Johnson C. Smith University President Ron Carter is urging the Department of Education to reconsider changes to the Federal Parent PLUS loan. Carter blames those changes for the school's recent three million dollar budget cut.
He says the approval rate has dropped from about 50 percent to about 24 percent since the changes to the federal loan program were made two years ago. The Department of Education says it made the changes to be in line with private lending standards.
Parents applying for the loan now go through a more stringent credit check. Parents who have an "adverse credit history" including default on other federal student loans or accounts in collections in the past five years are more likely to be denied.
"This knee-jerk approach to financing the future is a dead-end pathway with long term economic consequences," Carter says. "When students are forced to drop out of college, they join the growing ranks of under-employed Americans."
Last week, the school laid-off 21 employees and froze or eliminated 30 other positions as part of its budget cuts to deal with a drop in enrollment. Carter says last year, there was a record number of students on campus but that 300 of them came up short when it was time to pay their tuition and 120 dropped out.