Article
Recognizing resilience: What the numbers really say about HBCUs
Aug 06, 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,
- and 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 and data-rich empirical investigation of financial and operational performance of over 15 Our risk framework updates should reflect what the data tells us:
- Federal Leverage-Dependent Growers: Expanded to include all HBCUs, public and private.
- New subcategories: Appropriation-Buffered but Liquidity-Challenged for public master’s institutions. Overhead-Limited Research Institutions for research-focused publics with weak indirect cost recovery.
- Shared Alert Profile: Institutions with >60% Pell recipients, <12% reserves, >90% student grant aid and flat or negative margins for three or more years.
This is not a niche cluster—it’s the structural norm for dozens of schools central to our higher education system and to the mobility of Black students in America.
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.
Ready for a deeper conversation. Be in touch. 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.
