Sending Office: Honorable Terri A. Sewell
Sent By:
Hillary.Beard@mail.house.gov

Support Deferment Authority for Struggling HBCUS in the HBCU Capital Financing Loan Program

Supporting Organizations: UNCF

Deadline: March 27, 2019 at NOON

Dear Colleague:

Please join us in sending the following letter to LHHS Chairwoman DeLauro and Ranking Member Cole regarding deferment authority for struggling HBCUs in the HBCU Capital Financing Loan program.

As you know, the HBCU Capital Financing Loan Program lends funds to public and private HBCUs at a lower interest rate than market rates for the purposes of building infrastructure on their campuses. This federal loan program is essential to HBCUs, especially
considering
research
 demonstrating the barriers HBCUs have faced in the private bond market, including higher underwriting fees. While the program has been invaluable, some institutions have continued to struggle making payments due to the 2008 economic recession.

Many bipartisan Members of Congress who represent these struggling HBCUs worked together to include language in Public Law (P.L.) 115-141, the Consolidated Appropriations Act of 2018. This language provided a deferment for private HBCUs with critical financial
needs. Despite eight private HBCUs being chosen, there were five additional private HBCUs which also applied, met the qualifications in the law, and were denied relief due to a demand that exceeded the funds appropriated by Congress. In response, bipartisan
support was also gained from Members of Congress to include the necessary language to meet the appropriate demand in the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act of 2019 (P.L. 115-245).

We ask for your support in including the necessary language in the FY2020 Labor, Health and Human Services, and Education Appropriations Act to ensure that these HBCUs will continue to receive their deferment for the period they’ve been allowed by the Department
of Education.

Please reach out to Hillary Beard in Rep. Terri Sewell’s office or
John Christie in Rep. Adams office to add your boss to our letter.

Sincerely,

 

 

March XX, 2019

The Honorable Rosa DeLauro                                    The Honorable Tom Cole

Chairwoman                                                                Ranking Member

Subcommittee on Labor, Health and Human             Subcommittee on Labor, Health and Human

Services, Education, and Related Agencies                Services, Education, and Related Agencies

U.S. House of Representatives                                   U.S. House of Representatives

Washington, D.C.                                                       Washington, D.C.

Dear Chairwoman DeLauro and Ranking Member Cole:

We write to ask for your support regarding the Historically Black Colleges and Universities (HBCU) Capital Financing Loan Program deferment authority. As you know, the HBCU Capital Financing Loan Program lends funds to public and private HBCUs at a lower
interest rate than market rates for the purposes of building infrastructure on their campuses. This federal loan program is essential to HBCUs, especially considering
research demonstrating the barriers HBCUs have faced in the private bond market, including higher underwriting fees.[1] While the program has
been invaluable, some institutions have struggled to make payments due to the 2008 economic recession.

Many bipartisan Members of Congress who represent these struggling HBCUs worked together to include language in Public Law (P.L.) 115-141, the Consolidated Appropriations Act of 2018. This language provided a deferment for private HBCUs with critical financial
needs. Despite eight private HBCUs being chosen, there were five additional private HBCUs which also applied, met the qualifications in the law, and were denied relief due to a demand that exceeded the funds appropriated by Congress. In response, bipartisan
support was also gained from Members of Congress to include the following language in P.L. 115-245, the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act of 2019:

“$20,000,000 shall be made available to provide for the deferment of loans made under part D of title III of the HEA to eligible institutions that are private Historically Black Colleges and Universities, which apply for the deferment of such a loan
and demonstrate financial need for such deferment by having a score of 2.6 or less on the Department of Education’s financial responsibility test: Provided, That during the period of deferment of such a loan, interest on the loan will not accrue or be capitalized,
and the period of deferment shall be for at least a period of 3-fiscal years and not more than 6-fiscal years: Provided further, That funds available under this paragraph shall be used to fund eligible deferment requests submitted for this purpose in fiscal
year 2018: Provided further, That the Secretary shall create and execute an outreach plan to work with States and the Capital Financing Advisory Board to improve outreach to States and help additional public Historically Black Colleges and Universities participate
in the program.”

We believe protecting and strengthening the federal investment in private HBCUs is vital and we strongly recommend that this deferment language is maintained in the Fiscal Year (FY) 2020 appropriations bill. Not only does this language have bipartisan support,
but it is also included in President Donald Trump’s FY 2020 budget request with a minor modification that ensures the 13 private institutions continue to receive the deferment. We thank you for your past support and for your continued leadership this year.

 

Sincerely,

TERRI A. SEWELL                                                                           ALMA S. ADAMS

Member of Congress                                                                          Member of Congress


[1] Dougal, C., Gao, P., Mayew, W.J., & Parsons, C.A. (2018). What’s in a (school) name? Racial discrimination in higher education bond markets. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2727763

 

Related Legislative Issues

Selected legislative information: Appropriations, Education

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