CHARLOTTE, N.C. — Johnson C. Smith University and other local colleges are millions of dollars in debt to the federal government, according to a new report that says the problem is affecting many historically black colleges.
Many of the colleges were banking on their enrollment going up over time, which would have increased revenue and their ability to pay off federal loans, but that hasn't been the case.
According to The Wall Street Journal, in the last 10 years, HBCUs, including Johnson C. Smith, Barber Scotia in Concord and Livingstone in Salisbury, borrowed $1.7 billion from the federal government to pay for campus upgrades.
But according to The Wall Street Journal, most of that money hasn’t been paid back.
In some cases, schools can't pay.
Barber Scotia defaulted on $14 million it borrowed to build student housing in 2000.
In 2014, JCSU borrowed $26 million for its new science center.
Even though Johnson C. Smith is on the hook for millions of dollars, Greg Petzke, the university's chief financial officer, said the school is paying back every penny.
"We're right on target,” Petzke said “We haven't missed a payment."
Johnson C. Smith borrowed more than $20 million from the federal government to build STEM Hall, a building Petzke said has helped the school excel.
"Specifically, the computer technology area is one of the leading schools in the HBCUs and all schools,” Petzke said.
Livingstone College borrowed $61 million in 2001, 2003 and 2015 collectively for new buildings and renovations.
Barber Scotia College borrowed $14 million to renovate student housing in 2000, but defaulted on the loan in 2005 after losing accreditation.
There is now a call for more oversight and stricter requirements to borrow money.
Representative Alma Adams spoke to The Wall Street Journal about a bill she co-sponsored that she believes could help the schools. It would require more reporting by the advisory board for the federal loan program, and provide financial counseling for schools struggling with debt.
Adams said HBCUs depend on increased enrollment to pay money back, but that hasn't been the case.
She is co-sponsoring a bill that would keep the money available, but would require more reporting by the advisory board for the federal loan program and provide financial counseling for schools struggling with debt.
"We've got to,” Adams said. “I think we, have a comprehensive plan to make sure that we're able to pay the monies back. We think it's going to go a long way to really helping these schools stabilize themselves."
Many HBCU leaders say that the schools have been underfunded for many years, which is why they are having to borrow money to make so many improvements.
Livingstone College’s statement:
"Over the past 16 years (2001-2017), Livingstone College’s cumulative debt to the U.S. Department of Education was $61 million. However, the college reduced its debt to approximately $22 million by 2016.
In 2015, the college refinanced and consolidated its existing debt with an additional $15 million loan to build two new structures: the F. George Shipman Science Annex Building and a new physical education building.
At current, our balance is $38 million with a lower interest rate and a monthly payment that is lower than what was being paid before consolidation.
What’s important to note is that Livingstone College has not experienced a significant drop in enrollment in the past five years. In fact, the 2014 freshman class was the largest in the school’s history.
Let me also add that the new science annex, expected to be completed in 2018, will further enrich Livingstone's STEM (Science, Technology, Engineering and Math) initiative and strengthen the college's research infrastructure. These types of investments aid in student recruitment and thusly increases enrollment. - Dr. Jimmy R. Jenkins, Sr., President of Livingstone College."
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