Colleges struggling despite billions in stimulus package
The $2 trillion stimulus package barreling toward passage by the Senate on Wednesday will send about $14 billion to colleges and universities that are hemorrhaging money as they close their campuses and try to stay afloat with distance learning.
But higher education leaders say that is far short of what they need in the face of an education crisis that is greater than any they have faced in a generation.
The deal — likely to pass the Senate on Wednesday night and the House on Thursday — would create a $30.75 billion education stabilization fund, 46% of which would go to higher education. That is a fraction of the $50 billion that higher education leaders said they needed.
Of that $30.75 billion, $13.5 billion would go to primary and secondary schools, which had requested at least $75 billion to help keep their systems intact with more than 55 million children out of school. Governors would receive about 10% of the fund, or about $3 billion, to put toward emergency education costs.
The deal would also allow borrowers to defer their federal student loan payments for six months, without penalty and without added interest costs. In a separate move, Education Secretary Betsy DeVos announced Wednesday that she would stop collecting payments and garnishing wages from borrowers who default on their loans. The Education Department will refund $1.8 billion to borrowers who had money seized by the government since March 13.
The funding for higher education is significantly higher than the $6 billion first proposed by Senate Republicans and is closer to the $15 billion proposed by House Democrats. But education leaders are hoping for more relief in additional bills that may emerge in the coming weeks.
“While this legislation is an improvement from where the Senate started, the amount of money it provides to students and higher education institutions remains woefully inadequate,” said Ted Mitchell, the president of the American Council on Education, which represents more than 1,700 colleges and universities.
In a memo, the council joined other associations representing virtually every school in the country to request at least $50 billion to help with student housing costs, other student expenditures and the damages that universities are suffering from their shutdowns. They also asked for a separate $7.8 billion to help with the costs of technology needed for digital learning.
Colleges were among the first institutions in the country to shut down operations amid the coronavirus outbreak, and shortly after the higher education sector’s bond rating was downgraded by Moody’s to negative from stable. “Universities face unprecedented enrollment uncertainty, risks to multiple revenue streams and potential material erosion in their balance sheets,” it said.
Already, schools are refunding tens of millions of dollars in costs for housing and food plans, struggling to pay salaries for faculty and staff members and incurring new costs associated with digital classrooms. And with the college admissions season this spring in flux, they cannot predict tuition revenue in the fall.
“Campuses are losing staggering sums,” Mitchell said. “If these needs are not met, students are going to suffer financially and may drop out.”
The bill ensures funding for the hardest-hit institutions, those that serve overwhelmingly low-income populations, with about $1 billion for historically black colleges and universities and other minority-serving institutions and tribal colleges.
Michael Lomax, the president of the United Negro College Fund, said the funding would help the schools move to digital platforms, adding, “thankfully, this time Congress remembered us.”
Public and private research universities joined medical schools and teaching hospitals in requesting an additional $13 billion for their research operations. The schools said they needed help paying staff members, such as postdoctoral students, and maintaining or shutting down laboratories. The bill contained $1.3 billion for research, about 10% of what they had asked for.
Four-year public research universities, which serve 5.8 million students and employ 1.1 million faculty members, conducted $52.8 billion in research in the 2018 fiscal year alone. Much of that was federally sponsored.
Peter McPherson, the president of the Association of Public and Land-Grant Universities, which represent nearly all public research institutions, noted that some member schools, such as the University of Washington, have helped fight the coronavirus.
“It’s an important enterprise and is of course particularly helpful right now,” McPherson said.
The stimulus funding will be critical for small and independent institutions that do not have the huge endowments of Ivy League schools or the government backing of large public universities.
The New Haven Independent reported this week that Quinnipiac University announced that it would temporarily cut pay for faculty and staff, citing “significant additional expenses for our university and lost revenues from programs that were canceled.”
Roger Casey, the president of McDaniel College in Maryland, which serves 3,000 students, said refunds and credits for food and housing would take $4 million from its budget of about $60 million.
“We’re hoping Congress can plug that hole for us, so that we can do right by our students and get that cash back in these families’ hands,” he said.
But Casey said the budgetary effect of the virus was only one concern, describing the last two weeks as “trying to put together a jigsaw puzzle, on a roller coaster in a hurricane.”
Small colleges with less affluent student bodies have “sent students back to digital deserts — and you can’t write papers on your smartphone,” he said.
Even larger institutions are feeling the strain. Elite universities worry that they cannot possibly charge tuition of $50,000 or more if all they can offer is distance learning.
Brown University announced a freeze in faculty hiring for the current and next fiscal years.
“The financial consequences resulting from the increased expenditures and the dramatic reductions in revenue provoked by the current pandemic demand prompt attention,” its leaders wrote in a letter to the community.
Harvard, whose president, Lawrence Bacow, tested positive for the coronavirus, is under pressure to continue paying employees, although many of their facilities, such as dining halls, will be closed through the end of the semester. The university, which has a $40 billion endowment, agreed to pay some employees for 30 days. In a statement to The Harvard Crimson newspaper, it said “the economic impact of this rapidly evolving public health crisis is one that is hitting employers of all sizes, not just higher education institutions.”
Duke University has promised to continue paying through May 31 all of its full-time employees, including contract workers in its food service facilities and in two hotels that the university owns but that are operated by vendors. As part of that effort, Duke officials said, they might have to assign some of them to new jobs.
Last week, the university issued a call to Duke employees asking for volunteers to work in its health system. In the first hour, 650 employees had agreed; by Friday, the number had risen to more than 1,000.
“We find ourselves in extraordinary times that will likely test our mettle and strain our resources in the days ahead,” said the note to colleagues from Kyle Cavanaugh, the vice president for administration and emergency coordinator.
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Other college presidents worry what will happen to students if their schools do not recover.
Ann McElaney-Johnson, the president of Mount St. Mary’s University in Los Angeles, said the college was already projecting a budget loss of $2 million. With so much money going to financial aid, every source of revenue counts — down to a quarter-million dollars in parking fees and half a million dollars in facility rental fees.
McElaney-Johnson said the college prided itself on serving a population that was “high-risk for higher ed.”
“We need to pay particular attention to these students who have put everything into making this dream of college a reality,” she said. “We’re going to get them through it, we just need help.”
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