Prudential works to enhance opportunities for students at HBCUs

Historically Black colleges and universities face funding challenges greater than their peer institutions. Federal funding for HBCUs was nearly cut in half between 2003 and 2015 according to the American Council on Education, and endowments are one-third the size of endowments at peer institutions.

PGIM, the $1.4 trillion global investment management business of Newark-based Prudential Financial Inc., recently hired certified financial analyst Timothy Woods to lead its new HBCU Strategic Initiatives program.

Woods is himself a graduate of Florida A&M University, one of the nation’s 107 HBCUs.

The institutions have long played a role in providing high quality educations to Black Americans and leading them to lucrative careers. Today, they aim to close the racial wealth gap, yet lack of funding makes that difficult: In 2020, the 10 largest HBCU endowments totaled $2 billion, compared with $200 billion for the endowments at the 10 largest predominantly white institutions, according to the Brookings Institution. The combined endowment for every HBCU in the country through 2019 was just over $3.9 billion, according to a 2021 report from the Chicago Sun Times. For context, that’s roughly one-tenth of Princeton’s $37.7 billion endowment reported at the end of the last fiscal year in June 2021.

To give the schools a leg up, PGIM’s Office of Diversity, Equity & Inclusion’s HBCU investment initiative will provide investment management education and training for endowment managers at HBCUs to “support their work as stewards.”

“Endowments are incredibly important. They help support the infrastructure for student scholarships overall. The smaller endowments that they have, the less students they can support. It’s important that endowments are robust and they continue to provide returns,” explained Sarah Keh, Prudential vice president of inclusion solutions.

Woods, who brings with him two decades of expertise in asset management from stints at Deutsche Bank Asset Management, ClearBridge Investments, and JP Morgan Asset Management, attended FAMU at the same time as Shawnta Friday-Stroud, who is now the dean of FAMU’s School of Business and Industry, vice president for university advancement, and executive director of the FAMU Foundation.

“We are excited about the opportunities it will create for our students in a space where we have historically been underrepresented,” Friday-Stroud said in a statement. “The partnership will involve creating opportunities for students, engaging in curriculum development and enhancing financial support for our students.”

The Strategic Initiatives program will help establish and maintain student-run investment funds at Hampton University in Virginia and FAMU. With help from PGIM asset managers, students will gain real-life asset management experience, which will in turn cultivate top talent for the investment industry itself.

“Our asset management business is looking at how we can work with endowment investment committees, and the student led investment fund is a direct correlation to that. Students want to know that what they’re learning works in the real world,” Keh said.

Additionally, the program will establish scholarships for HBCU students to increase education affordability, piggybacking on Prudential’s decades-long relationships with HBCUs, including a recent round of approximately $3 million in grants.

Last year, Prudential partnered with the Student Freedom Initiative on the launch of the Handling Everyday Life Problems for Students Program, a three-year pilot that addresses expenses that disproportionately create hurdles for Black students. Billionaire businessman and philanthropist Robert Smith launched SFI a few years ago after paying off student loan debt for an entire class at Morehouse College, an HBCU in Atlanta.

Through the partnership, students at nine HBCUs will receive money to address financial issues that could otherwise put their education at risk; and Prudential will provide financial literacy education and training for students.

“It can be something as simple as their laptop broke or they got into a car accident, or someone in their family got ill, and they simply don’t have the finances [to cover the costs and continue school],” Keh said.

Students can apply for as much as $4,000 in funding over the course of their degree through their financial aid office. Three-quarters of costs are covered by the SFI fund, which includes Prudential’s financial contribution and is open to financial contributions from other businesses, and one-quarter of costs are covered by the partnering HBCU.

“When a student is forced to leave college before graduation, the likelihood of defaulting on student loans increases tenfold, contributing to the $1.7 trillion student loan crisis,” SFI Executive Director Mark Brown said in a blog post on Prudential’s website. “Likewise, students who come from fragile economic circumstances often do not have the financial literacy they need to thrive. Prudential’s leadership and commitment as the inaugural partner of HELPS will support culturally sensitive financial literacy education, while also offering critical financial assistance to students at the pilot schools. We applaud their efforts to reduce the wealth gap and hope this encourages others to provide similar support.”

At Hampton University, Prudential’s longest HBCU partner, the company has established the Hampton Fellowship Program for 20 to 25 sophomores and juniors over two years who will benefit from the mentorship of Prudential employees. The organizations are working out the details now for an upcoming launch. Also focused on mentorship is Prudential’s partnership with the Thurgood Marshall College Fund, which in March connected 23 students to Prudential employees for a six-month mentorship program that will bring students through the Prudential’s internship program application process. Ideally, the TMCF partnership pipeline will feed into the internship, and the internship will lead to careers at Prudential after graduation.