What Is the Financial Future of HBCUs?
Do the latest trends in HBCU funding offer promise for the future? Learn more about the financial history and potential financial future of HBCUs.
Updated February 28, 2022
Our Review Network
BestColleges is committed to delivering content that is objective and accurate. We have built a network of industry professionals across healthcare and education to review our content and ensure we are providing the best information to our readers.
With their first-hand industry experience, our reviewers provide an extra step in our editing process. These experts:
- Suggest changes to inaccurate or misleading information.
- Provide specific, corrective feedback.
- Identify critical information that writers may have missed.
Our growing Review Network currently consists of professionals in fields like business, nursing, social work, and other subject-specific industries; professionals in higher education areas such as college counseling and financial aid; and anti-bias reviewers.
Reviewers typically work full time in their industry profession and review content for BestColleges as a side project. Our reviewers are members of the Red Ventures Education Freelance Review Network and are paid for their contributions.
Higher education has been hit extremely hard by the COVID-19 pandemic. Many colleges and universities are still struggling to rebound.
For historically Black colleges and universities (HBCUs), the road to recovery may be even more challenging. This can be linked to the schools' relative lack of access to financial and social capital since their inception.
To try and address inequities in funding allocation, Congress recently passed several spending bills — including the CARES Act — to help invest in HBCUs. The recent attention given to rebuilding the financial infrastructure of HBCUs is promising.
Historical Funding for HBCUs
History shows a prolonged trend of disinvestment in HBCUs since their founding. The first piece of federal legislation that recognized and supported HBCUs was the Agricultural Act of 1890, known as the Second Morrill Act.
This act outlined that land-grant institutions, including some HBCUs, would receive an appropriation from the federal government, as well as a one-to-one match from their respective state governments.
Over time, given the lack of accountability and the belief that HBCUs were "lesser than," many states refused to provide their one-to-one match to HBCUs within their borders.
In 1944, the United Negro College Fund — a private organization — began providing aid to Black college students. It also committed to improving the financial stability of private Black colleges and universities.
However, targeted federal legislation to support HBCUs did not occur again until 1986. That year, the Higher Education Act Title III Part B authorized the federal re-investment and strengthening of HBCUs' development offices, endowment funds, academic resources, and student services.
Unfortunately, the American Council on Education reported that HBCUs again saw declines in federal funding per full-time equivalent student between 2003 and 2015, as compared to non-HBCU schools.
Larger state schools and elite private institutions have been able to establish a sizable donor base. HBCU alumni also donate money to their alma maters. However, due to the relative lack of federal funding to HBCUs, these alumni gifts are typically spent on capital improvements rather than put into endowments.
Also, given the disparities in wealth between Black and white families, Black alumni may not be able to donate as much as wealthier white families.
Existing Financial Challenges for HBCU Students
HBCUs typically accept and enroll more students from families with lower incomes than non-HBCUs. With decreased funding and declining enrollment, it is challenging for many students to attend HBCUs without taking on excessive loan debt.
Federal Pell Grants have been the largest source of funding for income-eligible students. However, contributions to this grant program have declined substantially since 2013.
To bridge funding gaps, students who attend HBCUs borrow more money at a higher rate. They also graduate with more debt than their peers at non-HBCU institutions. For students of color, excessive loan debt only serves to widen the racial wealth gap. Student debt can present challenges as a person tries to generate wealth, buy a home, start a family, and achieve economic security.
The 2011 changes to the Parent PLUS Loan had an impact on student persistence at HBCUs. The U.S. Department of Education stipulated that applicants who had accounts in collection within the last five years were ineligible to be approved for Parent PLUS loans — previously this window was just the last 90 days.
These changes led to many parents and guardians of students attending HBCUs to be rejected for loans to pay for college expenses. HBCUs lost an estimated $168 million as a result of the large number of students who were no longer able to start or finish their college education.
With changes to federal funding and limited loan choices for Black families, students who want to attend and graduate from HBCUs must often put themselves in significant debt to finance their education.
