HBCUs and Minority-Serving Institutions — Federal Aid Programs

Historically Black Colleges and Universities (HBCUs) receive dedicated federal funding under Part B of Title III of the Higher Education Act — a formula program that distributes grants based on Pell Grant enrollment and recognizes the unique role these institutions play in serving Black, low-income, and educationally disadvantaged students. Federal law also provides parallel programs for tribal colleges, Hispanic-serving institutions, Alaska Native and Native Hawaiian institutions, and other minority-serving institutions. Together, these programs represent the federal government's recognition that certain institutions serve populations that the mainstream higher education system historically excluded.

Current Law (2026)

Legal Authority

• 20 U.S.C. § 1060 — Findings and purposes: Congress finds that HBCUs have contributed significantly to equal opportunity; States and the federal government discriminated and underfunded them; federal investment is needed to overcome this legacy
• 20 U.S.C. § 1062 — Grants to institutions: approved Part B institutions receive grants for library acquisitions, program expansion, academic tutoring, faculty professional development, endowment challenges, and other capacity-building uses
• 20 U.S.C. § 1063 — Allotment formula: each Part B institution receives a proportional share based on Pell Grant recipient enrollment (one half of funds) and graduate/professional enrollment (other half)
• 20 U.S.C. § 1063a — Applications: Part B institutions must meet accreditation and financial stability requirements; must submit plans showing how funds will be used to improve institutional capacity
• 20 U.S.C. § 1065 — Endowment challenge grants: Secretary may award matching grants to help HBCUs establish or expand endowment funds; federal dollars matched by private fundraising
• 20 U.S.C. § 1059c — Tribal Colleges and Universities: Secretary provides grants and assistance to TCUs to improve and expand capacity to serve Indian students; separate formula from HBCU Part B
• 20 U.S.C. § 1067q — MSI Investment Fund: pooled investment available to HBCUs, Hispanic-Serving Institutions, Tribal Colleges, Asian American/Pacific Islander institutions, Native American/Alaska Native institutions, and Native Hawaiian institutions

Who the Programs Cover

HBCUs are defined in federal law as institutions of higher education that were established before 1964, whose principal mission was and is the education of Black Americans. As of 2026, 101 HBCUs are accredited and degree-granting. They range from large research universities (Howard University, Spelman College) to small liberal arts colleges and community colleges. Many are in the South, though HBCUs exist in 19 states and the District of Columbia. HBCUs enroll roughly 300,000 students — a fraction of all Black college students, but a disproportionately important fraction: HBCUs produce a large share of Black professionals in medicine, law, engineering, and the sciences relative to their enrollment.

Tribal Colleges and Universities (TCUs) are post-secondary institutions chartered by federally recognized Indian tribes, located on or near reservations, and primarily serving tribal community members. There are approximately 35 TCUs, most in the Great Plains and Pacific Northwest. The federal grant program for TCUs (§ 1059c) is separate from the HBCU formula and reflects the unique trust relationship between the federal government and Indian tribes.

Hispanic-Serving Institutions (HSIs) are colleges and universities where 25% or more of full-time students are Hispanic. HSIs are not defined by founding purpose (unlike HBCUs) but by current enrollment demographics. There are approximately 550 HSIs, concentrated in California, Texas, Florida, and New York. Federal HSI programs are authorized under a separate part (Part A of Title V) and channeled in part through the MSI Investment Fund.

The MSI Investment Fund (§ 1067q) pools appropriations that can flow to any of the recognized MSI categories — the mechanism used to direct significant additional funding to these institutions when Congress makes large appropriations (as in the American Rescue Plan and Infrastructure Investment and Jobs Act).

