HBCUs Giving Students a Head Start through Debt Forgiveness

Melissa Maichle .

The CARES Act of March 2020 provided funding to institutions to help students directly, but also to help institutions manage the combination of new expenses for distance learning and those caused by the reduction in enrollment. Then, in April 2021 the Department of Education discharged $1.6 billion in debt for 45 institutions participating in the HBCU Capital Financing Program, a program created to provide institutions lower cost capital for expenses related to infrastructure improvements, maintenance and educational equipment.1

What is noteworthy about this influx of financial support is how many institutions chose to use it in direct support of current students and/or recent graduates. Clark Atlanta University, for example, cleared $5 million worth of unpaid tuition balances for nearly 2,000 students.2 That’s 2,000 students who are now able to continue their education without incurring additional debt. Wilberforce University, Hampton University and Grambling State University have taken similar action starting a trend among HBCUs and ultimately non-HBCU institutions like City University of New York. In addition to unpaid tuition, some institutions are clearing balances for housing and library fines while others are paying off/down student loans for recent graduates.

Of course, the funds could have been used differently – something more high profile like a new residence hall or to beef up the institutional scholarship program to attract new students and thus increase tuition revenue. But that would be somewhat out of character for institutions that have historically supported those most at risk of not completing college or enrolling at all. A 2016 study by the United Negro College Fund found:

  • HBCUs enroll a higher percentage of low-income students (71% versus 39% at non-HBCUs);
  • HBCU students have higher levels of unmet need comparatively ($9,855 versus $7,810) and
  • HBCU four-year students borrow at a higher rate with higher median loan amounts (80%, $26,266 versus 55%, $14,881).3

To add to the challenge, there is large endowment differential. FY19 data showed that the average endowment per full-time equivalent (FTE) for public HBCUs was $7,265 and $24,989 at private institutions. Similar non-HBCU institutions had average endowment per FTE of $25,390 for public institutions and $184,409 for private colleges.4 A lack of endowment income effects every aspect of providing higher education services from building upkeep to institutional scholarship. So, despite the fact that the cost of HBCUs is on average nearly 30% lower than non-HBCU cost (2015)5, students are still likely to be shouldering a larger financial burden than their peers.

It’s really no surprise then that so many HBCUs used the influx of both pandemic-related funds and increased philanthropy to support their enrolled students in such a way. Creating a place where each student can thrive has been central to the purpose of HBCUs.  Let’s continue our work to ensure that minority-serving institutions are supported and can do what we, as a community of aid professionals, have always done – help at-risk students succeed.

  1. https://www.ed.gov/news/press-releases/department-education-discharges-over-16-billion-hbcu-capital-finance-debt;
  2. https://www.cnbc.com/2021/08/24/hbcus-clear-student-balances-cancel-debt-with-federal-funds.html;
  3. https://uncf.org/pages/infographic-fewer-resources-more-debt-loan-debt-burdens-students-at-hbcus;
  4. https://tcf.org/content/report/achieving-financial-equity-justice-hbcus/?agreed=1;
  5. https://uncf.org/the-latest/6-reasons-hbcus-are-more-important-than-ever