Bond Market Study Yields New Bill in Congress

September 19, 2016
Accounting, Diversity

Research by a professor at Duke University's Fuqua School of Business has inspired the introduction of a second bill in Congress aimed at eliminating racial inequity in the higher education bond market.

Professor Bill Mayew found historically black colleges and universities pay more to float bonds in the market than other schools. He found evidence race was a factor in the higher costs.

U.S. Rep. Keith Ellison announced on Sept. 16 the introduction of the HBCU Investment Expansion Act, which would allow municipal bonds issued by HBCUs to be exempt from taxes at the local, state and federal levels. 

Ellison met with Mayew to discuss his findings earlier this year after the research went public. Mayew found that state tax benefits mean higher education bonds tend to be sold within their home states, and that tended to result in higher costs for HBCUs to sell bonds in states with more documented instances of racial tension.

The HBCU Investment Expansion Act would increase the investor base by making the benefits nationwide and lower placement costs for these bonds, Ellison said.

"We all know how important our HBCUs are, and why they're important," Rep. Ellison said in a statement. "They offer a place for students to get an excellent education and set themselves up for success. Unfortunately, that costs money. While HBCUs are able to raise money by issuing bonds, researchers found that these universities face higher costs compared to other universities trying to raise funds with bonds. That's not right. This legislation will level the playing field and help HBCUs get the funds they need to build new dorms, labs or classrooms without additional costs or fees."

Mayew's research had already spurred action in Washington to tackle this problem. In July, the HBCU Capital Financing Improvement Act passed the House, and is awaiting action from a Senate committee. That bill would make it easier for HBCUs to access the existing HBCU Capital Financing Program. That same month, the U.S. Government Accountability Office agreed to investigate the barriers facing HBCUs when they seek to finance capital projects.

"My coauthors and I are excited our research has brought attention to this imbalance and is resulting in efforts to correct it," Mayew said. "Having a positive impact on society is ultimately why we do research in the first place."

Rep. Alma Adams of North Carolina introduced the July legislation and also co-sponsored Ellison's bill.

"Historically Black Colleges and Universities, like any other institution of higher learning, should be able to efficiently invest in their schools and support their students," Rep. Adams said. "With more HBCUs in my home state than any other state in our nation, I am proud to support Congressman Ellison in our shared effort to eliminate the barriers that HBCUs face."

This story may not be republished without permission from Duke University's Fuqua School of Business. Please contact for additional information.

Contact Info

For more information contact our media relations team at