How It Affects You

If you're a student currently enrolled at an HBCU, TCU, or other MSI: Title III and MSI Investment Fund money doesn't land in your bank account — it funds the infrastructure around you. Tutoring centers, writing labs, upgraded STEM equipment, faculty retention (so the professor who knows your name doesn't leave for a higher-paying institution), career services, and advising staff are all eligible uses. If your campus tutoring center is well-staffed or your library resources are strong, federal Title III funding is likely why. UNCF (uncf.org/scholarships) offers a scholarship portal specifically for students attending HBCUs and MSIs — over $100 million in scholarships distributed annually through its network, searchable by institution, major, and eligibility. If you're navigating financial stress, ask your institution's financial aid office what emergency funds or institutional aid is available — Title III funds can support student services that go beyond what Pell and loans cover.

If you're an administrator or development officer at an HBCU or MSI: The Part B formula allotment is not a grant you compete for — it's an annual entitlement if your institution is accredited and financially stable. Your share is determined by two factors in equal weight: Pell Grant recipient enrollment (half) and graduate/professional enrollment (half). Increasing Pell Grant enrollment increases your institutional allotment. The Department of Education's Office of Postsecondary Education (IDUES) administers Title III — contact information and application guidance is at ed.gov/about/org/list/ope. Endowment challenge grants (§ 1065) are competitive and require a 2:1 private match — for every $1 of private fundraising, the federal government contributes $1 (up to a cap). These are worth pursuing if your institution has active major-gift fundraising, since they effectively double the value of every private dollar raised for the endowment. NAFEO (nafeo.org) and UNCF track Title III funding developments, particularly in the OBBBA reconciliation process where HBCU appropriations are being negotiated.

If you're a policymaker or researcher studying HBCU funding equity: The quantitative case for the funding gap is well-documented. The 1890 land-grant HBCUs — 19 institutions in Southern states — received substantially less federal agricultural research funding than their 1862 counterparts for decades; the 2018 Farm Bill required parity, but implementation has been inconsistent. Eighteen states have settled HBCU equity lawsuits with the U.S. Department of Education regarding underfunding of their public HBCUs — Maryland's $577 million settlement over 10 years (finalized 2021) is the most recent large-scale resolution. UNCF's research division (uncf.org/research) publishes annual HBCU Impact Reports with enrollment, graduation, and workforce outcome data by institution. For institution-level financial comparisons — state vs. federal funding, endowment size, expenditures per student — NCES IPEDS (nces.ed.gov/ipeds) has complete financial data for every accredited institution, enabling peer-group comparisons. The research funding gap (federal R&D contracts at HBCUs vs. comparable predominantly white institutions) has been documented by GAO and is the subject of active lobbying for dedicated NSF, DOD, and NASA HBCU research programs.

If you're a prospective student or family choosing between an HBCU and other options: HBCUs produce a disproportionately large share of Black professionals in medicine, engineering, law, and the sciences relative to their enrollment share — the mentorship culture and professional network depth are real and measurable outcomes, not just brochure language. But the financial health of individual institutions varies enormously. Before committing, look up your specific institution on collegescorecard.ed.gov — search by name, then check graduation rate, median earnings 10 years after enrollment (broken down by field of study), and loan repayment rates. HBCU Money (hbcumoney.com) tracks financial health indicators including endowment size and composite financial indicators by institution — a practical resource for distinguishing financially stable HBCUs from those facing enrollment or fiscal challenges. Ask admissions directly about career placement rates in your intended field, and ask to speak with alumni in your field before enrolling — network strength is one of the most important variables and it differs significantly by major and institution.

State Variations

HBCUs are subject to both federal programs and state funding. Many HBCUs are public institutions funded primarily by their state governments, and state funding levels are a major determinant of institutional health. Several states have faced legal challenges for underfunding their public HBCUs relative to comparable predominantly white institutions — Maryland, Mississippi, and Tennessee have been sites of prominent HBCU equity litigation.

