Department of Education

HISTORICALLY BLACK COLLEGE AND UNIVERSITY CAPITAL FINANCING

PROGRAM ACCOUNT

Fiscal Year 2018 Budget Request

CONTENTS

Page

Appropriations Language ........................................................................................................U-1

Analysis of Language Provisions and Changes.......................................................................U-2

Amounts Available for Obligation ............................................................................................U-3

Obligations by Object Classification ........................................................................................U-4

Summary of Changes .............................................................................................................U-4

Authorizing Legislation............................................................................................................U-5

Appropriations History.............................................................................................................U-6

Activity:

Federal Administration........................................................................................................U-7
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Appropriations Language

For the cost of guaranteed loans, $20,112,000, as authorized pursuant to part D of title III of 

the HEA, which shall remain available through September 30, 2019:1 Provided, That such costs, 

including the cost of modifying such loans, shall be as defined in section 502 of the 

Congressional Budget Act of 1974:2 Provided further, That these funds are available to 

subsidize total loan principal, any part of which is to be guaranteed, not to exceed

$313,513,000:3 Provided further, That these funds may be used to support loans to public and 

private Historically Black Colleges and Universities without regard to the limitations within 

section 344(a) of the HEA.4 In addition, for administrative expenses to carry out the Historically 

Black College and University Capital Financing Program entered into pursuant to part D of title 

III of the HEA, $333,000.

NOTES

A full-year 2017 appropriation for this account was not enacted at the time the budget was prepared; therefore, 

the budget assumes this account is operating under the Further Continuing Appropriations Act, 2017 (P.L. 114-254). 

The amounts included for 2017 reflect the annualized level provided by the continuing resolution. The Department of 

Education Appropriations Act, 2017, provided $20.484 million which is equal to the 2016 level for this account

Each language provision that is followed by a footnote reference is explained in the Analysis of Language 

Provisions and Changes document which follows the appropriations language. 

.
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Analysis of Language Provisions and Changes

Language Provision Explanation

1 For the cost of guaranteed loans, 

$20,112,000, as authorized pursuant to part D 

of title III of the Higher Education Act of 1965 

(HEA), which shall remain available through 

September 30 2019:

In accordance with the Federal Credit Reform 

Act of 1990, the requested language 

appropriates $20.112 million in subsidy for 

new loans to be made under the HBCU 

Capital Financing program. This amount will 

be available for obligation for 2 fiscal years. 

No loans may be insured under the program 

that would require subsidy above this amount.

2 Provided, That such costs, including the cost 

of modifying such loans, shall be as defined in 

section 502 of the Congressional Budget Act of 

1974:

This requested language specifies that any 

program costs or cost modifications shall 

comply with the definitions that are provided in 

Section 502 of the stated Act.

3 Provided further, That these funds are 

available to subsidize total loan principal, any 

part of which is to be guaranteed, not to exceed 

$313,513,000:

The requested language limits the amount of 

bonds that may be insured under the HBCU 

Capital Financing program to $313.513 million 

in fiscal year 2018.

4Provided further, That these funds may be 

used to support loans to public and private 

historically Black colleges and universities 

without regard to the limitations within section 

344(a) of the HEA.

The requested language allows the program to 

make loans in fiscal year 2018 without regard 

to the language in HEA section 344(a) that 

sets limits on the amount of the program’s loan 

authority that can be devoted to private versus 

public HBCUs.

5 In addition, for administrative expenses to 

carry out the Historically Black College and 

University Capital Financing Program entered 

into pursuant to part D of title III of the HEA, 

$333,000.

In accordance with the Federal Credit Reform 

Act of 1990, this language appropriates funds 

to administer new loans, service existing loan 

obligations, and provide technical assistance 

to prospective and existing program 

participants.
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Amounts Available for Obligation

(dollars in thousands)

Appropriation and Adjustments 2016

2017

Annualized CR 2018

Discretionary appropriation ......................... $20,484 $20,445 $20,445

Mandatory appropriation ............................. 21,656 201,110 0

Total, direct obligations ......................... 42,140 221,555 20.445
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Obligations by Object Classification

(dollars in thousands)

Obj ect Class C ode Object Class 2016 2017 2018

Change 

from 2017 

to 2018

11.10 Full-time permanent 149 150 151 +1

11.31 Full-time temporary 0 0 0 0

11.52 Awards 1 1 1 0

Compensation subtotal 150 151 152 +1

12.00 Benefits 44 45 46 +1

Comp/benefits subtotal 194 196 198 +2

21.00 Travel 14 11 9 -2

23.10 Rental payments to GSA 10 6 7 +1

Subtotal Travel/Rent 24 17 16 -1

25.21 Other services 99 98 97 -1

25.22 Training/tuition contracts 1 2 1 -1

25.30 

Goods/services from Federal 

sources 0 3 3 0

25.72 IT services/contracts 15 16 17 +1

Subtotal 25 115 119 118 -1

26.00 Supplies 1 1 1 0

Total, Obligations 334 333 333 0

Summary of Changes

(dollars in thousands)

