at least $7 million in the 2012-13 academic year compared with the previous year, a 17 percent decline. Howard's 5 percent enrollment drop and loss of revenue fueled a debate over fiscal issues that has roiled the university community. The vice chairwoman of the board of trustees, Renee Higginbotham-Brooks, warned in a letter to trustees disclosed June 7 that the school "is in genuine trouble." Days later the board chairman, Addison Barry Rand, countered that it remains "financially and operationally strong." But the federal lending squeeze, which quietly took effect in the fall of 2011, has reverberated at Howard and many other historically black schools. "The concern that many people have is, will students find the resources they need to come back to school in the fall?" said Beverly Daniel Tatum, president of Spelman College. The historically black women's school hosted a federal hearing in Atlanta on June 4, during which several college leaders urged the government to take more steps to help parents obtain loans. Spelman, Tatum said, scrambled last year to find scholarships to support scores of students whose parent loans were unexpectedly denied. There were reports of fiscal troubles related to parent loan denials elsewhere, including staff furloughs at Morehouse College and budget shortages at Clark Atlanta and Hampton universities, according to the Association of Public and Land-grant Universities. Some analysts say it is high time for the government to limit how much parents borrow. Federal PLUS loans to parents, they note, have a 7.9 percent interest rate, while rates on federal loans to undergraduate students range from 3.4 percent to 6.8 percent. Parents also face higher borrowing fees than students and can borrow far more. Some, willing to sacrifice for their children, are vulnerable to taking on too much debt in order to cover ever-rising tuition. "Having created a new class of student debtors, higher education is now reaching back in time to indenture the preceding generation," Kevin Carey, an education analyst with the New America Foundation, wrote this month in the Chronicle of Higher Education in an essay headlined "The Federal Parent Rip-Off Loan." Congress is debating federal loans as it faces a July 1 deadline to prevent a doubling of the 3.4 percent rate on certain undergraduate loans for about 7 million students in financial need. Some lawmakers want to include parent loans in a broader overhaul that would link lending rates to fluctuations in the government's cost of borrowing.