The primary goal of the HBCU Capital Financing Program is to provide the nation’s HBCUs low-cost capital for the financing of infrastructure improvements. 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.
There are many benefits to choosing the HBCU Capital Financing Program over traditional funding sources, including:
- Significant net present value savings
- Less stringent collateral requirements, particularly for outstanding debt being refinanced
- More flexibility when additional borrowing is needed from other sources
- Program administrators who understand the unique needs and constraints of HBCUs
To issue traditional bonds, an HBCU institution would first need to identify a bond issuer, would most likely need to seek credit enhancements from the private sector, and would ultimately have to find investors. Under 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. The loan interest rate is typically a small spread over the corresponding Treasury security yield and is tailored to the 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. 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.
More on qualifying >>