Sophia Phelan • 2024 McNair Summer Research Symposium • July 8, 2024

Sophia Phelan

she/her

Class of 2025

Major: Entrepreneurship & Innovation

Mentor: Belinda Roman, PhD

St. Mary’s University

Comparative Financial Analysis of HSIs, HBCUs, and Liberal Arts Colleges:

Net Present Value and Return on Investment Perspectives

This research presents a preliminary expedition into identifying the relationship between Net

Present Value (NPV) and Return on Investment (ROI) of general liberal arts institutions,

Hispanic Serving Institutions (HSIs), and Historically Black Colleges and Universities (HBCUs).

HSIs and HBCUs have a long tradition of serving specific underrepresented communities of

color, fostering success through culturally appropriate learning environments. This research

utilizes a unique business lens to discuss the value of a service-based institution using tools such

as value proposition and consumer fit. And then, it compares each set of institutions using ROI

and NPV. The data, sourced from College Scorecard, Georgetown University, and Data USA,

consolidated into a unique dataset composed of four-year universities that predominantly grant

bachelor’s degrees in non-rural Texas, with a small (642) to small-medium (4,547) student body,

and coincidentally, religiously affiliated. An important note is that on average the black student

body population in this data set, as well as across Texas, tend to be smaller than the Hispanic

student population which could affect the data and the overall performance of HBCUs. The

preliminary outcomes of this research reveals concerning trends. While HSIs and liberal arts

institutions exhibit similar NPVs over a 40-year period, HBCUs start from a lower NPV and

experience slower growth. This disparity suggests a potential financial disadvantage for HBCU

graduates. Similarly, HBCUs have lower ROIs, even when compared by majors to the other

institutions. This research demonstrates a disparity in post-graduation achievement, in metrics of

NPV and ROI, but further research is necessary to determine where the gap originates.

Keywords: Hispanic Serving Institutions (HSIs), Historically Black Colleges and

Universities (HBCUs), Liberal Arts, Return on Investment (ROI), Net Present

Value (NPV), Value Proposition