NASFAA Signs Onto Amicus Brief Refuting Allegations That Colleges Profited From the Pandemic

By Hugh T. Ferguson, NASFAA Staff Reporter  

In a recently filed amicus brief NASFAA has joined more than a dozen higher education organizations in contesting allegations that colleges somehow saw their financial fortunes padded by a windfall of federal funding due to the ongoing pandemic.

The legal filing demonstrates how institutions at the outset of the pandemic had to quickly pivot in order to address unforeseen costs associated with the need to immediately administer remote instruction to enable students to continue with their studies and programs.

“Far from ‘an enormous windfall,’ COVID-19 stressed tight budgets and exacerbated the financial challenges colleges and universities already faced,” the legal document reads. “As ACE has testified to Congress, by the end of 2020, these academic institutions saw ‘at least $120 billion in new expenses and lost revenue that [were] the direct result of the pandemic.’”

In analyzing the challenges schools faced the organizations highlighted a litany of unanticipated expenses that were directly associated with the transition to virtual learning. For instance, in a matter of days, schools had to purchase and license software such as Zoom, LinkedIn Learning, Dropbox, Bomgar, closed captioning software, and other specialty software packages for specific educational disciplines.

Schools also had to invest in and expand IT support services for online course formats, laptop loaner and purchase programs, and additional online-teaching resources for faculty.

“One flagship midwestern university reported to [the American Council on Education (ACE)] that it spent approximately $8.2 million between March and June 2020 on software, hardware, faculty training in online instruction, IT-related costs, and other costs associated with the transition to online classes,” according to the legal filing. “This is not surprising given that the software license alone for each remote learning platform can cost hundreds of thousands of dollars.”

Amid all this upheaval institutions also saw their previously reliable revenue streams, in many instances, reduced or eliminated. 

“[The Commission on Independent Colleges and Universities’] data shows that New York’s colleges and universities lost $1.4 billion in auxiliary revenue—such as sales and services provided to students, visitors, and community members—during the pandemic.”

In total, according to data from ACE’s members, auxiliary revenues — such as revenue from bookstores, dining facilities, event tickets, parking, and conference and facility fees — decreased 38% in the early days of the pandemic. When combined with the unexpected increase in expenditures in the spring, the totals were substantial.

“These lawsuits force institutions to spend scarce resources rebutting the false narrative of a COVID-windfall,” the legal document argues. “The story of COVID-19 on America’s campuses is one of courage and creativity, as administrators and instructors ensured that students safely continued learning in the face of crisis. This is something to celebrate, not penalize.”


Publication Date: 8/30/2021

David S | 8/30/2021 11:8:26 AM

A windfall of federal funding? Sure, the share of HEERF funding that schools have been allowed to keep has been nice, but at the school this particular plaintiff is suing, it was probably a sliver of one percent of their operating budget. Anyone who thinks that the past 18 months have given colleges the luxury of rolling around in piles of money is not well informed about higher ed finance, not good at math, or both.

I get student frustration with agreeing to enroll and pay a certain amount of money only to be shifted to an extremely different learning environment, and one that they perhaps would never have chosen. But the alternatives were to close up shop mid-semester, or stick to business as usual and expose everyone to a deadly virus. In that scenario, you go with the option that combines continued learning and protecting peoples' health. That's not what you want, take a leave of absence and return when it's safe to return to everything in-person.

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