Federal Student Loan Repayment Rates at HBCUs and Other Institutions: Explaining the Differences

Abstract

This paper examines why 3-year federal student loan repayment rates differ between Historically Black Colleges and Universities (HBCUs) and other not-for-profit, 4-year institutions, and how institutional characteristics—such as resource levels, student composition, and intercollegiate athletics—contribute to this gap. Using a panel of 709 institutions from FY 2010 to FY 2017, we apply entropy balancing to reweight characteristics and estimate random effects models to identify conditional differences in repayment outcomes. Year-by-year Oaxaca–Blinder decompositions separate the portion of the gap explained by differences in institutional endowments from the portion arising from differential returns to those characteristics. Across specifications, repayment rates at HBCUs remain lower—by about 13.7 to 17.9 percentage points—even after covariate adjustment. The explained component is generally small, statistically insignificant, and often negative, while the unexplained component is large and significant in several years. These patterns suggest that observable characteristics account for little of the disparity, and that structural factors, including possible discriminatory returns, play a substantive role. Higher household income improves repayment performance, while greater shares of Pell Grant and part-time students reduce it. Intercollegiate athletics spending is positively, though modestly, associated with repayment rates. The findings emphasize the influence of institutional context, culture, and unobserved dynamics on student loan outcomes.