Over Half Of HBCUs Could Lose Federal Financial Aid Access

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.

Bullock wasn’t planning on going to an HBCU, but a conversation with DSU’s admissions director changed that. The message to Bullock from DSU was clear: “‘Whatever you need, we got you,” Bullock recalls. “That was the only place I applied to that took me in as family before I even was at the university.”

Without a scholarship, a Pell Grant and federal student loans DSU helped Bullock secure, she isn’t sure she would’ve been able to go to college at all.

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.

“It’s the network. It’s the connections. It’s the inspiration that I can do and be something. That is the most valuable thing that I have extracted from going to college,” she says. “I would not have that at home.”

Bullock finds the HBCU experience unique, saying the schools push you to excel, provide a platform to share your passions and “believe in you before you do.” To HBCU historian Dr. Cheryl Mango, HBCUs provide even more.

Unfortunately, students at more than half of America’s 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.

Almost 60 percent of HBCUs could lose access to federal financial aid programs

If too high a percentage of a school’s former students default on their student loans, the U.S. government withdraws that school’s 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’s HBCUs are on track to lose their Pell Grants and federal student loans. That’s if — and it’s a significant if — 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.

If a student chooses to go to an at-risk HBCU, they may have to find other ways to finance their education.

Elevated delinquency and default rates aren’t just plaguing HBCUs. As Bankrate reported this summer, 5.3 million student loan borrowers have defaulted on their student loans as they’ve resumed or begun owing payments after the pandemic pause. And based on the ED’s delinquent borrower report, more than 1,100 colleges and universities across the country — almost 20 percent of all colleges tracked — could lose access to federal financial aid. But the potential impacts for America’s HBCU institutions and communities are particularly pronounced.

The Department of Education has not responded to email and phone messages seeking comment on this data. An automated message at the department’s press office phone number states that the office is “temporarily closed.”

Cohort Default Rate, nonpayment rate and federal financial aid

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’s eligibility for federal financial aid. A federal loan officially enters default when it’s 270 days past due but may not be counted toward the CDR until it’s 360 days past due.

• One-year trigger: If a school’s most recent CDR is 40 percent or higher, it could lose access to the Direct loan program almost immediately.
• Three-year trigger: If a school’s three most recent CDRs are 30 percent or higher, it could lose access to the Pell Grants and Direct loans.

The nonpayment rates listed in the ED’s report are not the same as cohort default rates — 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.

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.

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 “institutions mitigate their risk of facing high cohort default rates next year that could potentially result in losing access to federal student aid,” it wrote.

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:

• In total, 56 had nonpayment rates of 30 percent or higher.
• 29 schools had nonpayment rates between 30 percent and 39 percent. Of those 29, 21 were public HBCUs.
• 27 schools had nonpayment rates of 40 percent or higher. Of those 27, 25 were private HBCUs.

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.

— Bankrate analysis of Department of Education data

• Why does the government sanction schools with high CDRs?
  

  Per a 2023 congressional report, the government pulls Pell Grants and federal Direct Loans from schools with high CDRs to protect students and taxpayers. If many graduates default on their loans, the reasoning goes, the school must not prepare students for employment and financial success after college. Additionally, student loan defaults can add to the national debt and slow down economic growth.

  The government hopes that the looming threat of sanctions will motivate schools to set their students up for success with better education and resources for employment after graduation. It may also incentivize schools to reach out to delinquent students to get them back on track.

• Is it common for schools to lose federal funding?
  

  While schools with high CDRs can lose access to Pell Grants and federal loans, it is rare. For example, in fiscal year 2017, only 29 of approximately 6,000 institutions disbursing federal financial aid were eligible for these sanctions, and just 12 were actually subject to them.

  Some schools may successfully increase their repayment rates before the sanctions take place. Schools may also appeal sanctions. For example, if they have a high percentage of low-income students (which HBCUs do), they could say that their students’ preexisting likelihood of default should exclude them from sanctions.

HBCUs and their students depend on federal financial aid

According to the United Negro College Fund’s 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.

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.

“[HBCUs] don’t have the same resources. They don’t have the large endowments. They don’t have all the money coming in because most philanthropists give their money to wealthy institutions. Money begets money,” she says. “And so, when you get a package as a student from an HBCU, you’re going to get institutional aid, but you’re not going to get the same as if you go to the predominantly white institution down the street.”

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.

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 had average rates of undergraduate students receiving Pell Grants compared to all IHEs.”

What happens if HBCUs lose access to federal financial aid?

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.

“The Freedmen’s Bureau was probably one of the first kinds of mechanisms of the federal government offering and extending federal funding to college students,” she says. “So the HBCUs kind of set the model for that, because we have always had a dependency on the federal government for our survival.”

That dependency means HBCUs risk closure should they lose access to grants and federal student loans.

Impact on HBCUs

“It makes it almost impossible for most HBCU students to go to college,” says Gasman, laying out a domino effect of losing aid:

• Students lose access to aid and can’t go to a particular college.
• That college has less funding and cannot provide programming or student success support.
• In turn, the college will also need to raise tuition, making attendance even harder to afford.

