Stimulus bill gives colleges $22.7 billion, but advocates say much more is needed

At the same time, colleges are spending more money than anticipated on coronavirus testing, mental health support and financial aid for students rocked by the economic fallout of the pandemic. The need is unrelenting. The resources are finite.

The stimulus package released in full Monday has $82 billion for schools, including $22.7 billion earmarked for colleges and universities and $54.3 billion for elementary and secondary education. While higher education advocates welcome the long-awaited second round of funding, they had hoped for much more.

Earlier this month, the American Council on Education and other higher-ed groups implored Congress to provide at least $120 billion to support college students and campuses across the country. On Monday, Ted Mitchell, president of the council, which represents college and university presidents, called the funding in the latest bill “wholly inadequate.”

“The situation currently facing America’s colleges and universities is a crisis of almost unimaginable magnitude,” Mitchell said in a statement. “The money provided in this bill will provide some limited relief … but it is not going to be nearly enough in the long run or even the medium term.”

Education groups say colleges and universities have already pushed their financial capacities to the limits in addressing the pandemic. State budget deficits are hitting public colleges and private institutions are grappling with dwindling tuition revenue as unforeseen expenses continue to mount.

Credit rating agencies Moody’s Investors Services and Fitch Ratings say the fiscal outlook for higher education is grim, with both earlier this month predicting revenue declines of 5 to 10 percent in fiscal year 2021.

“Reduced enrollment will lead to tuition revenue declines at a majority of public and private universities, while reductions in auxiliary revenue, such as that earned from housing and dining, will also be significant for some,” said Moody’s analyst Michael Osborn. “Other revenue sources, such as state funding and philanthropy, will also come under increasing stress as the pandemic persists.”

Faculty salaries and debt obligations make it difficult to pare back expenses, according to Moody’s, noting that some universities are borrowing money or refinancing debt to set aside more cash. Even with a return to normal operations and a broader economic recovery next year, analysts say it may take much longer for many schools to bounce back.

And if colleges struggle to recover, students will feel the pain, advocates say.

The last infusion of stimulus funding from the Cares Act in March kept many schools running and supported students in the spring. Much of the $14 billion that Congress provided back then went to student emergency aid. According to the text of the bill released Monday, the same appears to be true this time around.

Colleges must spend at least the same amount on student aid as they did with funds allocated from the Cares Act. Students could also benefit from a $10 billion investment in child care as well as $7 billion to shore up and expand broadband services.

The new legislation largely divvies up the higher education funding as before, but with a few key changes. Chief among them is a revised formula gives more consideration to an institution’s total number of students, instead of focusing on those attending full time. That distinction should deliver more money to community colleges, which have a high number of part-time students.

Community colleges educate a disproportionate share of students from lower-income families, but receive a small fraction of the support of other public institutions. Many were already stretching their resources before the pandemic and now face the added burden of lower tuition revenue from double-digit declines in enrollment.

David Baime, senior vice president for government relations at the American Association of Community Colleges, said the increased funding through the legislation “is badly needed by both students and institutions.”

“We hope that Congress will provide additional assistance next year, because the changed economy will require the types of programs that community colleges offer,” he said.

As Congress negotiated the latest stimulus deal, student advocates pressed lawmakers to fix what they said were glaring inequities in the distribution of aid to schools and students. They were successful in getting more money to under-resourced schools, but not in ensuring all students receive the help they need.

Absent from the latest stimulus package is a repeal of Education Secretary Betsy DeVos’s rule narrowing student eligibility for emergency aid. That rule asserts that only those who can participate in federal student aid programs can receive money, shutting out undocumented and international students, as well as those with defaulted student loans or minor drug convictions.

Congressional aides say lawmakers compromised on the restriction with the hope President-elect Joe Biden will repeal the rule when he takes office.

Student advocates are also urging Biden to address another omission from the legislation: an extension of the moratorium on student loan payments. DeVos extended the payment pause to the end of January, calling on Congress to address the issue beyond that date. With lawmakers excluding the issue in the stimulus deal, it is now up to Biden to act.

“This is a major failing,” Ashley Harrington, federal advocacy director at the Center for Responsible Lending, said of the exclusion of the moratorium. “It is now more urgent than ever that the Biden-Harris administration keep its promise to provide substantial, across-the-board debt cancellation and take the necessary steps to prevent further financial devastation for vulnerable borrowers and communities.”

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