Racism Plagues Our Educational Institutions
Before the American Civil War, higher education for Blacks in the US was almost nonexistent. The majority of American Blacks were enslaved, and, while a few emancipated ones managed to somehow attend “White” colleges in the North, educational opportunities for Blacks in the southern slave states were extremely rare and generally illegal. To combat this inequality, a small number of institutions were started during the Antebellum period to offer elementary and high school-level instruction specifically to Black students. These institutions later developed into full-fledged post-secondary institutions, and are generally considered the first Historically Black Colleges and Universities (HBCUs).
Financial support for HBCUs under the Higher Education Act of 1965 was explicitly acknowledged as a partial remedy for past discrimination. In 1980 President Jimmy Carter signed an Executive Order, “to overcome the effects of discriminatory treatment and to strengthen and expand the capacity of Historically Black Colleges and Universities to provide quality education.” Despite support from the government, financial problems still plague HBCUs remains a top concern in order to sustain their educational mission.
As states decrease spending on higher-education, these institutions face an uphill task in generating funds to improve their campuses by constructing new buildings or renovating ones that have started to wear down. To circumvent their funding woes, the colleges have found a way: taking on debt, specifically bond debt. But this is where the cruel fangs of racism bites.
The Atlantic explains the process of taking on debt: “There are a couple of steps colleges have to go through to issue bond debt. First, they have to find a bank to buy the debt. The bank will then sell the debt to public investors. The banks are the gatekeepers, and they’re essentially signing off on the fact that the loan isn’t a scam. But the banks don’t do this for free. They typically sell the debt at a slight markup as compensation for expenses and management fees — and that ultimately falls back on the college to pay off.”
It is no secret that racial wealth-gap is a reality, with the blacks being at the fag end of the socio-economic ladder. They are the ones who as multiple studies have pointed out, are in the greatest need of financial assistance from the government to build a future that they think align with their dream of a better and prosperous America. An estimated 86.8% of black students borrow federal student loans to attend a four-year public college, as opposed to 59.9% of white students, according to the National Center for Education Statistics (NCES).
Now, a new study published in the Journal of Financial Economics has pointed at another way race affects finances and wealth: by penalizing HBCUs for being HBCU. The study, which looked at a 23-year sample of 4,145 tax-exempt municipal bonds issues issued by 965 four-year, not-for-profit colleges, found that black institutions pay more to banks to issue debt. The study found that “For the typical non-HBCU, 81 cents out of every $100 raised flows to banks. The average for HBCUs is 11 points higher, at 92 cents per $100 raised. So, for a $30 million bond issuance, a black college would pay $276,000, while a non-HBCU would pay $243,000.”
Let’s not jump to conclusions so easily. For the time being let’s think there might be some other way to explain this disparity. This is the same thought that the researchers had. So, the researchers controlled for other bond parameters like the amount raised, how long will it take for the bond to be paid off, and the colleges’ ability to pay early. They also looked at school metrics such as enrollment, alumni-giving rates, and rankings and also at the quality of the bank selling the bond. But what they again found was disturbing. Even after controlling for all of the above-mentioned factors, black colleges still paid significantly more — 16 points more than predominantly white institutions (PWIs).
These findings led the researchers to conclude that there could not be any other reason: Racism was the primary driver.
So not only do HBCUs normally have less money to spare than the predominantly white institutions, when they take debt in order to improve or maintain their campuses, they are forced to pay more back, further widening the financial gaps between HBCUs and PWIs.
HBCUs have produced great men and women including the likes of the Reverends Martin Luther King, Jr. (Morehouse College), Jesse Jackson (North Carolina A&T), Spike Lee (Morehouse College), and Oprah Winfrey (Tennessee State University). It is now time that to honor the invaluable contributions of the HBCUs in nation building each of us as members of this discriminatory society join hands to ease the widening socio-economic gap. Mere loud-mouthed speeches are not what we need, a social revolution with the participation of all segments of the society only can end this insulting discrimination.