2017 Annualized CR ......................................................................... $333

2018................................................................................................. 333

Net change ................................................................ 0
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Authorizing Legislation

(dollars in thousands)

Activity 2017 

Authorized

2017 

Annualized CR

2018 

Authorized

2018

Federal administration 

Career and T echnical: Federal Credit Reform Act of 1990, section 

505(e) and Title III, part D, HEA .........................

Indefinite $334 Indefinite $333

New loan subsidy

Adult educati on: Federal Credit Reform Act of 1990, section 505(e) 

and Title III, part D, HEA......................................

Indefinite 20,150 Indefinite 20,112

Reestimate of existing loan subsidies

Federal Credit Reform Act of 1990, section 

504(f) ................................................................... Indefinite 201,1101 Indefinite 0

Total Discretionary Appropriation 20,484 20,445

Total Mandatory Appropriation 201,110 0

1 The 2017 reestimate of existing loans includes an upward reesimate of $130 million due to increased default assumptions related to the schools 

receiving loans under the HBCU Hurricane Supplemental Loan program, established pursuant to section 2601 of Public Law 109-234..
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Appropriations History

(dollars in thousands)

Year

Budget 

Estimate 

to Congress

House 

Allowance

Senate 

AllowanceFootnote AppropriationFootnote

2009 $10,354 $10,3541 $10,3541 $10,354

2010 20,582 20,582 10,3542 20,582

2011 20,582 20,5823 20,5822 20,5414

2012 20,582 20,5415 20,5415 20,502

2013 20,502 19,4306 19,4306 19,430

2014 20,502 N/A720,484219,430

2015 19,430 N/A720,444 19,430

2016 19,436 19,096 19,096820,1509

2017 20,112 20,11210 20,11210 20,15010

2018 20,112

1 The levels for the House and Senate allowances reflect action on the regular annual 2009 appropriations 

bill, which proceeded in the 110th Congress only through the House Subcommittee and the Senate 

Committee.

2 The levels for the Senate allowance reflect Committee action only.

3 The level for the House allowance reflects the House-passed full-year continuing resolution. 4 The level for appropriation reflects the Department of Defense and Full-Year Continuing Appropriations 

Act, 2011 (P.L. 112-10). 5 The level for the House allowance reflects an introduced bill and the level for the Senate allowances 

reflects Senate Committee action only. 6 The level for the House and Senate allowances reflect action on the regular annual 2013 appropriations 

bill, which proceeded in the 112th Congress only through the House Subcommittee and the Senate 

Committee.

7 The House allowance is shown as N/A because there was no Subcommittee action.

8 The level for the Senate allowance reflects Senate Subcommittee action only.

9 The levels for House and Senate allowances reflect action on the regular annual 2016 appropriations 

bill, which proceeded in the 114th Congress only through the House Committee and Senate Committee. 10 The levels for House and Senate allowances reflect Committee action on the regular annual 2017 

appropriation bill; the Appropriation reflects the Consolidated Appropriations Act, 2017.

.
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Federal Administration

(Federal Credit Reform Act of 1990, Section 505(e) and the Higher Education Act of 1965, 

Title III, Part D) (dollars in thousands)

(dollars in thousands)

FY 2018 Authorization:

Federal administration: Indefinite

New loan subsidy costs: Indefinite 1

Budget Authority:

Authority 2017 

Annualized CR

2017 

Appropriation 2018 Change

Federal Administration $334 $334 $333 -$1

New loan subsidy costs 20,150 20,150 20,112 -38

Total 20,484 20,484 20,445 -39

Full-time equivalent 

employee 1 1 1 0

1 Although the amount authorized for subsidy costs of new loans is indefinite, section 344(a) of the HEA 

limits the aggregate principal amount of outstanding bonds insured, together with any accrued unpaid 

interest thereon, to $1,100,000 thousand, of which not more than $733,333 thousand may be used for 

loans to eligible private HBCUs and not more than $366,667 thousand may be used for loans to eligible 

public HBCUs. The 2015 appropriations bill included language removing this limitation. The 2016

request includes appropriations language to remove this limitation for new loans made in fiscal year 2016.

