The coronavirus pandemic has affected all of the spheres of our lives and due to these circumstances, student loans can be a burden. With unemployment, that is increasingly growing, Americans are struggling to pay for necessities such as rent or groceries.
What does the CARES mean?
It’s the Coronavirus Aid, Relief, and Economic Security Act, which was passed by Congress. It was signed into law on March 27, allocated about $14 billion to American colleges and universities, of which approximately $6.3 billion must go to students who are impacted financially by the coronavirus. The total amount of stimulus a given college receives is based on enrollment, with a 75% weighting given to the number of full-time students eligible for Pell Grants. Importantly, the formula excludes students who were enrolled exclusively in online coursework prior to the pandemic.
Who is going to distribute the money?
At least half of an institution’s allocation must be used for emergency grants given to students, but the other half can be used to cover expenses related to the coronavirus pandemic. It’s up to individual institutions themselves to determine which students will receive the money and what the amount is going to be, but the Department of Education Department intended the funding to help financially needy students pay for course materials, food, housing and health care, among other things.
No matter how good these intentions are, CARES money is getting to students very slowly or at some schools not at all. The Department of Education has given vague guidance to institutions. Colleges, in turn, have been wary of doling out the money only to learn later that the federal government disapproved of its methodology. And finally, many institutions continue to hesitate about the perfect way to distribute the funding – either through an application process requiring students to justify their need or a formula assigning a specific amount to all students below some income threshold.
Universities are rejecting CARES funding
A couple of elite schools, particularly those with large endowments, have already turned down CARES funding. Their reasons for refusing the money run the range of motives, one of which is that this money is being used to “rescue” wealthy colleges.
Harvard, Princeton and Stanford announced they would not accept CARES funding allocated to them in a coronavirus aid package.
“The combination of lost revenue, increased costs and the market downturn that could have a substantial impact on our endowment are all expected to negatively affect the university’s finances for some time to come,” Stanford said in series of tweets. “However, we realize that this crisis represents an existential threat for many of the smaller colleges and universities that are such a critical part of the fabric of higher learning in the United States.”
In a statement, Harvard said it would inform the Department of Education of its plans to return the funds and request the federal government to act swiftly to reallocate the resources.
“While we understand that any reallocation of these resources is a matter for the Department of Education, we hope that special consideration will be given to Massachusetts institutions that are struggling to serve their communities and meet the needs of their students through these difficult and challenging times,” the university said.