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Recognizing resilience: What the numbers really say about HBCUs
Aug. 11, 2025 · Authored by Daniel Greenstein
In an era when institutional sustainability is under a microscope, it’s time to take a closer look at Historically Black Colleges and Universities (HBCU) —not just for what they’re up against, but for what they’ve endured.
The opportunity emerges from work conducted at Baker Tilly as part of its ongoing efforts to improve the financial resiliency of colleges and universities nationwide – ensuring they are able to flourish as critical engines of workforce development and social mobility despite massive shifts in the landscape on which they operate.
The work resulted in a tool that leverages longitudinal data, 2010-23 from IPEDS and other publicly available sources. The tool is used to:
- Analyze institutions’ financial strengths and weaknesses
- Benchmark them against peers
- Evaluate their financial vulnerabilities against predictive risk patterns that emerge from mining the larger longitudinal corpus comprising over 3,000 institutions
- Offer guidance based on a database of financial recovery strategies
The tool is also able to profile whole groups of institutions – think, for example, HBCUs – the topic of this blog – rural serving institutions, the institutions that make up a university or college system, and a state’s private or public sector higher education institutions.
The tool has been calibrated against institutions that are closed or acquired, have been put onto heightened cash management, that announce major budget deficits and/or financial cuts and restructuring plans. And because it is designed to learn, it “gets smarter” with every analysis; its predictive powers become increasingly targeted and more reliable.
More details about the tool and its operations are forthcoming.
In the meantime, this blog represents the first based on insights derived from its ongoing use. It is a cross-sector analysis of HBCUs, and it paints a picture that’s both familiar and revealing. Familiar because these institutions have long operated at the intersection of high mission and high constraint. Revealing because the data shows just how consistently they’ve adapted across Carnegie Classifications and governance structures—and what that says about the systems surrounding them.
Topline takeaway: HBCUs tend to fall in the moderate risk zone on financial health assessments—not because they’re flush, but because they’ve learned to navigate volatility without the cushions most of their peers take for granted. Their performance metrics show resilience, yes—but also dependency. Not on tuition or endowment income. On policy.
A distinctive profile
Compared to non-HBCUs, institutions across the HBCU landscape show:
- Lower tuition dependency
- Higher reliance on Pell Grants and federal support
- Greater saturation in grant aid
- Thinner reserves and liquidity buffers
- Relatively stable or growing enrollment
This combination shows up in private liberal arts colleges, public master’s institutions, public research universities and beyond. It reflects a financial architecture that centers around federal leverage, not market pricing.
Examples:
- Public HBCU master’s institutions often have tuition dependency below 30%, compared to 40–50% for non-HBCU peers*
- Across HBCU sectors, Pell eligibility typically exceeds 60%, versus 30–50% at non-HBCUs*
- Most operate with primary reserve ratios below 12%, even where enrollment is stable or rising*
*Analysis of IPEDS data 2010-23
Misleading metrics
Traditional financial indicators—like operating margin or cash reserves—don’t tell the full story. Many HBCUs operate on razor-thin margins year after year, buffered by stable state appropriations or targeted federal support. In today’s frameworks, those institutions show up as “moderate risk,” but moderation should not be confused with safety.
These institutions are vulnerable to policy disruption. Pell caps, changes to Title IV or erosion of HBCU-specific funding would have seismic effects.
This is especially true for institutions that appear “successful” on the surface—those growing enrollment, expanding research capacity or outperforming peers on student success despite constrained resources. These schools are doing more with less. That’s not a cliché—it’s a warning.
What the data demands
A detailed, data-rich empirical investigation of more than 1,500 public and private four-year universities’ financial and operational performance (across seven Carnegie Classifications) reveals typical patterns that are predictive for HBCUs, as well as other institutions. Three out of 10 current archetypes are highlighted below.
- Federal leverage-dependent growers have achieved modest revenue growth or stability largely through federal grant and aid programs and federal student loans — rather than tuition or auxiliary revenue expansion
- Appropriation-buffered but liquidity-challenged – largely public master’s-level institutions that appear moderately stable due to consistent state appropriations, but exhibit weak liquidity positions and minimal reserves
- Overhead-limited research institutions earn federal research grants but have weak indirect cost recovery, meaning their research enterprises create soft-money obligations without significantly contributing to unrestricted resources
The data also identifies institutions experiencing a common pattern of cumulative stressors including a high proportion of Pell recipients and students in receipt of institutional grant aid, low primary reserves ratios and flat or negative operating margins for 3+ consecutive years.
Redefining resilience
We often talk about resilience as a balance sheet issue. In this case, it’s a matter of mission, public commitment and policy scaffolding.
HBCUs are distinct not just because of their student populations or histories, but because they’ve crafted sustainability around public purpose—not commercial models. If we’re serious about building a more equitable higher education landscape, we have to respect that—and support it accordingly.
That means:
- Avoiding across-the-board funding formulas that penalize high Pell or low endowment institutions
- Protecting programs—like Title III and Pell—that make resilience possible
- Investing in core infrastructure so these schools can grow—not just survive
The bottom line
If your risk model doesn’t account for the unique role and design of HBCUs, it’s not just incomplete—it’s inaccurate. These institutions are system-critical, mission-aligned and structurally exposed. They deserve more than a label. They deserve intention. Let’s act like it.
Our university financial analysis tools are not only robust. They can recognize warning signs of financial decline. They are predictive, highly nuanced for universities in different segments and serving different populations, and as such, enormously helpful in identifying performance improvement strategies that will be suited to your institution’s distinctive needs.
Please note: All views and opinions expressed are my own.
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