Dive Brief:

  • Senate Republicans have earmarked about $29 billion for colleges in the latest coronavirus relief proposal, far below what industry groups believe is necessary for campuses to defray pandemic-related costs. 

  • The American Council on Education (ACE), along with other education groups, have continually pressed for additional money. A proposal put forward by House Democrats in May would provide about $37 billion to the sector, though GOP lawmakers have written it off. 

  • The need for relief funding is becoming increasingly urgent as many colleges prepare to resume face-to-face classes this fall.

Dive Insight:

Senate Republicans immediately derided House Democrats’ proposal, saying the $3 trillion package is too expansive and veers too far from pandemic-related priorities. 

The first aid bill, the Coronavirus Aid, Relief and Economic Security (CARES) Act, set aside $14 billion for colleges, but ACE deemed the funding “woefully inadequate.”

It and other education groups initially pushed for at least $47 billion in the next aid package, but in a statement Monday, ACE President Ted Mitchell said the group estimates colleges will need at least $120 billion to handle lost revenues related to the coronavirus and new expenses associated with reopening campuses this fall. 

“Unfortunately, the amount of higher education aid contained in this legislation is inadequate to address the extensive needs of the millions of students and families struggling to cope with lost jobs or reduced wages and colleges and universities reeling from lost revenues and increased costs,” Mitchell said in his statement. 

Under Senate Republicans’ proposal, colleges wouldn’t need to pass half their aid to students as emergency grants, as the CARES Act had required. Similar to the first bill, though, their portion of funding would be determined by their student count, weighted heavily toward the number of Pell Grant recipients enrolled. Students who were enrolled in exclusively online programs before the pandemic are excluded from the calculation.

In an effort to curtail relief for wealthy colleges, the bill also cuts in half the aid for any college that paid a tax on their endowment last year. The so-called “endowment tax” is a 1.4% excise tax on net investment income at private institutions enrolling 500 or more tuition-paying students and having at least $500,000 in assets per student. These colleges could also only use their share of the funding for student financial aid.

President Donald Trump and Education Secretary Betsy DeVos railed against rich colleges accepting their share of CARES funding, which led to several elite institutions rejecting it. But the Education Department didn’t have a process in place to immediately reallocate the money, leading to some criticism. 

The latest bill states that the department will redistribute aid from colleges that don’t apply for it within 60 days of it being made available but does not specify how.

The GOP proposal contains other elements that Republican lawmakers have emphasized, namely liability safeguards for schools and businesses, which would limit lawsuits against them for the spread of the coronavirus.

Colleges and ACE have asked for such protections, though the concept has been criticized by some Democratic lawmakers. Massachusetts Sen. Elizabeth Warren sharply questioned the president of Brown University during a June committee hearing, asking her what message it sent to students and families if colleges could be “careless.”

The proposal is expected to start negotiations with Democrats, some of whom have opposed parts of the proposal.

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