ED’s Decision to Send Last of CARES Act Funding to Small Schools Draws Ire

By Owen Daugherty, NASFAA Staff Reporter

The Department of Education (ED) late last month began allocating roughly $350 million set aside in the federal stimulus package to help colleges most impacted by the novel coronavirus in a way that ensured every eligible higher-education institution — regardless of size or enrollment — could receive at least $500,000 in relief. But some critics questioned whether the money was going to the schools that needed it most.

The money came from a provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that set aside 2.5% of the roughly $14 billion in the Higher Education Emergency Relief Fund (HEERF) to create a discretionary fund for Education Secretary Betsy DeVos to send to colleges and universities determined “to have the most unmet need related to coronavirus.”

That money has largely gone to small vocational and religious schools, along with other nonprofit trade programs that received an outsized portion of the funding in comparison to the size of their enrollment.

Ben Miller, vice president for postsecondary education at the Center for American Progress (CAP), broke down where the money was going and found that in some cases, schools received grants that were equivalent to more than half of their annual revenue.

While the institutional portion of the CARES Act allocated funding to schools using a formula that significantly weighted full-time equivalent students and Pell Grant recipients, the $350 million discretionary fund was doled out based on which schools needed additional assistance after the first set of grants was distributed.

A spokesperson for ED declined to comment on the record.

Miller said instead of analyzing need, ED looked at language in the CARES Act that said DeVos should prioritize the money for institutions that automatically received less than $500,000 through the CARES Act formula.

By doing so, Miller said, ED ignored language in the law that said the discretionary funding should go to schools that demonstrate “significant unmet needs related to expenses associated with coronavirus,” regardless of the amount of money institutions were allocated under the funding formula.

“I don’t think the legislative language told them to do this,” Miller said. “What [ED] seemed to have said was, ‘We're going to get everyone to $500,000, and then we'll use this paltry sum left behind to identify those who have higher levels of need.’ And it's just completely backwards.”

Miller’s breakdown shows that the top 20 schools receiving discretionary funding together enrolled just 212 Pell Grant recipients, with one school representing nearly half of those students. Of the nearly $350 million, only about $27 million is left.

Miller said the money could have been allocated to schools that needed it more, and even though ED announced in a letter late last month that $15 million would be available to the larger schools through a competitive grant process, waiting for the money to come in won’t help the schools that need it now.

Some have said this decision disproportionately impacted community colleges, with Miller finding that following the adjustment with the discretionary funding taken into account, four-year nonprofit schools received roughly 19% of the money set aside in the CARES Act and public colleges of two years or less, largely community colleges, received 27% of the money even though they enroll more students.

He said community colleges received a lower share of funds largely due to the fact that the formula weighted full-time enrollment instead of total head count, giving less weight to part-time students.

The Century Foundation (TCF) recently published a report analyzing the amount of money each student would receive by sector under the CARES Act emergency grant aid program and found stark discrepancies.

The report found that community colleges, which enroll the most undergraduates of any sector and often enroll the students with the greatest financial and educational needs, received $187 per student. By comparison, nonprofit four-year institutions received $298 per student, public four-year institutions received $337 per student, and for-profit institutions received $539 per student.

Still, some community colleges fared better than others when it comes to funding per student allocated from the CARES Act, according to the report. Indiana's community college system, for example, received an average of $123 per student, even though 38% of its students live in poverty.

“Recognizing that many low-income students will have an emergency need in excess of their institution’s average aid per student, it is clear that some rationing must take place,” the report notes.

Miller said many schools feel the funding they received was not adequate and ED’s decision on how to distribute the discretionary funding further exacerbated the strain schools shortchanged by the CARES Act funding formula are experiencing.

“Schools are saying, ‘We’ve already handed out every dollar we got, and we still have students in need,’” Miller said. “Others are in a similar boat and the federal government is basically closed for business to them now when it didn’t have to be.”

He added that hoping for Congress to allocate more money for higher education in another stimulus package could be wishful thinking.

“The hope is that Congress acts and provides a lot more money quickly, but I don't know if that's going to happen,” Miller said. “So in the meantime, all these schools are sort of out of luck.”


Publication Date: 5/14/2020

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