{"id":2710,"date":"2025-09-07T18:55:31","date_gmt":"2025-09-07T18:55:31","guid":{"rendered":"https:\/\/ft365.org\/index.php\/2025\/09\/07\/over-half-of-hbcus-could-lose-federal-financial-aid-access-bankrate\/"},"modified":"2025-09-07T18:55:31","modified_gmt":"2025-09-07T18:55:31","slug":"over-half-of-hbcus-could-lose-federal-financial-aid-access-bankrate","status":"publish","type":"post","link":"https:\/\/ft365.org\/index.php\/2025\/09\/07\/over-half-of-hbcus-could-lose-federal-financial-aid-access-bankrate\/","title":{"rendered":"Over Half Of HBCUs Could Lose Federal Financial Aid Access | Bankrate"},"content":{"rendered":"
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Key takeaways<\/span> <\/span> <\/h2>\n
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  • When too many former students default on their student loans, the Department of Education can remove a school\u2019s access to federal financial aid. <\/li>\n
  • Almost 60 percent of HBCUs could lose access, compared to less than 20 percent of non-HBCUs, if current rates of borrowers being behind on loans translate into similarly high default rates. <\/li>\n
  • Higher percentages of HBCU students rely on federal financial aid to help fund their education than students at non-HBCUs. <\/li>\n
  • Losing federal financial aid could devastate institutions that move Black Americans from low-income to middle class, but advocates say supporters can take action to help protect HBCUs. <\/li>\n<\/ul><\/div>\n

    Federal financial aid enabled Ranyah Bullock to attend Delaware State University, a historically Black university where the professors know her by name and the community feels as much like a family as a campus. But as soon as next year, thousands of other historically Black college or university (HBCU) students across the nation may lose access to that funding.<\/p>\n

    Bullock wasn\u2019t planning on going to an HBCU, but a conversation with DSU\u2019s admissions director changed that. The message to Bullock from DSU was clear: \u201c\u2018Whatever you need, we got you,\u201d Bullock recalls. \u201cThat was the only place I applied to that took me in as family before I even was at the university.\u201d<\/p>\n

    Without a scholarship, a Pell Grant and federal student loans DSU helped Bullock secure, she isn\u2019t sure she would\u2019ve been able to go to college at all.<\/p>\n

    In her time attending Delaware State University, Bullock has interned at Fortune 500 companies, served as a student leadership representative, hosted educational workshops and received $80,000 in scholarships to help pay for her junior and senior year.<\/p>\n

    \u201cIt\u2019s the network. It\u2019s the connections. It\u2019s the inspiration that I can do and be something. That is the most valuable thing that I have extracted from going to college,\u201d she says. \u201cI would not have that at home.\u201d<\/p>\n

    Bullock finds the HBCU experience unique, saying the schools push you to excel, provide a platform to share your passions and \u201cbelieve in you before you do.\u201d To HBCU historian Dr. Cheryl Mango, HBCUs provide even more.<\/p>\n

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    We believe in the American dream through that HBCU experience\u2026 And so many Black people experience the best of America through the HBCU education, so I fear what that would look like if that’s not there.<\/q> \u2014 Dr. Cheryl Mango, associate professor and HBCU historian <\/cite> <\/p><\/blockquote><\/div>\n

    Unfortunately, students at more than half of America\u2019s HBCUs may not get the funding they need to flourish at these institutions. A Bankrate analysis of Department of Education data found these schools are at disproportionately high risk of losing access to federal financial aid due to widespread student loan defaults by former students. If HBCUs cannot offer a financial aid package with the Pell Grant and federal student loans, many undergraduates will struggle to afford attendance and the institutions may struggle to survive.<\/p>\n

    Almost 60 percent of HBCUs could lose access to federal financial aid programs<\/h2>\n

    If too high a percentage of a school\u2019s former students default on their student loans, the U.S. government withdraws that school\u2019s ability to disburse federal financial aid. In July, the Department of Education released its delinquent borrower report. Its data suggests that 59.6 percent of America\u2019s HBCUs are on track to lose their Pell Grants and federal student loans. That\u2019s if \u2014 and it\u2019s a significant if \u2014 former students who are currently behind on their loans go on to enter default at similar rates. That rate is sky-high compared to non-HBCUs, of which fewer than 1 in 5 are at risk.<\/p>\n

    If a student chooses to go to an at-risk HBCU, they may have to find other ways to finance their education.<\/p>\n

    Elevated delinquency and default rates aren\u2019t just plaguing HBCUs. As Bankrate reported this summer, 5.3 million student loan borrowers have defaulted on their student loans as they\u2019ve resumed or begun owing payments after the pandemic pause. And based on the ED\u2019s delinquent borrower report, more than 1,100 colleges and universities across the country \u2014 almost 20 percent of all colleges tracked \u2014 could lose access to federal financial aid. But the potential impacts for America\u2019s HBCU institutions and communities are particularly pronounced.<\/p>\n

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    \"Mixed<\/p>\n

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    Student loan delinquencies are rising. Could “nudges” help? <\/h3>\n

