Department of Education

HISTORICALLY BLACK COLLEGE AND UNIVERSITY 

CAPITAL FINANCING PROGRAM ACCOUNT

Fiscal Year 2019 Budget Request

CONTENTS

Page

Appropriation Language..........................................................................................................U-1

Appropriation, Adjustments, and Transfers .............................................................................U-2

Obligations by Object Classification ........................................................................................U-3

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

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

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

Federal Administration........................................................................................................U-7
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Appropriation Language

NOTES

No appropriations language is included for this account. All programs in this account for fiscal year 2019 

are authorized under the expired Higher Education Act of 1965, as amended; when new authoring legislation is 

enacted, appropriations language for these programs will be proposed.

A full-year 2018 appropriation for this account was not enacted at the time the budget was prepared; 

therefore, the budget assumes this account is operating under the Continuing Appropriations Act, 2018 (Division D of 

P.L. 115–56, as amended). The amounts included for 2018 reflect the annualized level provided by the continuing 

resolution.
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Appropriation, Adjustments, and Transfers

(dollars in thousands)

Appropriation/Adjustments/Transfers 2017

2018

Annualized CR 2019

Discretionary: 

Appropriation.................................................................. $20,446 0 $20,489

Annualized CR (P.L. 115-56) ......................................... 0 $20,307 0

Total, discretionary appropriation ................................ 20,446 20,307 20,489

Mandatory: 

Appropriation.................................................................. 201,110 39,548 0

Total, discretionary and mandatory appropriation....... 221,556 59,855 20,489
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Obligations by Object Classification

(dollars in thousands)

Obj ect Class C ode

Object Class 2017

2018 

Annualized 

CR

2019

Request

Change 

from 2018 

to 2019

11.10 Full-time permanent $150 $151 $151 0

11.31 Full-time temporary 0 0 0 0

11.52 Awards 1 1 1 0

Compensation subtotal 150 151 151 0

12.00 Benefits 45 47 47 0

Comp/benefits subtotal 195 199 199 0

21.00 Travel 11 9 9 0

23.10 Rental payments to GSA 6 7 9 2

Subtotal Travel/Rent 17 16 16 0

25.21 Other services 98 96 101 5

25.22 Training/tuition contracts 2 1 1 0

25.30 

Goods/services from Federal 

sources 3 1 1 0

25.72 IT services/contracts 16 18 18 0

Subtotal 25 119 116 121 5

26.00 Supplies 1 1 1 0

Total, Obligations 333 332 339 7
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Summary of Changes

(dollars in thousands)

2018 Annualized CR ......................................................................... $332

2019................................................................................................. 339

Net change................................................................. +7

Change

Increases: 2018 base from base

Program:

Increase in rent to GSA and Other Services $103,000 +$7,000
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Authorizing Legislation

(dollars in thousands)

Activity

2018

Authorized

2018 

Annualized CR 

2019 

Authorized

2019

Request

Federal administration (Federal Credit Reform Act of 1990, 

section 505(e) and Title III, part D, HEA) Indefinite $332

To be 

determined $339

New loan subsidy (Federal Credit Reform Act of 1990, section 

505(e), Title III, part D, HEA) Indefinite 19,975

To be 

determined 20,150

Reestimate of existing loan subsidies (Federal Credit Reform 

Act of 1990, section 504(f)) Indefinite 39,5481

To be 

determined 0

Total Discretionary Appropriation 20,307 20,489

Total Mandatory Appropriation 39,548 0

1 The 2018 reestimate of existing loans includes an upward reesimate of $40 million due to increased default assumptions.
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Appropriations History

(dollars in thousands)

Year

Budget 

Estimate 

to Congress

House 

Allowance

Senate 

AllowanceFootnote AppropriationFootnote

2010 $20,582 $20,582 $10,3541 $20,582

2011 20,582 20,5822 20,582 20,5413

2012 20,582 20,5414 20,5413 20,502

2013 20,502 19,4305 19,4304 19,430

2014 20,502 N/A6 20,484 19,430

2015 19,430 N/A820,444 19,430

2016 19,436 19,096 19,096720,1508

2017 20,112 20,112920,112920,1129

2018 20,112 19,97510 19,97510 19,97510

2019 20,150

1 The levels for the Senate allowance reflect Committee action only. 2 The level for the House allowance reflects the House-passed full-year continuing resolution.

3 The level for appropriation reflects the Department of Defense and Full-Year Continuing Appropriations 

Act, 2011 (P.L. 112-10). 4 The level for the House allowance reflects an introduced bill and the level for the Senate allowances 

reflects Senate Committee action only. 5 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.

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

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

9 No appropriations language is included for programs authorized under the expired Carl D. Perkins 

Career and Technical Education Act; when new authorizing legislation for the Perkins Act is enacted, 

appropriations language for these programs will be proposed.

