The U.S. Education Department says it is granting full forgiveness of $322 million in loans made to four historically black colleges and universities (HBCUs) that suffered damage after Hurricanes Katrina and Rita struck the Gulf Coast in 2005.
Secretary of Education Betsy DeVos said in a news release that the loan forgiveness "will lift a huge burden and enable the four HBCUs to continue their focus on serving their students and communities This relief provides one more step toward full recovery.”
The education department says the Bipartisan Budget Act of 2018 made funds available to fully forgive the loans of Dillard University, Southern University at New Orleans, Tougaloo College and Xavier University of Louisiana under the HBCU Hurricane Supplemental Loan program.
"We are deeply grateful for the bipartisan legislative efforts and to the Trump administration for relief of the Katrina loans to Xavier University of Louisiana and our partner HBCUs," says C. Reynold Verret, President of Xavier University of Louisiana. "Forgiveness of the loans removes a great impediment to innovation and the delivery of superlative education to talented women and men who build and sustain our communities, cities and nations."
The Washington Post reports that in the aftermath of the 2005 storms, the four universities collectively borrowed more than $360 million through the HBCU Capital Financing Program in 2007. The money was used to renovate, refinance existing debt and build new facilities.
The schools struggled to repay the debt amid depressed enrollment, and in 2013 received a five-year reprieve on payments that was set to expire this spring.
Established in 1992, the HBCU Capital Financing Program provides low-cost capital to help historically black institutions upgrade their campuses and refinance debt. The program is meant to provide a lifeline to schools, many with small endowments, that face difficulties getting traditional financing at reasonable rates.