HBCUs pay higher fees to borrow money. Research links that premium to racism.

HBCUs pay higher fees to borrow money. Research links that premium to racism.
 
Historically black colleges and universities (HBCU) looking to raise money for major projects face higher fees than their non-HBCU counterparts, according to research recently published in the Journal of Financial Economics. The financial premium is especially high for HBCUs in Alabama, Louisiana and Mississippi, the researchers find.
Historically black colleges and universities looking to raise money for major projects face higher fees than their non-HBCU counterparts, even when agencies that rate credit risk give HBCU-issued bonds their highest scores, according to research recently published in the Journal of Financial Economics.
There’s one big reason for the additional cost, according to the authors: racial discrimination.


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