A small provision in the two-year federal budget deal may eradicate the debt of four historically black colleges saddled with loans left over from Hurricane Katrina and Hurricane Rita recovery efforts.
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Dillard University, Xavier University of Louisiana, Southern University at New Orleans and Tougaloo College in Jackson, Mississippi, had borrowed an estimated $360M under the HBCU Capital Financing Program — a program created in the early 1990s to help provide historically black colleges and universities with the finances needed to upgrade colleges or refinance debt. Consistently low enrollment since the natural disasters has made it difficult for the institutions to settle their debt, the Wall Street Journal reports.
As of last summer, the colleges had only been able to repay approximately $12.4M of the money owed. Adding to the complication was the fact that many school leaders initially believed the capital provided to rebuild were grants rather than loans, the WSJ reports.
A section of the new budget deal includes a potential source of reprieve, allowing the Education Secretary to forgive outstanding balances owed by these schools. The total amount allowed to be forgiven has yet to be confirmed.
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