    A simple email could help 80,000 borrowers nationwide avoid delinquency, a Wharton study suggests.<\/p>\n

    Learn more <\/p>\n<\/div><\/div>\n

    The Department of Education has not responded to email and phone messages seeking comment on this data. An automated message at the department\u2019s press office phone number states that the office is \u201ctemporarily closed.\u201d<\/p>\n

    Cohort Default Rate, nonpayment rate and federal financial aid<\/h3>\n

    The Cohort Default Rate (CDR) measures the share of federal student loan borrowers who default within three years of entering repayment and determines a school\u2019s eligibility for federal financial aid. A federal loan officially enters default when it\u2019s 270 days past due but may not be counted toward the CDR until it\u2019s 360 days past due.<\/p>\n

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    • One-year trigger:<\/strong> If a school\u2019s most recent CDR is 40 percent or higher, it could lose access to the Direct loan program almost immediately.<\/li>\n
    • Three-year trigger: <\/strong>If a school\u2019s three most recent CDRs are 30 percent or higher, it could lose access to the Pell Grants and Direct loans. <\/li>\n<\/ul>\n

      The nonpayment rates listed in the ED\u2019s report are not the same as cohort default rates \u2014 in fact, the ED has not released CDRs since the pandemic student loan pause. Some borrowers who are currently more than 90 but fewer than 360 days behind on their loans may resume payments, especially as the government adds pressure through wage garnishment and tax return collection actions<\/u>. <\/p>\n

      So, schools with default rates between 30 percent and 39 percent have years to get their former students back on track. Schools with higher rates face a more urgent situation.<\/p>\n

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      Lightbulb Icon<\/title> <\/svg> <\/p>\n
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      What does “nonpayment” mean? <\/p>\n

      Nonpayment is defined in the report as \u201cDirect Loan borrowers who entered repayment since January 2020 and whose federal student loans were more than 90 days delinquent at the time of the data pull.\u201d<\/p>\n<\/p><\/div>\n<\/p><\/div>\n

      However, the ED itself encourages institutions to use nonpayment rates as a proxy for cohort default rates. Its goal for sharing the data was to ensure \u201cinstitutions mitigate their risk of facing high cohort default rates next year that could potentially result in losing access to federal student aid,\u201d it wrote.<\/p>\n

      Bankrate cross-referenced the delinquent borrower report data with a list of HBCUs and found that, of the 94 HBCUs tracked by the Department of Education:<\/p>\n

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      • In total, 56 had nonpayment rates of 30 percent or higher.<\/li>\n
      • 29 schools had nonpayment rates between 30 percent and 39 percent. Of those 29, 21 were public HBCUs.<\/li>\n
      • 27 schools had nonpayment rates of 40 percent or higher. Of those 27, 25 were private HBCUs.<\/li>\n<\/ul>\n
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        Twenty-seven HBCUs currently have a nonpayment rate of 40 percent or higher, meaning they could lose access to federal student loans as early as next year, if nonpayment rates predict CDRs.<\/p>\n

        \u2014 Bankrate analysis of Department of Education data<\/cite> <\/p><\/blockquote>\n

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          HBCUs and their students depend on federal financial aid<\/h2>\n

          According to the United Negro College Fund\u2019s 2025 Fact Sheet, it costs 27 percent less to attend an HBCU than a comparable non-HBCU. Even so, without federal financial aid, the majority of HBCU students would not be able to afford to go to one of these schools.<\/p>\n

          HBCUs tend to enroll more low-income students than predominantly white colleges and the institutions themselves cannot provide as much institutional aid, according to Marybeth Gasman, professor and executive director of the Rutgers Center for Minority Serving Institutions.<\/p>\n

          \u201c[HBCUs] don\u2019t have the same resources. They don\u2019t have the large endowments. They don\u2019t have all the money coming in because most philanthropists give their money to wealthy institutions. Money begets money,\u201d she says. \u201cAnd so, when you get a package as a student from an HBCU, you\u2019re going to get institutional aid, but you\u2019re not going to get the same as if you go to the predominantly white institution down the street.\u201d<\/p>\n

          Comparing reliance on financial aid between institutions makes it clear: More is at stake for HBCU students than others. Not only is the number of students receiving Pell Grants or federal loans 23 percentage points higher than at non-HBCUs, but the amount of aid they get is higher, too.<\/p>\n

          HBCU students who start at a greater economic disadvantage and must borrow more student loans may be more likely to struggle with repayment. According to the 2023 congressional report, institutions of higher education (IHEs) with CDRs of 25% or higher have higher average rates of undergraduate students receiving Pell Grants compared to all IHEs.<\/p>\n

          What happens if HBCUs lose access to federal financial aid?<\/h2>\n

          The irony of HBCUs losing federal financial aid is not lost on Mango, who is an associate professor and founder of an HBCU studies program as well as a historian.<\/p>\n

          \u201cThe Freedmen\u2019s Bureau was probably one of the first kinds of mechanisms of the federal government offering and extending federal funding to college students,\u201d she says. \u201cSo the HBCUs kind of set the model for that, because we have always had a dependency on the federal government for our survival.\u201d<\/p>\n