Promising Trends in Financial Support
The Biden administration has put an increased focus on funding for HBCUs, recognizing their crucial role in educating and graduating students of color — specifically those pursuing science, technology, engineering, and mathematics (STEM) degrees.
The Higher Education Emergency Relief Fund allocated approximately $1 billion in emergency aid to HBCUs. This money allowed many schools to clear student debt for some learners.
For example, Dillard University cleared over $485,000 in balances affecting more than 250 students. Other institutions — such as Clark Atlanta University and Howard University — also eliminated student account balances for many students.
President Joe Biden also signed an executive order that established the White House Initiative on Advancing Educational Equity, Opportunity, and Excellence through HBCUs. The administration has proposed $239 million in new institutional aid funding for HBCUs, including $72 million in new discretionary funding for the schools.
Additionally, the administration has earmarked $167 million in new mandatory funding for HBCUs. It also plans to provide two years of subsidized tuition for HBCU students.
HBCUs have produced many talented STEM graduates. That fact is receiving increased recognition. For example, Maryland lawmakers announced $7.5 million in funding for Morgan State University to expand its STEM programs.
Additionally, the National Science Foundation released a funding opportunity for HBCUs to expand undergraduate research and help prepare more HBCU students to pursue STEM careers and graduate programs.
HBCUs have long served as institutions that embrace students of all races and classes. Their goal is to provide empowering spaces for students to succeed and thrive. Over the past few years, HBCUs' emphasis on social justice and racial equity has led to increased donations and larger endowments at some of these schools.
As racial injustice continues to come to light, there is mounting interest in supporting institutions that are actively working to combat racism.
COVID-19 will continue to have long-lasting impacts on educational institutions. Due to a history of federal and state disinvestment, HBCUs have long faced an uphill battle in building a solid financial infrastructure.
However, in 2021, America saw the success of HBCU grads on the political stage — most notably from Vice President Kamala Harris (a Howard University alum) and activist and politician Stacey Abrams (a Spelman College alum). Many HBCU graduates are indeed very successful.
Although HBCU students often face challenges in funding their college education and avoiding student loan debt, recent federal legislation and increases in endowments are extremely promising.
Dr. Pamela “Safisha Nzingha” Hill, Ph.D.
Dr. Pamela "Safisha Nzingha" Hill, Ph.D., is a diversity, equity, and inclusion consultant; Afrocentric scholar; activist; journalist; educator; student development practitioner; and life student of Africana studies. For over 20 years Dr. Hill has worked in higher education in both student development and academic affairs. She has served as a mid-level student affairs administrator in positions of assistant dean of students, diversity director, and assistant vice president, as well as adjunct assistant professor teaching in the areas of higher education, humanities, developmental writing, African American studies, and social work. As a student-centered educator/consultant, she is experienced at developing culturally based curricula and conducting specialized professional development sessions on cultural competency and sensitivity educational training within academic and organizational settings. Additionally, she has lectured at a number of colleges and universities across the nation on issues pertinent to the Black experience and multiculturalism in higher education.
Dr. Hill is a proud graduate of Langston University — Oklahoma's only Historically Black University — where she received a bachelor of arts degree in broadcast journalism. Additionally, she holds a master of science in college teaching/student personnel services from Northeastern State University in Oklahoma, and she earned a Ph.D. in higher and adult education with an emphasis in student development and minors in Black studies and educational counseling psychology from the University of Missouri-Columbia — one of the nation's top-tier Research I institutions.
She holds membership in the Texas Association of Black Personnel in Higher Education, Association for the Study of African American Life and History, Langston University Alumni Association, and Delta Sigma Theta Sorority, Inc. She is the proud mother of a daughter, Safisha Nzingha, who is a student at Langston University.
Dr. Hill sees her life mission as moving people forward through the vehicle of culturally grounded education.
Feature Image: Cavan Images / Cavan / Getty Images