Enacted in 1994 to recognize the prominent role of HBCUs in American history, the Capital Financing Program addresses HBCUs’ widespread need for capital improvements and general lack of access to traditional funding sources.

The Program was authorized under title III, part D of the Higher Education Act of 1965 The Historically Black College and University (HBCU) Capital Financing, as amended (HEA) (20 U.S.C. 1066 et seq.).

Under this program, the U.S. Department of Education provides financial insurance to guarantee up to $1,100,000,000 in loans and accrued interest to qualifying HBCUs for specified kinds of capital projects. To date, all bonds issued have been purchased by the Federal Financing Bank of the U.S. Treasury.

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About the Historically Black College and University (HBCU) Capital Financing Program

t Provides financing for important capital projects at the lowest cost of borrowing available in today's challenging credit environment
Repayment of debt and principal is guaranteed by the U.S. Department of Education with no fee
Typically, loans range from $10 to $20 million, but may be larger

To provide low-cost capital to finance improvements to the infrastructure of the nation’s 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.

Rice Capital Access Program, as the Designated Bonding Authority for the U.S. Department of Education, works with schools to qualify projects and determine if the school has the necessary credit standing to qualify for a loan.

To issue bonds, you would need to secure an issuer, most likely seek credit enhancements from the private sector, and ultimately find investors. With the HBCU Capital Financing Program, Rice is the issuer. All principal and interest is guaranteed to be repaid by the U.S. Department of Education, and the sole investor is the U.S. Treasury. Your loan interest rate is typically a small spread over the corresponding Treasury security yield and is tailored to your project's anticipated useful life.

According to the U.S. Department of Education, any Historically Black College or University that was established prior to 1964 whose principal mission was and is the education of Black Americans is eligible to borrow from the HBCU Capital Financing Program.
More on qualifying >>

Typical projects
HBCU loan proceeds can be used for the 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 five percent 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;
  • 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;
  • A facility designed to provide primarily outpatient health care for students or faculty;
  • Physical infrastructure essential to support the projects authorized by the program, including roads, sewer and drainage systems, and water, power, lighting, telecommunications, and other utilities;
  • Any other facility, equipment, or fixture which is essential to maintaining the accreditation of the member institution by an accrediting agency or association recognized by the Secretary.

More information
In addition to the materials found on this website, you may also wish to review the Frequently Asked Questions found on the U.S. Department of Education's website for the HBCU Capital Financing Program.