Predominantly Black Institution Act of 2006

Predominantly Black Institution Act of 2006 - Amends the Higher Education Act of 1965 to provide grants to Predominantly Black Institutions to: (1) enhance their capacity to serve more low and middle-income Black American students; (2) expand higher education opportunities for students eligible for student assistance under title IV of the Act by encouraging such students to prepare for college and persist in secondary and postsecondary education; and (3) strengthen their financial ability to serve the academic needs of such students.

Defines such institutions as accredited institutions: (1) serving at least 1,000 undergraduate students, at least 50% of which are pursuing a bachelor's or associate's degree; (2) serving an undergraduate population at least 40% of which are Black Americans and at least 50% of which are low-income or first-generation college students; and (3) whose spending per full-time undergraduate student is low in comparison to that of institutions offering similar instruction.

Allows grant recipients to use up to 20% of their grant on an endowment fund, provided they raise nonfederal matching funds at least equal to the amount of the grant used for such endowment. Allots funding among institutions on the basis of their share of Pell Grant recipients, graduates, and graduates pursuing a higher degree.

Establishes a minimum allotment for each institution of $250,000, which is to be ratably reduced if appropriations are insufficient to pay such amount.