10 The levels for the House reflect floor action on an Omnibus appropriation bill; Senate allowances reflect 

Committee action on the regular annual 2018 appropriations bill; the Appropriation reflects the annualized 

Continuing Resolution level.
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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)

FY 2019 Authorization:

Federal administration: To be determined

New loan subsidy costs: To be determined1

Budget Authority:

Authority 2018

Annualized CR 2019 Change

Federal Administration $332 $339 +$7

New loan subsidy costs 19,975 20,1502 175

Total 20,307 20,489 182

Full-time equivalent employee 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 2017 appropriations bill included language removing this limitation. The 2019 request 

includes appropriations language to remove this limitation for new loans made in fiscal year 2019. 2 Increase funding to reflect the President’s Budget request to fund the HBCU Capital Finance Program at 

FY 2017 enacted levels. This amount would restore cuts resulting from the 0.6791 percent across-theboard reduction included in the FY 2018 Annualized CR Level.

PROGRAM DESCRIPTION

A full-year fiscal year 2018 appropriation was not enacted at the time the fiscal year 2019 

Budget was prepared; therefore, the Budget assumes the Department is operating under the 

Continuing Appropriations Act, 2018 (Division D of P.L. 115–56, as amended). The amounts 

included for fiscal year 2018 reflect the annualized level provided by the continuing resolution.

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 
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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. These loans 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.

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 DBA was credited with ensuring that recipient institutions receiving loans would 

be able to comply with the terms of their loans. However, since 2004, increases in financial 

instability by certain HBCUs have affected Federal liability in the program. For example, in 

2004, Barber Scotia College lost its accreditation with the Southern Association of Colleges and 

Schools. As a result, students enrolled at Barber Scotia College were no longer eligible for 

Federal student assistance. The DBA, which holds the loans guaranteed through this program, 

initiated foreclosure actions against Barber Scotia College to recover funds owed. In addition, 

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. The 

HBCU portfolio is experiencing greater financial stress as evidenced by an increase in 
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delinquencies outlined in the performance measures. Accordingly, default rate assumptions for 

the portfolio have been increased to reflect the heightened risk profile, resulting in an upward 

reestimate of existing loan subsidies in fiscal years 2017 and 2018. 

Subsidy levels for the past 5 fiscal years were:

Fiscal Year (dollars in thousands)

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

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

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

2017.............................................................. ..................20,112

2018.............................................................. ..................19,975

FY 2019 BUDGET REQUEST

The Administration requests $20.5 million for the Historically Black College and University 

(HBCU) Capital Financing Program account for fiscal year 2019. The request includes $339,000

for administrative expenses and an additional $20.2 million for new loan subsidy costs. The 

Administration requests that loan subsidy funding be available through September 30, 2020. 

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 Department’s ability to achieve the statutory mandate of ensuring that loans are fairly 

allocated among as many eligible institutions as possible.

The $339,000 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 $20.2 million for new loan subsidy costs and anticipates that the requested 

subsidy amount will be sufficient to guarantee $580 million in new loans.

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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PROGRAM OUTPUT MEASURES

(dollars in thousands)

Output Measures 2017

2018

Annualized CR 2019

Number of new loans:

New loans to Private HBCUs 0 3 7

New loans to Public HBCUs 4 3 7

Total new loans 4 6 14

New loan volume:

New loans to Private HBCUs $0 $156,000 $290,000

New loans to Public HBCUs 174,100 156,000 290,000

Total new loan volume 174,100 312,000 580,000

Total number of loans:

Total loans to Private HBCUs 50 54 60

Total loans to Public HBCUs 18 22 28

Total number of l oans 68 75 88

Total loan awards:

Total loans to Private HBCUs $1,436,385 $1,592,123 $1,882,047

Total loans to Public HBCUs 719,990 875,728 1,165,652

Total outstandi ng awards 2,156,375 2,467,851 3,047,699

Total outstanding loan awards:

Total loans to Private HBCUs $1,408,885 $1,567,520 $2,121,989

Total loans to Public HBCUs 580,670 646,051 874,575

Total outstandi ng awards 2,156,375 2,213,571 2,996,564
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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 2019 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

2014 70 41

2015 70 26

2016 70 44

2017 70

2018 70

2019 70

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. 
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Objective: Improve the delinquency rate of loan recipients.

Measure: The delinquency rate of loan recipients.

Year Target Actual

2014 14 18

2015 14 36

2016 14 33

2017 14 29

2018 14

2019 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 more 

delinquent a borrower the greater level of financial instability exists. 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. 

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 full-time retention rate is the percent of the fall full-time cohort from the prior year 

minus exclusions from the fall full-time cohort that re-enrolled at the institution as either full or 

part-time in the current year.

Year Target Actual

2014 69 59

2015 70 59

2016 71 58

2017 71

2018 71

2019 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. 

Historically, the persistence rate at HBCUs receiving loans through the capital finance program 

is about the same as at HBCUs overall. This measure relies on data taken from the Integrated 

Postsecondary Education Data System maintained by the National Center for Education 

Statistics.