Lawmakers Urge ED to Exclude For-Profit Schools From COVID-19 Relief Funds

By Joelle Fredman, NASFAA Staff Reporter

A group of Democratic senators sent a letter Wednesday urging the Department of Education (ED) not to deploy a portion of the $14 billion in emergency relief funds included in the third COVID-19 stimulus package to for-profit institutions — and if it decides to do so to impose stricter requirements on how schools in that sector can spend the funds. 

In their letter, the lawmakers — Sens. Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio), Dick Durin (D-Ill.), and Richard Blumenthal (D-Conn.) — wrote to Education Secretary Betsy DeVos that the Coronavirus Aid, Relief, and Economic Security (CARES) Act only grants ED the authority to distribute funds to “institutions of higher education” as defined in the Higher Education Act (HEA), which, for the purposes of non-Title IV aid, only includes public and nonprofit institutions.

“By extension, for-profit colleges are currently excluded from all other non-Title IV grant programs authorized by HEA,” they wrote. “As such, we believe the most legally sound interpretation of the CARES Act would exclude for-profit colleges from the fund entirely.”

The lawmakers also argued that because the percentage of students enrolled in distance education programs before the COVID-19 outbreak was largest at for-profit schools — as made evident in ED’s recent Notice of Proposed Rulemaking (NPRM) on distance education —  they have “relatively less need for funds to compensate for changes to the mode of delivery of instruction among these students and institutions.”

However, Jeff Arthur, the vice president of regulatory affairs and chief information officer at East Coast Polytechnic Institute (ECPI University), warned that by seeking to exclude for-profit institutions, the lawmakers are harming many minority, adult, and career-changing students, “who are among the most negatively impacted by this virus.”

“It is time to stand up for the students who need help during this health crisis,” Arthur said.

If ED determines for-profit schools are eligible for CARES Act funds, the lawmakers wrote they “strongly encourage [ED] to follow the clear legislative intent behind the expressed purposes of the funds under the CARES Act to prohibit taxpayer dollars under the fund from being used to increase profits to private companies and investors.”

They specifically requested ED ensure for-profit schools direct 100% of the funding toward students for instruction, emergency financial aid, and support services, whereas the bill currently mandates institutions must use 50% of the emergency funds to students, and the remaining funds for crisis-related expenses such as lost revenue, reimbursement for expenses already incurred, technology costs associated with transitioning to distance education, faculty and staff training, and payroll. 

The lawmakers also specifically urged ED to prohibit for-profit schools from using emergency funds for things such as stock buybacks, executive compensation packages, and advertising, and to consider the emergency funds as federal funds for the purposes of calculating the so called “90/10 rule” ratio, which prohibits for-profit institutions from collecting more than 90% of their revenue from federal aid programs. 

For more information and resources on how the spread of the novel coronavirus is impacting student financial aid, please refer to NASFAA's COVID-19 Web Center.


Publication Date: 4/9/2020

Lisa S | 4/9/2020 2:36:46 PM

So are you saying for profit students cant get COVID??? That is ignorant. All students should be eligible for relief not just the ones you deem worthy.

Angela C | 4/9/2020 1:18:50 PM

I would like to know how for-profit institutions were aware a pandemic was coming six months ago. So those students should be penalized because a for-profit school did not disclose this was coming? SMH.

Joe P | 4/9/2020 12:0:06 PM

Yes, i believe we really need to be focused on the students here and not whether the college is public, non-profit, or for-profit. Someone please lobby for the students!

Daniel R | 4/9/2020 11:45:09 AM

So students who choose to go to a for-profit school will be disadvantaged as their institution suffers due to COVID-19. Governments also often target private non-profits for exclusion too. It is particularly unfortunate in these times.

Mark K | 4/9/2020 11:24:13 AM

The Higher Education Emergency Relief Fund probably reduces the percentage Title IV under the 90/10 rule.

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