PROGRAM DESCRIPTION

Since fiscal year 1996, the Historically Black Colleges and Universities Capital Financing 

Program has provided Historically Black Colleges and Universities (HBCUs) with access to 

capital financing for the repair, renovation, and, in exceptional circumstances, construction or 

acquisition of educational facilities, instructional equipment, research instrumentation, and 

physical infrastructure. HBCUs, which have played a prominent role in our Nation’s history, 

have significant needs for capital improvements. However, in most cases these institutions 

cannot access traditional funding sources at reasonable interest rates. The HBCU Capital 

Financing Program provides HBCUs with access to low-cost financing to fund infrastructure 

improvements. This program has made low interest loans available for capital improvements to 

some of the Nation’s most vulnerable institutions of higher education, which have allowed these 

institutions to make improvements to their capital stock, especially academic facilities and 

student living-quarters. In order to limit the Federal Government’s exposure to incurring losses 

due to defaults and delinquencies, 5 percent of all loans are deposited in a pooled escrow 

account from which loan payments can be made in the event of defaults or delinquencies.
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The HBCU Capital Financing Advisory Board, appointed by the Secretary, advises the 

Secretary and the Designated Bonding Authority (DBA) as to the most effective and efficient 

means of implementing the program. The DBA, also selected by the Secretary, assists with the 

operation of the HBCU Capital Financing Program, which includes raising bond capital, making 

loans to eligible institutions, charging interest, and providing for a schedule of repayments. 

Direct loans are financed through the Federal Financing Bank and guaranteed loans are 

financed through the private market, with all loan payments fully insured by the Federal 

Government.

FEDERAL ADMINISTRATION

Funds for this activity pay the Federal costs for administering the HBCU Capital Financing 

Program. The administrative costs for this program include the personnel compensation and 

benefits for 1 full-time equivalent (FTE) employee, overhead, and other administrative services. 

The FTE reported in this account reflects the Department's estimate of the staff time devoted to 

administering the program. This estimate does not include FTEs associated with the 

Department's centralized services, which are reflected in the Program Administration account in 

the Salaries and Expenses Overview. The major non-personnel costs include support for the 

HBCU Capital Financing Advisory Board and a contract with the DBA to provide technical 

assistance workshops.

SUBSIDY COSTS

In the first 10 years that the HBCU Capital Financing Program operated, there were no 

delinquencies or defaults. The rigorous application and credit review process imposed by the 

Department and the DBA was credited with ensuring that institutions receiving loans under this 

program had the ability to comply with the terms of their loans. In 2004, Barber Scotia College 

lost its accreditation with the Southern Association of Colleges and Schools. Students enrolled 

at Barber Scotia College were no longer eligible for Federal student assistance. Approximately 

90 percent of the College’s students receiving some form of government assistance, this 

rendered the College unable to service its debt under the program. Barber Scotia College has 

one $7.0 million loan under the program, of which $6.1 million is currently outstanding. In 

addition, there will be a total of $3.4 million in interest due over the remaining life of the loan. 

Since March 2005, Barber Scotia College’s principal and interest payments have been made 

from the pooled escrow account. The DBA, which holds the loans that are guaranteed through 

this program, initiated foreclosure actions against Barber Scotia College to recover funds owed. 

Following emergency supplemental appropriations1 in fiscal year 2007, the Department awarded 

approximately $400.0 million in loan guarantees to institutions affected by Hurricanes Katrina 

and Rita. These loans were exempt from the pooled escrow requirement and limited to a 

maximum interest rate of 1 percent, increasing Federal liability and interest subsidy cost.

1

The Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 

2006 Sec. 2601 waived HEA provisions 343(b)(2) and 343(b)(8) and required the Secretary to pay any interest in 

excess of 1 percent for loans to institutions affected by Hurricanes Katrina and Rita.
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Subsidy levels for the past 5 fiscal years were:

Fiscal Year (dollars in thousands)

2013...............................................................................$19,096

2014................................................................................ 19,096

2015................................................................................ 19,096

2016................................................................................ 20,150

2017................................................................................ 20,150

FY 2018 BUDGET REQUEST

The Administration requests $20.4 million for the Historically Black College and University 

(HBCU) Capital Financing Program account for fiscal year 2018. The request includes 

$333,000 for administrative expenses and an additional $20.1 million for new loan subsidy 

costs. The Department of Education Appropriations Act, 2017, provided $20.484 million for this 

program. The Administration requests that loan subsidy funding be available through 

September 30, 2019. The narrow window for obligation of annual funds constrains the planning

process for new program loans, decreasing the number of projects that can be considered for 

funding and limits the Administration’s ability to achieve the statutory mandate of ensuring that 

loans are fairly allocated among as many eligible institutions as possible.

The $333,000 in administrative expenses will be used to maintain technical assistance services. 

