Three historically black universities in New Orleans that have struggled in recent years with tight finances will see roughly $330 million in post-Katrina debt they owe to the federal government wiped away under a provision tucked into a massive bipartisan congressional budget deal signed Friday morning by President Donald Trump.
Dillard University, Xavier University and Southern University at New Orleans borrowed the money in 2007 from the federal Department of Education as they reeled from potentially crippling blows dealt by Hurricane Katrina.
So did Tougaloo College, a historically black institution just north of Jackson, Mississippi.
Little of the low-interest loans had been paid back in the past decade, as most of the universities struggled to regain their footing and boost enrollment. Payments were suspended in 2013 under a provision — which also restructured the debt — inserted into a 2012 spending bill by former Sen. Mary Landrieu, D-Louisiana.
But the five-year loan forbearance period was set to expire in April, putting pressure on the universities. Each potentially faced millions in debt payments to the federal government.
“It would’ve been crippling,” said Walter Kimbrough, the president of Dillard University, which borrowed about $160 million from the Department of Education after several feet of water inundated its Gentilly campus.
Many of the college’s students come from middle- or low-income families — with roughly 75 percent eligible for federal Pell Grants — meaning that hiking tuition wasn't an option, Kimbrough said.
Xavier University borrowed $165 million through the program, while Southern University at New Orleans took out $44 million, according to U.S. Department of Education data compiled by the Wall Street Journal. Tougaloo borrowed another $28.5 million.
The Journal reported in 2017 that the four institutions together had paid back a total of roughly $12.4 million.
The loans’ forgiveness brings to a close years of lobbying by the institutions and politicians from Louisiana and Mississippi. The provision wiping away the debt was included in the budget deal’s massive $90 billion disaster-relief package primarily geared toward communities devastated in 2017 by Hurricanes Harvey, Irma and Maria.
“My predecessor, Dr. Victor Ukpolo, and I have been working with the other three universities for some time to make the case for this forgiveness," said SUNO Chancellor Lisa Mims-Devezin. "Attempting to pay off the loan would have caused an additional decrease in available funds and would have required significant budget cuts, termination of programs and employee layoffs."
The chancellor also noted that the vast majority of other Katrina federal loans have already been forgiven.
"This loan forgiveness will allow Xavier University to provide academic excellence to all of our students, today and into the future," said Reynold Verret, president of Xavier University of Louisiana. "We would like to thank the members of the House and Senate from Louisiana and Mississippi who worked diligently to secure this legislation so that our historic institution can continue our work of contributing to a just and humane society.”
Louisiana’s congressional delegation, including Rep. Cedric Richmond of New Orleans and Sen. Bill Cassidy, worked with the presidents of the universities on the issue, Kimbrough said.
Senate Appropriations Chairman Thad Cochran, a Mississippi Republican whose committee wrote the bill, played a key role in including the provision in the text.