“It 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,” says Mango. “We look at the real-life possibility of HBCUs: If we lose access, yes, it would lead to mass closures.”

Impact on HBCU students

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’s 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. 

Aside from losing financial assistance, HBCU students would face cultural, emotional and moral tolls. 

The HBCU experience and education students receive doesn’t just guide them in service to others. It is also tied to their esteem.

As Mango explains, education gives Black Americans an identity. “We say these things, ‘an educated Black person,’ [or] ‘I’m an educator,’ because it means so much to us, in terms of our esteem. Education is tied directly to our esteem.”

Impact on the country

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:

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. “It’s not moral,” she says of the possible repercussions. “It’s not equitable.”

Moving HBCUs from surviving to thriving

According to Mango, this isn’t 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’re trying to thrive.

“What HBCUs have contributed in our cultural currency is how we’ve 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,” she says. “We’re poor. That’s been understood since the first Negro college opened. And that’s what the federal government has understood, through numerous studies — that it’s going to have to support HBCUs. And it has done that.”

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

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.

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 — factors out of the control of higher education institutions.

Take action

So what can be done to prevent HBCUs from losing federal financial aid or — if they lose it — from closing their doors?

• Alumni
  

  • Pay your federal student loans, if you can: Institutions are at risk because they have high nonpayment rates from former students. Some borrowers may not know their payments are due. If you aren’t sure, check your emails, log into StudentAid.gov or contact your servicer. And make sure your contact information is up-to-date.
  • Get assistance: If you’re struggling to make payments, reach out to your servicers, consider student loan consolidation or an income-driven repayment plan. If your federal student loans are in default, contact the default resolution group for support.
  • Unify: Mango wants alumni, high-level advocacy organizations, HBCU scholars and communities to come together. They can use alumni events as educational and financial literacy opportunities and learn how to problem-solve for HBCUs together.

• Current students
  

  • Learn more about your loans: Talk to your financial aid office to learn more about your loans and what you are responsible for paying. Use a student loan calculator to get a better idea of what student loan repayment looks like. If you also borrow from a private lender, make sure you understand your private student loan rates and terms and how to fit those additional payments into your future budget.
  • Apply for scholarships: Current students should apply for as many scholarships as possible throughout their college career to lower the amount they must borrow and repay.
  • Share the HBCU narrative: Use social media to show off the HBCU experience, one that Mango calls “a cultural treasure.” Mango says this cultural currency is powerful.

• Supporters
  

  • Engage in politics: Gasman recommends lobbying, writing letters and calling your representatives to voice your concerns.
  • Learn more about HBCUs: Research the history of HBCUs and their impact on federal financial aid as we know it today. Learn about their past and current issues, the work the institutions and advocates are doing in the government and ways you can help them.
  • Raise awareness: Use social media to talk about the issues HBCUs face and share the HBCU story of survival and success.
  • Support other initiatives: Donate your time or money to mentoring programs and nonprofits, like Midnight Golf, that prepare youth for college. This Detroit nonprofit first connected Bullock to DSU.
  • Provide funding: Donate to scholarship organizations or education fundraisers on crowd-sourcing sites like GoFundMe to help pay for a deserving student’s education.

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Bottom line

When a certain percentage of a school’s federal student loan borrowers default on their loans, the Department of Education can take away the school’s access to federal financial aid, which includes Pell Grants and federal student loans. This threatens more than 1,100 colleges across America, or just under 1 in 5, not just HBCUs.

But close to 60 percent of all HBCUs in America have nonpayment rates that indicate a high risk of losing federal financial aid — something that more than half of their students rely on. Losing this access can be detrimental to many of these schools, threatening the very existence of some.

HBCUs have faced loss of funding before. And while presidents may take supportive action with executive orders and funding promises, other federal rules and policies may void those efforts.

While the colleges work to encourage former students to pay back their loans and HBCU lobbyists, advocates and students take action to save their schools, Mango puts her hope in the past success of these institutions and what they mean to the country that founded them.

“We’re leaders in survival,” she says. “It’s a sad story in many ways, but it’s a triumphant story. It’s an American story. The HBCUs represent the American ethos of triumph, courage, bravery, sacrifice and pulling yourself up by your bootstraps.”

• Methodology
  

  Two sources were used to calculate the data presented in this article. The first is the list of 100 HBCUs in Rutgers University’s 2025 directory of Minority Serving Institutions. According to the directory, the schools with the HBCU designation “include all institutions deemed eligible to apply for a grant for this program or a current grantee, both in category “HBCU, “HBGI,” or “HBCU Masters” of ED’s Eligibility Matrix as well as additional institutions listed as HBCU within the Integrated Postsecondary Education Database System (IPEDS).” The second is the Department of Education’s NSLDS delinquent borrower report, released July 23, 2025.

  To find the number of HBCUs at risk of losing access to federal financial aid programs, the HBCU list in the Rutgers Directory was cross-referenced with the Department of Education’s delinquent borrower report. Of the 100 HBCUs on the Rutgers list, six schools were not tracked by the Department of Education’s report and, thus, not included in the count. Of the 94 schools on both lists, two schools did not have calculated nonpayment rates, but were counted as they are tracked by the ED.