Historically Black colleges and universities are on the frontlines of the One Big Beautiful Bill Act’s new limits on parent and graduate student loans. Philanthropists could help fill the gap.
Antonio Sweeney relied on a mix of private and school scholarships, plus a federal Pell Grant for low income students, to pay for his first two years at his dream school, Morehouse College, in Atlanta, the alma mater of Sen. Raphael Warnock (D-Georgia) and Martin Luther King Jr. But by junior year, most of the outside scholarship money was used up and he had taken on so many activities–from serving as class president to running his own side businesses–that he hadn’t earned enough credits to keep his Morehouse academic scholarship. He filled the gap that year by taking out federal and private student loans. Now, in his senior year, his mother has come to the rescue–she borrowed $24,419 this fall from the federal Parent Plus program and plans to tap a similar amount for the spring semester. “We’re almost at the finish line and if this is what needed to be done for him to complete his education, then as a parent, I’m willing to do it,’’ says Sylvia Tripplett, a Flint, Michigan special education teacher still paying off her own student loans.
Sweeney and Tripplett shared their story with Forbes for a good reason: As part of President Donald Trump’s One Big Beautiful Bill Act (OBBBA), beginning next July 1, new Parent Plus borrowers will be limited to $20,000 per school year (and $65,000 over a student’s school career). “It’s going to force families to have to decide to tell their kids, ‘hey, we don’t have enough money for you to go to your dream school,’” worries Sweeney.
They’re not the only ones thinking about the problems students at historically Black colleges and universities (HBCUs) have had financing their studies.
On Monday, the family foundation of Arthur Blank, the owner of the Atlanta Falcons and cofounder of Home Depot, committed $50 million over the next 10 years to “gap” scholarships for students at four Atlanta HBCUs. The grants are meant to fill financial shortfalls left after students have exhausted all their other scholarship, grant and loan options and will go mostly to juniors and seniors who might otherwise drop out for lack of funds. Blank had made smaller gifts to the schools before, for specific infrastructure or sports. But in an email to Forbes he explained that, “through conversations with the college presidents, we continued to hear promising students were leaving school not because they couldn’t do the work, but because they hit a financial wall. These aren’t students who lack talent or ambition, but there is a gap between what aid they’ve received and what they actually need to stay enrolled and graduate.” Blank added that while he’s aware of the “broader conversations around student debt and borrowing,” the gift isn’t a response to that, but to the needs of “real students in our community.”
Meanwhile, private equity billionaire Robert F. Smith is planning to expand his Student Freedom Initiative, which now makes low cost loans to HBCU undergraduates, to graduate students, who will be hit by OBBBA’s new limits on graduate student loans. And in September, MacKenzie Scott, a novelist, philanthropist and former wife of Amazon founder Jeff Bezos, made a $70 million gift to the United Negro College Fund (UNCF) to help build endowments for its 37 member private HBCUs. Scott, Smith and Blank are all Forbes 400 members and signatories of the Giving Pledge, a commitment from some of the world’s richest individuals to give away the majority of their wealth during their lifetimes or in their wills.
Chronically underfunded for decades, the nation’s 107 HBCUs and their students rely heavily on federal loans. In 2019-2020, 65% of HBCU undergraduates took out federal loans and 18% had parents who tapped Plus loans, compared to 36% of students borrowing and just 4% of parents borrowing for undergraduates as a whole.
The new parental borrowing limits present a particular problem for the nation’s elite private HBCUs, which have high price tags, but lack the rich endowments of a Princeton, Yale or MIT. Indeed, three of the four schools Blank’s money will go to–Morehouse, Spelman College and Clark Atlanta University–ranked among the 10 schools in the nation with the highest percentage of students relying on Parent Plus loans, according to a 2022 analysis by Peter Granville of the Century Foundation. A Forbes analysis of 2022-2023 data provided by Century showed that at Spelman, 40% to 45% of students’ parents borrow, with an average outstanding Parent Plus loan balance of nearly $80,000–the second highest dollar debt in the nation after New York University, where only 10% to 20% of parents borrow.
Mark Brown, president and CEO of Alabama’s Tuskegee University, has mixed feelings about the federal student loan program. He’s fought to preserve access to the loans, including Parent Plus, that make it possible for the majority of the HBCU’s students to graduate. Yet he believes the creation of Parent Plus was a mistake—and, he tells Forbes, one that “we’ve become dependent on.”
During Trump’s first term, Brown, a retired Air Force general, served as chief operating officer of the Department of Education’s Office of Federal Student Aid and saw up close how Plus loans could devastate families. Created in 1980 for parents too well-off to qualify for other financial aid, Plus Loans evolved, as college costs soared, into a way for poor parents to fill in the aid gaps. These loans aren’t cheap–they currently carry an interest rate of 8.94%, with an onerous origination fee of 4.228%. But so long as they don’t have serious delinquencies or defaults, tax liens or bankruptcies, even parents with low incomes and credit scores have been able to borrow any undergraduate college costs not covered by other aid. Paying back is another matter. Granville’s analysis identified 68 schools where 10% or fewer of Parent Plus borrowers had been able to pay down any principal after three years of payments; 59 of those schools were HBCUs.
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.
Mark Brown, president and CEO of Tuskegee University, is concerned recent student loan changes could limit the talent pipeline.
Tuskegee University
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.”
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Source: https://www.forbes.com/sites/daniellechemtob/2025/10/16/these-billionaires-are-stepping-up-as-hbcus-are-squeezed-by-student-loan-cuts/