Implementing Regulations

The Department of Education's Office of Postsecondary Education implements the Title III institutional strengthening programs through two parallel regulatory frameworks:

34 CFR Part 606 — Developing Hispanic-Serving Institutions Program (22 sections, implementing 20 U.S.C. § 1101): HSIs eligible for Part 606 grants must have undergraduate enrollment that is at least 25% Hispanic students and at least 50% low-income students or first-generation college students. The program awards two types of grants:

• § 606.2 — Eligibility: the HSI must be an accredited nonprofit institution of higher education with at least 25% Hispanic enrollment; institutions must certify they have not received development grant funds for the same activity from another Part of Title III in the same year
• §§ 606.10–606.14 — Allowable and prohibited activities: planning grants fund the design of comprehensive development plans; development grants fund implementation — which may include faculty development, curriculum improvement, endowment building, purchase of equipment, construction or renovation of instructional facilities, and student services programs; prohibited uses include student financial aid, political or lobbying activities, and endowment fund investments below a minimum earnings threshold
• §§ 606.21–606.24 — Selection criteria: the Secretary evaluates applications on need (low graduation rate, low per-student expenditures, high proportion of low-income students), quality of development plan, management capacity, and evidence of commitment from institutional leadership; past performance under prior Part 606 grants earns bonus points — institutions that exceeded their prior award's outcomes receive additional scoring credit
• § 606.23 — Special funding: if only one additional planning grant can be funded, preference goes to an institution that has not previously received Part 606 planning support

34 CFR Part 607 — Strengthening Institutions Program (22 sections, implementing 20 U.S.C. §§ 1057–1059): the broader "Strengthening Institutions" program targets accredited IHEs with low per-student expenditures, high concentrations of needy students (Pell-eligible), and low graduation rates — a category that includes many small, underfunded private colleges and historically underserved community colleges. Key provisions parallel Part 606's structure:

• § 607.2 — Eligibility: the institution must be legally authorized to provide an educational program of not less than 2 years; must have an enrollment of at least 50% Pell-eligible or low-income students; must have low educational and general expenditures per FTE student compared to similar institutions — the Secretary establishes these comparison thresholds annually
• §§ 607.10–607.14 — Allowable activities: same as Part 606 — planning grants for development planning, development grants for implementation of improvement activities in instruction, administration, financial management, student services, and facilities
• §§ 607.20–607.24 — Selection criteria: need, quality of plan, management capacity, and evaluation capacity; prior grantees with documented success receive past-performance bonus points; the Secretary provides special funding consideration for institutions that serve areas with particularly high concentrations of low-income students

Both programs run on 5-year grant cycles through competitive peer review. An institution may hold both a Part 606 (HSI) grant and a Part 607 (Strengthening Institutions) grant if it meets both eligibility criteria, though it may not receive funds for the same activities from both programs simultaneously.

34 CFR Part 628 — Endowment Challenge Grant Program (20 sections, implementing 20 U.S.C. § 1065): a specialized mechanism for helping eligible institutions build permanent endowments — the financial foundation that enables long-term institutional stability independent of federal grant cycles. The Endowment Challenge Grant program is designed for institutions eligible under Title III (those serving high proportions of low-income or first-generation students, including HBCUs and other MSIs), and the "challenge" mechanic requires the institution to raise private matching funds before the federal grant is released:

• § 628.2 — Eligible institutions: the institution must be eligible for assistance under Title III of the HEA — typically institutions with low per-student expenditures, high concentrations of financially needy students, and accreditation by a recognized accrediting agency; HBCUs, HSIs, and other minority-serving institutions often qualify

• § 628.3 — Foundation recipients: an eligible institution may designate a college foundation (a separately incorporated 501(c)(3) organization) as the direct recipient of the endowment challenge grant, provided the foundation's endowment is established exclusively to benefit the institution; this allows institutional foundations to formally manage endowment assets even when the degree-granting institution lacks the legal capacity to hold and invest large endowment funds

• §§ 628.10 — Endowment grant characteristics: federal endowment challenge grants are matched — the grantee must raise non-federal funds in an amount equal to or greater than the federal grant; both the federal grant and the non-federal match are deposited into a permanent endowment fund; the fund may not be spent — only the investment income may be used for allowable educational purposes; the principal is permanently restricted

