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Universities ask for more support as first Cares Act funding arrives

Government handing out $6 billion for institutions to pass on to students hit by Covid-19

The Department of Education has announced the distribution of billions of dollars in emergency federal funding intended to help students cope with the Covid-19 pandemic, which has claimed more than 22,000 lives in the United States.

Secretary of education Betsy DeVos announced on 9 April that just over $6bn would be “distributed immediately to colleges and universities to provide direct emergency cash grants to college students whose lives and educations have been disrupted by the coronavirus outbreak”, the department said.

The money is the first wave of funding from the $2 trillion Cares Act, which became law on 27 March and includes $14bn in support for post-secondary students and institutions.

Institutions must decide which students will get grants. Costs of students’ course materials, technology, food, housing, healthcare and childcare are all eligible for reimbursement. The amount allocated to each institution is pegged to the number of full-time students it has.

Funding to help cover institutions’ costs of delivering classes remotely will trickle down in the coming weeks, the Department of Education said, adding that it was working to make funds available “as quickly as possible”.

On 10 April the American Council on Education, a lobby group, said the next Covid-19 federal funding package ought to include $46.6bn in emergency aid for students and institutions. Like the Cares Act, this future package should split funding equally between students and institutions, the council said.

Institutions are expecting a 15 per cent drop in student enrollment in September 2020, according to the council, with a 25 per cent fall in international students, resulting in a $23bn institutional loss. Other sources of university revenue are also expected to fall by at least 25 per cent, amounting to $11.6bn nationally.

The council said it did not factor in all aspects of the wider economic fallout of Covid-19 into its projections, such as a likely drop in state funding for public universities as a result of squeezed budgets. In addition to seeking further federal funding, the council also called on policymakers to make public institutions eligible for various forms of tax relief introduced under the Cares Act.

The Cares Act creates two kinds of paid leave for employees affected by Covid-19, but public institutions are not eligible to receive an associated tax credit to compensate for the cost of that leave. The council would also like public institutions to be eligible for a payroll tax credit included in the Cares Act that is designed to help organisations whose operations were suspended due to the pandemic.

The council also said the government should no longer tax students who spend their scholarships on accommodation and food.

The call for further government support for higher education came as the Massachusetts Institute of Technology told staff to cut their 2021 budgets.

The top-tier university said it had already spent nearly $50 million on its Covid-19 responses. In anticipation of lean times ahead it has introduced a hiring freeze, stopped merit-based pay rises, cut spending for campus upgrades and cut senior pay by 20 per cent for the next year.

In an all-staff letter, MIT president Leo Reif said he would try to avoid staff layoffs but that “as the full financial picture becomes clear, we may well need to take additional actions that affect the budget and our community”.

A version of this article also appeared in Research Europe