          That dependency means HBCUs risk closure should they lose access to grants and federal student loans.<\/p>\n

          Impact on HBCUs<\/h3>\n

          \u201cIt makes it almost impossible for most HBCU students to go to college,\u201d says Gasman, laying out a domino effect of losing aid:<\/p>\n

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          • Students lose access to aid and can\u2019t go to a particular college.<\/li>\n
          • That college has less funding and cannot provide programming or student success support. <\/li>\n
          • In turn, the college will also need to raise tuition, making attendance even harder to afford.<\/li>\n<\/ul>\n

            \u201cIt will devastate HBCUs if they lose access to financial aid. Because the majority of our students are Pell-eligible. The majority of our students come from disadvantaged, impoverished backgrounds,\u201d says Mango. \u201cWe look at the real-life possibility of HBCUs: If we lose access, yes, it would lead to mass closures.\u201d <\/p>\n

            Impact on HBCU students<\/h3>\n

            HBCU students are taught the American dream: You work hard, you see success. And the success is seen in the results after graduation. According to Gasman\u2019s study on income mobility at HBCUs, more students experience upward mobility at HBCUs than at predominantly white institutions, with 70 percent obtaining middle-class incomes and two-thirds of low-income students moving into at least the middle class.\u00a0<\/p>\n

            Aside from losing financial assistance, HBCU students would face cultural, emotional and moral tolls.\u00a0<\/p>\n

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            The biggest thing HBCUs pour into the students is: You enter to learn and you go forth to serve. Everything that you learn is to serve other people.<\/q> \u2014 Ranyah Bullock, senior at Delaware State University <\/cite> <\/p><\/blockquote><\/div>\n

            The HBCU experience and education students receive doesn\u2019t just guide them in service to others. It is also tied to their esteem.<\/p>\n

            As Mango explains, education gives Black Americans an identity. \u201cWe say these things, \u2018an educated Black person,\u2019 [or] \u2018I\u2019m an educator,\u2019 because it means so much to us, in terms of our esteem. Education is tied directly to our esteem.\u201d<\/p>\n

            Impact on the country<\/h3>\n

            If more HBCUs close or lose federal aid, fewer students can have that opportunity to thrive, nurture their talents and share them with society. As Gasman explains:<\/p>\n

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            [HBCUs] are incubators for Black doctors, and lawyers, judges and pharmacists, and nurses and teachers.<\/q> \u2014 Marybeth Gasman, Rutgers Center for Minority Serving Institutions <\/cite> <\/p><\/blockquote><\/div>\n

            Gasman worries about seeing fewer Black professionals across all different industries, as well as wider income and wealth gaps and the perpetuation of systemic inequities. \u201cIt\u2019s not moral,\u201d she says of the possible repercussions. \u201cIt\u2019s not equitable.\u201d<\/p>\n

            Moving HBCUs from surviving to thriving<\/h2>\n

            According to Mango, this isn\u2019t a new threat for HBCUs. She acknowledges that HBCUs have closed in the past and many are currently under the threat of closing. Still, these institutions survive, and they\u2019re trying to thrive.<\/p>\n

            \u201cWhat HBCUs have contributed in our cultural currency is how we\u2019ve been able to navigate these very real practical issues with financial aid and all that has come since our inception. These problems are not new,\u201d she says. \u201cWe\u2019re poor. That\u2019s been understood since the first Negro college opened. And that\u2019s what the federal government has understood, through numerous studies \u2014 that it\u2019s going to have to support HBCUs. And it has done that.\u201d<\/p>\n

            Mango credits past and current U.S. presidents, government advocacy and HBCUs\u2019 own political prowess for helping these institutions survive thus far. She refers to HBCUs as \u201cthe most bipartisan consensus issue in American history,\u201d stating that both parties can claim success. She says \u201cthe secret, the magic\u201d for HBCUs is the bipartisan alignment they\u2019ve historically had. \u201cWe have been supported by every American president since our inception,\u201d she says, including current President Donald Trump.<\/p>\n

            In his first and second terms, Trump secured $225 million in permanent annual funding for HBCUs, provided hurricane relief to many affected institutions and moved the White House Initiative on HBCUs from the Department of Education to the Executive Office of the President.<\/p>\n

            But despite presidential and bipartisan support, HBCU students have been and still are under threat of losing federal funding for reasons including the current delinquency crisis and new federal loan limits \u2014 factors out of the control of higher education institutions.<\/p>\n

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            HBCUs should not just bear this responsibility alone. This is a responsibility that the nation should bear with their HBCUs. Because the problems of HBCUs were not created by the HBCU community alone.<\/q> \u2014 Dr. Cheryl Mango, HBCU historian and associate professor <\/cite> <\/p><\/blockquote><\/div>\n

            Take action<\/h3>\n

            So what can be done to prevent HBCUs from losing federal financial aid or \u2014 if they lose it \u2014 from closing their doors? <\/p>\n