These services prepare eligible institutions to access capital markets by enhancing their fiscal 

stability.

The request includes $20.1 million for new loan subsidy costs and anticipates that the requested 

subsidy amount will be sufficient to guarantee $314 million in new loans.

PROGRAM OUTPUT MEASURES

(dollars in thousands)

Output Measures 2016

2017 

Annualized CR 2018

Number of new loans:

New loans to Private HBCUs 3 8 8

New loans to Public HBCUs 1 8 8

Total new loans 4 16 16

New loan volume:

New loans to Private HBCUs $91,100 $141,107 $156,757

New loans to Public HBCUs 36,600 141,107 156,757

Total new loan volume 127,700 282,213 313,513
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Output Measures 2016

2017 

Annualized CR 2018

Total number of loans:

Total loans to Private HBCUs 49 56 64

Total loans to Public HBCUs 16 23 30

Total number of l oans 65 79 94

Total loan awards:

Total loans to Private HBCUs $1,408,885 $1,549,992 $1,706,748

Total loans to Public HBCUs 603,671 744,778 901,534

Total outstandi ng awards 2,012,556 2,294,769 2,608,282

Total outstanding loan awards:

Total loans to Private HBCUs 1,089,965 1,232,970 1,924,967

Total loans to Public HBCUs 342,493 387,428 604,871

Total outstandi ng awards 1,432,458 1,620,398 2,529,838

PROGRAM PERFORMANCE MEASURES

Performance Measures

This section presents selected program performance information, including, for example, GPRA 

goals, objectives, measures, and performance targets and data; and an assessment of the 

progress made toward achieving program results. Achievement of program results is based on 

the cumulative effect of the resources provided in previous years and those requested in fiscal 

year 2018 and future years, and the resources and efforts invested by those served by this 

program. 

Goal: To improve loan recipients’ overall financial stability and enhance their ability to 

attract, retain and educate students.

Objective: Total revenues and investment return will increase for loan recipients.

Measure: The percentage of borrowers who increase revenues and investment return annually.

Year Target Actual

2012 70 55

2013 70

2014 70

2015 70

2016 70

2017 70
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Additional information: This performance measure is the percentage of HBCUs that 

experienced an increase in revenue over the prior year. This measure is one gauge of 

improved institutional financial stability and capability to fulfill their educational mission. Loans 

that fund capital and infrastructure improvements are key assets for providing quality 

postsecondary education. Some HBCUs have significant cash flow problems, which capital 

improvements from this program are expected to help ameliorate. Revenue is a strong indicator 

of an institution’s success at maintaining or increasing enrollment, expanding fundraising 

activities, and, ultimately, the institution’s financial stability. The ability to maintain or increase 

revenue suggests that an institution will be able to service its debts and maintain its operations. 

This measure helps to assess the financial solvency of borrowers, which is a gauge of default 

potential. This measure is calculated as the number of HBCUs in the program that have 

experienced an increase in revenue over the prior fiscal year, divided by the total number of 

HBCUs in the program, and multiplied by 100. The data source for total revenues is the 

National Center for Educational Statistics' Integrated Postsecondary Education Data System. 

Performance metric information may not be updated where performance data is 

unavailable.Objective: Improve the delinquency rate of loan recipients.

Measure: The delinquency rate of loan recipients.

Year Target Actual

2012 14 19

2013 14 36

2014 14 18

2015 14 36

2016 14 33

2017 14

Additional information: The delinquency rate—the percentage of loan payments received 

between 11-59 days after the due date—indicates the financial stability of borrowers. The ability 

to make timely payments reduces the likelihood of default. It also indicates successful 

monitoring, technical assistance, and enforcement by the Department and the Designated 

Bonding Authority (DBA) in administering the program. 
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Goal: To improve the capacity of program borrowers to improve student success and 

provide high-quality educational opportunities for their students.

Objective: Maintain or increase the persistence rate of first-year students at borrower 

institutions.

Measure: The percentage of first-time, full-time, degree-seeking, undergraduate students who 

were in their first year of postsecondary enrollment in the previous year and are enrolled in the 

current year at the same loan recipient institution.

Year Target Actual

2012 67 61

2013 68 61

2014 69

2015 70

2016 71

2017 71

Additional information: New and improved physical facilities can help an institution of higher 

education increase student persistence. Many of the loans have provided support for student 

housing and many of the borrowers have explicitly cited the lack of adequate student housing 

and facilities as a reason for high attrition rates on their campuses in their loan applications. 

This measure relies on data taken from the Integrated Postsecondary Education Data System 

maintained by the National Center for Education Statistics. Performance metric information may 

not be updated where performance data is unavailable.