• § 628.32 — Funding priorities: the Secretary gives priority consideration to institutions that have recently lost eligibility for other Title III grant programs (transition support for graduating institutions), institutions with the lowest endowment values relative to enrollment, and institutions in states with the lowest per-capita income

• §§ 628.40–628.42 — Grant amount restrictions: federal grants may not exceed $750,000; the non-federal matching funds must be secured and available before the federal funds are released; institutions may not receive more than one endowment challenge grant in any 20-year period — preventing repeated federal investment in the same institution's endowment at the expense of other eligible institutions

  Endowment challenge grants address a structural disadvantage that many HBCUs and MSIs face: unlike elite predominantly white institutions whose alumni wealth enables large private gifts that build endowments compounding over centuries, HBCUs serve populations whose graduates historically earned lower wages in segregated labor markets. Small endowments mean high dependence on annual tuition revenue and federal grants — both of which are volatile. The challenge-grant mechanic is designed to mobilize alumni and philanthropic capacity while amplifying it with federal matching funds, gradually building the endowment base that provides institutional resilience.

Pending Legislation

Congress periodically increases HBCU appropriations and adds new programs. Recent years have seen significant new investments through COVID relief legislation. Proposals to strengthen HBCU research capacity (federal agencies contracting with HBCUs for research) and create dedicated HBCU infrastructure funds have bipartisan support. No major structural changes pending as of 2026.

Recent Developments

The Biden administration created an HBCU Propel Initiative to direct more federal research and contracting dollars to HBCUs, including specific DOD and NASA programs. Several HBCUs also received significant private philanthropic gifts in 2020-2022 following renewed attention to racial equity — Spelman, Morehouse, and Howard each received transformative gifts. The MSI Investment Fund mechanism has been used to direct large appropriations to MSIs rapidly when Congress acts, making it an important channel for expanded federal investment.

• Trump DEI executive orders and HBCU complications (2025): Trump's executive orders banning DEI in federal programs and federal contracting created significant uncertainty for HBCUs and MSIs. On one hand, HBCUs are designated by statute and Congress has specifically appropriated funding for them — they are not "DEI programs" in the executive order sense. On the other hand, the executive orders' broad language about "race-based preferences" created uncertainty about programs that benefit specific racial groups. The Trump administration ultimately clarified that HBCU-specific programs authorized by statute were not implicated by the DEI orders, but the uncertainty caused program delays.
• Federal HBCU funding in OBBBA: The HBCU community has actively lobbied to preserve and expand HBCU-specific funding in the reconciliation package. Key provisions: the HBCU Capital Financing Program, Strengthening HBCUs grants under Title III, and HBCU STEM research funding through NSF, DOD, and NASA. Republicans from states with prominent HBCUs — Alabama, North Carolina, Georgia — have been HBCU advocates in reconciliation negotiations. The programs have survived prior budget fights due to bipartisan geographic representation.
• Howard University endowment and federal funding independence: Howard University — the flagship federally chartered HBCU — receives a direct congressional appropriation (~$400M/year) separate from the Title III program. Howard has been building its endowment (now over $900M) to reduce dependence on federal appropriations. Trump's proposed budget included cuts to Howard's direct appropriation; Congress has historically protected Howard's appropriation on a bipartisan basis due to its unique status as a federally chartered institution.
• SFFA v. Harvard/UNC and HBCUs: The Supreme Court's 2023 decision in Students for Fair Admissions v. Harvard (see Equal Protection Clause) barred race-conscious admissions at colleges and universities. HBCUs were not directly affected — the ruling applies to race-based preferences in admissions, while HBCUs are open to all students of any race and are not using race as a selection criterion. However, some state-level actors have used the SFFA decision to challenge race-specific scholarship programs at HBCUs, arguing they violate equal protection. Courts have generally rejected challenges to HBCU-specific programs because HBCUs are open-enrollment institutions with diversity rooted in their founding mission, not exclusion.