Federal Stimulus Bill Will Give Colleges $23 Billion in Relief and Policy Reforms!

Five Mid-Michigan colleges splitting $30 million for coronavirus assistance

Dear Commons Community,

The higher-education community has been waiting to see how much money Congress would give to colleges and students in an aid package meant to offset economic losses from the Covid-19 pandemic. The number that emerged, about $23 billion, was not a surprise, and fell short of what higher-education associations said was needed to repair the fiscal damage of the last nine months.

The bill also contains a new requirement to simplify the application process for federal student aid, forgives more than $1 billion in federal loans to historically Black colleges, expands the Pell Grant program to people who are incarcerated, and restores Pell eligibility for students who were defrauded by their colleges, among other things.  As reported by The Chronicle of Higher Education.

“Higher-education associations, which are likely to seek more economic aid in 2021 from a new Congress and presidential administration, praised the policy changes. “Community-college leaders welcome adoption of the second-chance Pell,” said David S. Baime, senior vice president for government relations and policy analysis at the American Association of Community Colleges.

Ted Mitchell, president of the American Council on Education, applauded the changes in the Free Application for Federal Student Aid, the Fafsa: “This important legislation will support struggling students and families in coming years by simplifying and expanding the federal student-aid system.”

But he called the amount of money in the aid package “disappointing” and “wholly inadequate to meet the needs of students and colleges and universities.”

The legislation’s policy changes are, in part, a reflection of how much higher-education policy remains to be worked out in the long-delayed next reauthorization of the federal Higher Education Act, which expired in 2013.

Last year Sen. Lamar Alexander, Republican of Tennessee, sought to shepherd a reauthorization bill through the chamber’s Committee on Health, Education, Labor, and Pensions, which he leads. But that effort failed, and Alexander retires next month.

Simplifying the Fafsa has been the senator’s mantra for many years now — accompanied by his dramatic unfolding of a lengthy string of papers meant to represent the existing form — and this legislation takes several steps in that direction.

Under the bill, the Fafsa will be cut from more than 100 questions to 36, and the income-verification process will be streamlined by using data from the Internal Revenue Service. Advocates for low-income students have long pushed for such measures to increase the number of disadvantaged students who apply for federal aid.

The bill also increases the number of students who will be able to receive Pell Grants and, notably, reverses a 26-year-old ban on Pell Grants for people who are incarcerated — now commonly referred to as a “second-chance Pell.”

“After so many years of advocacy on this issue,” Baime wrote in an email, “it is incredibly gratifying to see bipartisan political support for this enlightened and rational policy.”

The bill — part of a larger, $900-billion stimulus package — comes nearly eight months after the $2-trillion Cares Act. That law appropriated some $14 billion to higher education, split evenly between money for students and for institutions.

While the latest legislation will provide more money than the March package did, the amount is just a fraction of the $120 billion that higher-education associations have sought in recent months.

Since last spring, colleges have shed more than half a million jobs — the largest decline in the higher-education work force since the federal government began collecting such data. Freshman enrollment in higher education fell more than 13 percent over all, and more than 22 percent at community colleges.

Declining tuition revenue was just the start of problems for colleges as money from room and board and athletics dried up and the expenses of operating campuses in a pandemic increased.

Baime, of the community-college association, said the fiscal aid was important but institutions would seek more in the new year. “Given increasing enrollment drops and looming budget cuts, the aid is essential,” he said. “College leaders are hoping for additional support in the new year, along with a focused community-college job-training program and support for short-term Pell Grants.”

Mitchell, of ACE, was less sanguine: “The money provided in this bill will provide some limited relief, which is welcome news to struggling students and institutions,” he said in a separate news release. “But it is not going to be nearly enough in the long run or even the medium term.”

Another disappointment for some was the removal of a provision to extend the pause on student-loan repayment until April. The U.S. Department of Education has allowed borrowers to refrain from making such payments through the end of January, so the administration of President-elect Joseph R. Biden Jr. will have to issue an order to extend that period.

The result will be weeks of unnecessary chaos and uncertainty.

“The result will be weeks of unnecessary chaos and uncertainty as borrowers wait to see if the Biden administration will extend the pause upon taking office, on January 20, 2021,” Jessica Thompson, associate vice president of the Institute for College Access and Success, said in a news release.

At the same time, some in higher education hope the latest measure will avoid some controversies of the Cares Act, including its language meant to distribute more of the money to colleges that enroll a larger percentage of low-income students.

In March the Cares Act doled out money based on each college’s full-time enrollment of Pell-eligible students, a formula that favored four-year colleges over community colleges and others with a high percentage of part-time students. The new legislation is expected to use a formula that counts both full-time enrollment and headcount, said Antoinette Flores, a higher-education-policy expert at the Center for American Progress.

The bill also limits how much money will go to the few dozen colleges that are subject to the endowment tax — those that enroll more than 500 students and hold $500,000 in endowment per student. Those colleges will get just half of the money that would otherwise be allocated under the law, with the exception of Berea College, in Kentucky, an institution in the home state of the U.S. Senate’s majority leader, Mitch McConnell.

Several wealthy colleges declined to accept any of the Cares Act money, over legal concerns as well as the threat of negative publicity.


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