As student debt skyrockets the Student Freedom Initiative 'offers an alternative to debt accumulation': Florida A&M President

Larry Robinson, Florida A&M President, and Yahoo Finance's Aarthi Swaminathan discuss the school's participation in a new alternative student loan initiative.

Video Transcript

- We talk a lot about student debt, but we also talk about the wealth gap in this country, especially when it is referring to different races. We're going to combine that discussion now with our next guest. First we want to welcome into this stream Larry Robinson. Dr. Larry Robinson is president of Florida A&M University, along with our education reporter, Arthi Swaminathan.

And one of the things we want to talk about in this is that the billionaire Robert Smith earlier this year announced it's $50 million in money to help support STEM education at historically black colleges and universities. But now there's an additional effort to lower the debt load on students at universities. And Dr. Robinson, let me start with you on that. How important is it to cut the debt for these students?

LARRY ROBINSON: Well, it's tremendously important because one of the most challenges-- biggest challenges that students have is the financing to get through school, and then having borrowed so much, the burden of paying that off after they finish.

And so this new Student Freedom Initiative will allow our students an alternative to debt accumulation through a traditional program, through a program that is very sensitive to their needs, their income levels and so forth. But it's also important to know that this isn't just about a loan program.

It's about this, through this initiative, offering students who are in good academic standing opportunities for internships, academic tutoring, mentoring and other services designed to get them on their path to graduation as early as possible. And we know, every year that a student spends in school leads to a greater financial burden.

So those components of the program are important as well. As quicker we can get them out into the world of work, or post baccalaureate experiences, the less debt that they will accumulate during their undergraduate experience.

AARTHI SWAMINATHAN: Dr. Robinson, so this is an income contingent plan, which is slightly different from the federal income-based repayment plan. So I'm just curious, what do you think didn't work about income-based repayment plan that sort of led you to take this on? It's really interesting, the interplay between the two.

LARRY ROBINSON: That's fair. That's a fairly unique and important component. In fact, if students earn less than $30,000 after they graduate, they won't have to pay anything back until they get above that threshold. So it makes good sense to me, because your ability to pay will be contingent upon your salary.

And I think to discourage students from defaulting altogether, I think this would encourage more students to pay. The other part of it, too is that the payments that they make go back into the program to fund the next generation of students who will be participating in the program as well. So it perpetuates itself through the repayment of the students. I think that is very, very, important that the students are able to pay at a rate that allows them to still grow and develop in their professional lives.

- Hey Dr. Robinson, it's Seana. I'm curious just how you see this potentially impacting enrollment for the better. Because we talked about the economic impacts not only of student loan debt, but of course, from the COVID-19 pandemic, and how that has had a decline year on enrollment, for especially for your school in the fall semester. What are you expecting for this spring, and then looking ahead to 2021 and 2022?

LARRY ROBINSON: Yeah, so first of all, having access to resources to keep students in school is going to be a tremendous advantage. Anything that we can do there will help keep students on the path to a new future. We have experienced a slightly less, or significantly less declining enrollment than we had budgeted for.

We had at one point we were talking about as high as a 20% decline in enrollment, and in the end we were at around 4% or so. We actually built our budget on a 10% model, so we're good there. With regards to the spring semester of 2021 and the fall of 2021, things are looking real good there.

First of all, you know, in terms of students who are preparing to return to campus to stay in our residence halls, we see about a 200 or 300 increase in those numbers. We'll be at about 1,500 or so compared to 1,200. That looks good.

And then compared to applications for the fall semester of 2021, compared to where we were at the same time a year ago, we're running neck and neck there. Right? And so that's very, very, good news as well. But another factor that's important to note is that the academic profile of the students continues to increase.

For example, the admitted students at this time of year ago, the average GPA was about 3.7, now the average is above 3.9. So that looks well for us, in terms of the fall and the spring of 2021.

But I worry, though, that if there are not financial options available for students and the longer term economic impact of COVID-19 take hold, we're going to have some students out there who plan to come to the university, or who plan to stay at the university, won't be able to do it because their parents might be caught in that, you know, the tens of millions of people who are unemployed at this time.

So we're encouraging everyone who cares to really step up and make contributions to allow us to keep students with us, and keep students on their way to us for the fall semester.

- Yes. All right, we want to remind everybody you can read the education stories that Aarthi Swaminathan writes on YahooFinance.com. Dr. Larry Robinson, FAMU president. Thank you for joining us here to talk about the Student Freedom Initiative.