How Stimulus Package Affects Higher Education

Stimulus Package Affects Higher Education

How CARES Act Stimulus Package Impacts Higher Education

Last week the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES), was signed into law.

The measure included a $30.75 billion Education Stabilization Fund designed to help state and local school districts and postsecondary institutions in their efforts to respond to the unprecedented pandemic that’s sweeping across the country and the world. Of that amount, $14.3 billion is specifically earmarked for institutions of higher education to help address the financial and operational upheaval that has been taking place. 

Though the bill is seen as largely inadequate for the task at hand (the American Council on Education had requested between $50 and $60 billion to keep higher education afloat), let’s take a closer look at some of its primary provisions and how they will be applied.

What Does it Cover?

Money from the stabilization fund may be applied to the cost of any substantial changes to the way instruction is being delivered as a result of the COVID-19 pandemic.

The language of the measure however, does not specifically detail the process or timing of distributing such funds. There will likely need to be clarifications on this front. It also remains unclear when the money will actually reach each school.

It’s important to note though that barring any further legislative measures, funding from the CARES Act will remain available through September 30, 2021.

Which institutions qualify for emergency funds?

The CARES Act unfortunately does not include clear guidance regarding whether for-profit institutions can access the financial support that the measure provides.

What it does make clear is that funding is tied to an institution’s on-ground student populations, which means those schools that had substantial online enrollments or a minimal on-ground presence before the COVID-19 pandemic erupted may not actually be able to access much financial support.

Yet another key point to be aware of, the emergency stabilization funding is tied to Pell Grant receipts. This, too, will be limiting for some institutions, as schools that have a small Pell grant population may not be eligible for as much money. 

About 7.5 percent of the stabilization fund (about $1.047 billion) has been earmarked for minority-serving institutions. And 2.5 percent, or approximately $349 million, has been set aside exclusively for certain institutions under Part B, Title VII of the Higher Education Act that the Department of Education determines have the most unmet need related to the effects of coronavirus.

Additional Key Provisions and Language

Some of the other notable provisions of the bill include the fact that at least 50 percent of the stabilization funding (about $6.279 billion) must be used to provide emergency financial aid grants to students related to the disruption of study. This could be in the form of emergency aid or “grants to students for food, housing, course materials, technology, health care, and child care.” 

Institutions meanwhile, may use their portion of the money for defraying expenses associated with such things as lost revenue. The money can also be applied to the technology costs that come with shifting to offering distance education. In addition, the language of the bill specifically notes that institutions receiving funding must retain current employees to the “maximum extent practicable.”

Schools that relied on or plan to use online program managers (OPMs) to transition to online delivery may be unable to have costs reimbursed. 

Furthermore, money from the stabilization fund cannot be used to cover such things as payments to contractors or pre-enrollment recruitment efforts.

More Hope on the Horizon 

Though the stabilization fund fell far short of what had been requested and hoped for, the current pool of funding may well be just the first step. 

Congress could still take further action in the form of passing yet another emergency aid bill.



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About the author

Johann Leitner is the founder and president of Touchwork, a marketing management software company.