Title III of the Higher Education Act lets eligible colleges and universities spend federal grant dollars on a defined set of capacity-building activities: facilities and equipment, faculty development, academic programs, student services, administrative systems, fundraising infrastructure, and endowment growth. The allowable uses and prohibited expenses under Title III funds are set by statute and by the government-wide cost rules in 2 CFR Part 200, and the core boundary is the same across every program in the title: the money has to build long-term institutional capacity, and it cannot replace spending the school was already doing.
What Title III Money Can Pay For
Across the Title III programs, Congress has authorized a consistent core of spending categories. The exact list shifts slightly by program, but an eligible institution can generally use grant funds for:
- Purchasing, renting, or leasing scientific and laboratory equipment for teaching and research.
- Constructing, maintaining, renovating, or improving classrooms, libraries, laboratories, and other instructional facilities, including integrating computer and telecommunications technology.
- Faculty exchanges, fellowships, and development programs, including support for faculty pursuing advanced degrees in their teaching fields.
- Developing and improving academic programs and curricula.
- Buying books, periodicals, and library materials, including telecommunications resources.
- Tutoring, counseling, retention programs, remedial education, and English language instruction.
- Financial literacy education and counseling for students and families.
- Improving funds management, administrative systems, and management information systems, including the equipment and software needed to run them.
- Joint use of facilities such as laboratories and libraries.
- Establishing or improving a development office to raise money from alumni and the private sector.
- Establishing or increasing an institutional endowment fund.
- Creating or improving distance-education facilities, including internet-based delivery.
Institutions can also propose other activities in a grant application, so long as the Secretary of Education approves them as consistent with the program’s purposes.1Office of the Law Revision Counsel. 20 U.S. Code 1057 – Program Purpose The practical test on any expense is whether it connects to an activity described in the institution’s approved application.
How Allowable Uses Differ by Program
Strengthening Institutions Program (Part A)
Part A is the broadest Title III program and is open to any eligible institution regardless of student demographics. Its purpose is to help schools become financially self-sufficient and expand their ability to serve low-income students, and the authorized spending list above tracks the Part A statute closely.2U.S. Department of Education. Title III Part A Programs – Strengthening Institutions
HBCUs and Historically Black Graduate Institutions (Part B)
Part B directs funding to Historically Black Colleges and Universities. The allowable categories overlap heavily with Part A, with an added authorization for academic instruction in disciplines where Black Americans are underrepresented.3Office of the Law Revision Counsel. 20 USC 1062 – Grants to Institutions HBCUs may also direct up to 20 percent of a Part B grant into an endowment fund, but only if the institution provides matching non-federal funds equal to or greater than the federal amount deposited.
Historically Black Graduate Institutions have a separate stream under Part B with additional authorized uses. HBGIs can fund scholarships and fellowships for needy graduate and professional students pursuing doctorates in medicine, dentistry, pharmacy, veterinary medicine, law, and physical or natural sciences, engineering, and mathematics fields where African Americans are underrepresented. They can also acquire real property adjacent to campus for facility expansion.4reginfo.gov. Application Package for Historically Black Colleges and Universities and Historically Black Graduate Institutions Programs
Hispanic-Serving Institutions STEM and Articulation Program (Part F)
Part F funds designated Hispanic-Serving Institutions through the HSI STEM and Articulation Program. Because the statute ties this funding to activities described in Title V of the HEA, allowable spending covers a broad set of improvement activities as long as they carry a STEM focus: upgrading STEM curricula, developing undergraduate research opportunities, improving STEM laboratories and equipment, providing tutoring and mentoring for STEM students, and STEM-focused faculty development. Part F also authorizes spending on transfer and articulation agreements between two-year and four-year institutions in STEM fields.5U.S. Department of Education. Hispanic-Serving Institutions – Science, Technology, Engineering, or Mathematics and Articulation Programs
Tribally Controlled Colleges and Universities
