An article from Dive Brief ACE: Student outcomes at MSIs improve with full funding

Public minority-serving institutions can graduate students in greater numbers if they get the federal funding for which they are eligible, a new report found.

Published March 27, 2025 Laura Spitalniak Editor

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Drazen Zigic via Getty Images Listen to the article 4 min This audio is auto-generated. Please let us know if you have feedback.  Dive Brief:

• Federal funding for public minority-serving institutions significantly improved student outcomes at those colleges, according to a report released Thursday by the American Council on Education and New York University's MSI Data Project.
• For fiscal 2023, Congress appropriated roughly $1.3 billion for colleges that qualified as MSIs. But many eligible institutions do not receive their share, the report said.
• When MSIs get their allotted amount, they "consistently outperformed" their unfunded counterparts for graduation rates among Pell Grant recipients, the report said. Graduates of funded MSIs also typically saw higher median earnings.

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Under the Higher Education Act, Congress appropriates funds specifically for colleges that qualify as MSIs, such as tribal colleges and historically Black colleges and universities, to help boost higher education attainment among underrepresented students.

HBCUs, tribal colleges and MSIs — which are all separate categories but significantly overlap —  enroll more than half of undergraduate students of color, despite making up less than a fifth of the higher ed institutions in the country, according to the report.

That disproportionate impact, combined with the 2023 U.S. Supreme Court’s decision banning race-conscious admissions practices, have placed an increased focus on these institutions' ability to serve as "accessible and affordable pathways to higher education for students," the report said. All this comes, it added, as the colleges often operate with limited resources.

Tribal colleges and HBCUs in particular have well-documented histories of being underfunded and underresourced.

Last fall, ProPublica found that Congress is shorting tribal colleges roughly $250 million a year from what had been promised, leaving the country's 37 institutions with devastating budget shortfalls.

In 2023, federal officials found that historically Black land-grant universities in 16 states had collectively missed out on more than $12 billion in recent decades. The disparity stemmed from historical underfunding at the state level, the Biden administration said at the time.

And a 2021 analysis from The Century Foundation found that the endowments of HBCUs were just a fraction of those at their non-HBCU peers, regardless of whether the institutions were public or private institutions.

Even so, Thursday's report said, HBCUs' mission-driven work to serve underrepresented populations results in higher degree attainment among Black students. 

HBCUs awarded an average of about 455 bachelor's degrees to Black students, according to the report, compared to the 146 conferred at other institution types.

Among MSIs more broadly, researchers found that these colleges saw improved graduation rates if they received the federal funding for which they were eligible.

"Overall, the findings suggest that the funding statuses of MSIs may be related to higher rates of degree completion of undergraduates, particularly for those who are from low-income backgrounds," it said.

At four-year, primarily Black institutions — where at least 40% of undergraduate students are Black or African American — that received MSI federal funding, 31.4% of Pell Grants recipients graduated. That compared to just 26.1% at four-year primarily Black institutions that don't get MSI funding.

“By ensuring that these institutions receive the funding they need, we can sustain and expand their transformative impact on student success," said Hironao Okahana, vice president and executive director of ACE’s Education Futures Lab and co-author of the report. 

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