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HBCU Capital Financing Board Offers Help To Katrina-Hit Schools

Black colleges impacted by Hurricane Katrina will have an easier time getting funding for capital projects, members of the Historically Black College and Universities Capital Financing Advisory Board said Friday during a meeting held at Howard University, in Washington, D.C.

“We’re going to work as hard as we can to help through site visits. We’re working with them to help get the application together and to think creatively on how we can provide service to get them back where they need to be,” said Derek Hansel, executive director of the Commerce Capital Access Program, a guaranteed loan program sponsored by the U.S. Department of Education.

Each university has unique needs. Dillard University needs to bring its buildings up to code and Southern University at New Orleans needs to build dormitories as well as clean up storm-damaged campus buildings.

“Southern was always a commuter school, but there aren’t any commuters,” Hansel said. “The first thing they are interested in is housing. There is no where for their students to live.”

The board acknowledged institutions with the most need in New Orleans are in the least position to quickly repay. While there is a cap on loans to other HBCUs that can be exhausted, there was no cap on loans for Katrina schools, said Sarah L. Warner, an attorney in the office of the General Counsel.

However, board members noted, the program has not been utilized to its fullest capacity, which is why Congress has been reluctant to raise the maximum amount schools can borrow. Board members discussed plans to increase awareness of the HBCU Capital Financing Program through increased promotion, campus visits and conference attendance.

The goal of the program is to provide low-cost capital to finance improvements to the infrastructure of the nation’s HBCUs. Under the program, the U.S. Department of Education provides a total of $375 million in loan guarantees to qualified HBCUs for specified projects. HBCU loans may be used for classroom and laboratory facilities, dormitory and dining, student centers, libraries, instructional equipment, research instrumentation, and capital equipment or fixtures.

Staff members reported to the board problems with a loan taken out by Barber-Scotia College, which has been unable to make debt service payments, according to Hansel. “We are forced to draw from escrow to make payments. It’s very tragic what’s happened there,” he said.

However, the board also highlighted success stories from universities in the program that have been able to improve their credit ratings through successful repayment of the government loans, such as Lincoln University in Pennsylvania and Clark Atlanta University.

The HBCU capital financing program provides financial insurance through a designated bonding authority to guarantee construction loans to qualified HBCUs. The nine-member board of HBCU administrators advises the U.S. Secretary of Education on the capital needs of HBCUs and how to best meet those needs through the capital financing program. 

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