Tribal colleges receive Title III funds under a statute that authorizes an especially broad set of activities. In addition to the core categories, TCCUs can spend on academic instruction in tribal governance and public policy, teacher-preparation programs emphasizing the teaching of Indian children and youth (including preparation for teacher certification), and community outreach programs that encourage Indian K–12 students to pursue postsecondary education. TCCUs may also acquire real property adjacent to campus for expansion.6Office of the Law Revision Counsel. 20 USC 1059c – American Indian Tribally Controlled Colleges and Universities
Endowment Grants Come With Strict Spending Limits
Part C of Title III authorizes Endowment Challenge Grants, and using this money means accepting a distinct set of rules on how it is invested and drawn down. The basic match is dollar-for-dollar: each federal grant dollar deposited into the endowment must be met by a non-federal dollar. Institutions applying for $1 million or less can match at one non-federal dollar for every two federal dollars.7Office of the Law Revision Counsel. 20 U.S. Code 1065 – Endowment Challenge Grants
During the grant period, which can run up to 20 years, the institution cannot withdraw or spend any of the endowment principal. It can spend endowment income on operational costs such as maintenance, administration, personnel, construction, and student services, but it cannot spend more than 50 percent of the total accumulated income. The Secretary can waive that cap only in emergencies like pending insolvency, a natural disaster, or comparable extraordinary circumstances.
The endowment must be held in low-risk investments: federally insured savings accounts, certificates of deposit, money market funds, mutual funds, or U.S. government obligations. If a school withdraws principal early, it owes the Secretary 50 percent of the amount taken (the federal share) plus any income that portion earned. Once the grant period ends, the institution can use the full corpus and accumulated income for any educational purpose.
What Title III Money Cannot Pay For
The most fundamental restriction is the supplement-not-supplant rule. Title III funds must supplement, and where practical increase, the money an institution would otherwise spend on the authorized activities. They cannot replace existing funding. Shifting a cost the school was already covering with state or institutional dollars onto a Title III grant violates the statute.8GovInfo. 20 USC Chapter 28 – Higher Education Resources and Student Assistance
Title III grants also fall under the government-wide cost principles in 2 CFR Part 200, which prohibit spending federal grant money on lobbying. That includes attempts to influence federal or state legislation, contributions to political campaigns, and public campaigns aimed at swaying elected officials. Even legislative liaison work such as attending hearings or analyzing pending bills is unallowable when done in preparation for lobbying.9eCFR. 2 CFR 200.450 – Lobbying
General operating expenses that are not tied to an approved improvement activity are outside the scope of these grants. Title III money funds discrete capacity-building projects, not routine institutional overhead, and each expenditure has to connect to an activity in the approved application. Construction is allowable only where the specific program authorizes it, and the scope has to be tied to instructional purposes rather than general campus development.
One boundary applies only to the HBCU Capital Financing Program under Part D: that statute separately prohibits loans for activities related to sectarian instruction, religious worship, or programs provided by a school of divinity. Institutions planning capital projects through Part D should factor that in.
Documentation That Keeps Spending Allowable
An expense is only defensible if the institution can show how it was spent. Title III grantees submit an Annual Performance Report covering both financial and programmatic data, including an executive summary of the grant’s impact, enrollment and degree data broken down by race, ethnicity, age, and gender, and a full accounting of spending across each category of allowable activity. The APR also requires outcomes in four focus areas: academic quality, fiscal stability, institutional management, and student services.
Federal regulations require grantees to retain all financial records, supporting documentation, and statistical records for at least three years from the date the final financial report is submitted. If any audit, litigation, or claim is pending when that window would otherwise close, the institution must hold the records until the matter is fully resolved. Records for property and equipment bought with grant funds must be kept for three years after the item’s final disposition.10eCFR. 2 CFR 200.334 – Record Retention Requirements Missing records turn otherwise allowable spending into a finding, so the documentation discipline is part of allowability, not separate from it.