The goal of the Historically Black College and University (HBCU) Capital Financing Program is to provide low-cost capital to finance infrastructure improvements at HBCUs. Specifically, the program provides HBCUs with access to capital financing or refinancing for the repair, renovation, and construction of classrooms, libraries, laboratories, dormitories, instructional equipment, and research instrumentation.
The HBCU Capital Financing Program's authorizing statute caps the total amount of loans and accrued interest available through the program at $1.1 billion. However, the program can exceed $1.1 billion if Congress provides for the program to do so in an appropriation bill.
This assistance comes through the issuance of federal guarantees on the full payment of principal and interest on qualified bonds, the proceeds of which are used for loans.
Eligibility
Only eligible Institutions of Higher Education (IHEs) designated by the Secretary of Education as HBCUs are eligible to borrow from the program. An eligible institution is a Title III Part B institution as defined in Section 322(2) of the Higher Education Act of 1965 (HEA).
Section 322(a) of the Higher Education Act of 1965, as amended (HEA), defines an HBCU as:
"... any historically black college or university that was established prior to 1964, whose principal mission was, and is, the education of Black Americans, and that is accredited by a nationally recognized accrediting agency or association determined by the Secretary to be a reliable authority as to the quality of training offered or is, according to such an agency or association, making reasonable progress toward accreditation...."
It is important to note that an institution does not receive a loan by only being a HBCU. The HBCU must meet credit criteria such as showing the ability to repay all of its debts based on financial analysis, providing enough collateral for the loan it seeks, and meeting loan and bond covenants.
Application Information
Rice Financial Products Company serves as the Designating Bonding Authority (DBA) for the HBCU Capital Financing Program through its subsidiary, Rice Capital Access Program. The DBA and ED work with HBCU applicant to determine program eligibility and established loan criteria, and, for qualified HBCUs, may issue bonds for capital projects through the program. Established loan criteria includes, but is not limited to, the school's:
- Accreditation standing
- Title IV eligibility
- Cohort default rates
- Enrollment
- Debt ratio
- Debt service coverage
- Capital improvement plans
Visit Rice Capital Access Program to learn more about the application process and to access application package materials.
Legislation
- Title III, Part D of the Higher Education Act (HEA) of 1965, as amended, provides the statutory authority for the issuance of bonds and the Advisory board.
Regulations
- Education Department General Administrative Regulations (EDGAR)
- Note: Pursuant to the Department’s authority in 2 CFR § 3474.5(a), the Department applies an exception to the regulatory definition of “Federal Financial Assistance” in 2 CFR § 200.1 to exempt participating institutions in HBCU Capital Financing Program from applying the domestic sourcing requirements of Section 70911 et seq. of the Infrastructure Investment and Jobs Act (P.L. 117–58).
Guidance
- The program is governed by an agreement between the Department of Education (ED) and the Designated Bonding Authority (DBA).
Program Performance
- Review ED's program performance plans to learn more about the goals and intended outcomes of ED's programs and initiatives, including the HBCU Capital Financing Program.
The loan proceeds of the HBCU Capital Financing Program can be used for repair, renovation or, in exceptional circumstances, the construction or acquisition of:
- Any classroom facility, library, laboratory facility, dormitory (including dining facilities) or other facility customarily used by colleges and universities for instructional or research purposes or for housing students, faculty, and staff;
- A facility for the administration of an educational program, or a student center or student union, except that not more than 5% of the loan proceeds provided under this part may be used for the facility, center, or union if the facility, center or union is owned, leased, managed, or operated by a private business that, in return for such use, makes a payment to the eligible institution;
- Instructional equipment technology, research instrumentation, and any capital equipment or fixture related to facilities described in subparagraph (A);
- A maintenance, storage, or utility facility that is essential to the operation of a facility, a library, a dormitory, equipment, instrumentation, a fixture, real property or an interest therein, described in this paragraph;
- A facility designed to provide primarily outpatient health care for students or faculty;
- Physical infrastructure essential to support the projects authorized under this paragraph, including roads, sewer and drainage systems, and water, power, lighting, telecommunications, and other utilities;
- Any other facility, equipment, or fixture which is essential to the maintaining of accreditation of the member institution by an accrediting agency or association recognized by the Secretary under Subpart 2 of Part H of Title IV.
The Department has statutory authority to guarantee bonds for up to $1.1 billion (no more than $733,333,333 must be used for private HBCUs and no more than $366,666,667 will be used for public HBCUs). Currently, the HBCU Capital Financing Program's outstanding balance is about $1.70 billion ($739 million attributed to public HBCUs and $958 million attributed to private HBCUs). The outstanding interest and principal cannot exceed $1.1 billion. Congress has provided authority, in an appropriations bill, to exceed the statutory limit and to make loans to public and private HBCUs without considering if an HBCU is public or private.
The remaining amount of funds available to lend in any year is determined by annual Congressional appropriations and that amount can vary. For Fiscal Year 2026, Congress provided $20.15 million in subsidy to make $500 million in new loans.
Frequently Asked Questions
Program Contact Information
Don E. Watson
Executive Director and Designated Federal Official (DFO)
Email: donald.watson@ed.gov
Phone: (202) 453-6166
Fax: (202) 401-8466
Find information about the HBCU Capital Financing Advisory Board, including a list of current board members and board meeting minutes and materials.