Harvard Turns Down Millions in Federal Grant Money
- Author: Chris Remington
- Posted: 2024-01-28
Universities have had to refund some fees after they sent students home after the coronavirus crisis hit. In addition, the alumni and corporate giving that many colleges rely on have dried up as the economy has veered into crisis. Nonetheless, colleges still have fixed expenses as they are paying their employees and have debt service. Accordingly, universities are being plunged into fiscal distress as they have taken large financial hits from COVID-19.
Congress acted to help universities by appropriating a large sum of money in aid in the stimulus bill. This money was to be given automatically to institutions of higher learning based on the number of students that were enrolled for use in student grants. There is a formula to determine how much each university would receive.
Ivy League Schools Are Eligible for Public Funding
The CARES Act was drafted in a hurry and did not distinguish between rich and poor universities. Some private universities have exceptionally large endowments that contain stocks and other investments. For example, Harvard has an endowment that exceeded $40 billion at its last reporting. Its endowment exceeds the total economies of many Third World countries. In other words, while Ivy League and other elite schools may have suffered financially, their predicament is all relative.
There has been much public outcry as news of who has gotten stimulus funds has emerged. For example, large public companies such as Shake Shack applied for and received stimulus money. This has sparked outrage as the intent of the stimulus package was to aid Main Street and those without large economic resources.
The same considerations have affected grants to universities. What started off this round of public pressure was a statement made by President Trump accusing Harvard University of taking funds that were earmarked for small businesses. This was not entirely true because Harvard was not receiving funds that were part of the Paycheck Protection Program that was intended to help small businesses.
Elite Schools Have not Asked for the mONEY
The universities were receiving funds from a different pot of money based on a statutory formula. They did not apply to take money that would have otherwise gone to a small business. Nonetheless, some of the same optics are present that angered people about the PPP funds. Elite schools do have huge budgets and large cash reserves and are more than able to weather this crisis financially, even if their endowments have shrunk and they were forced to give back some money.
This has sparked a debate on the ethics of accepting taxpayer money when a school is in the bucket of "haves" as opposed to "have nots." Regardless of the fact that the law that was passed by Congress and signed by the President did not contain any restrictions on who may be funded, public opinion has lumped well-funded universities into the bucket of those trying to game the system when they accept federal grant funds.
Another common misconception about this grant money is exactly who it is going to help. The public perception was that it was going straight into the universities' bank accounts that are already bloated. This is also not entirely true. The money is being used for colleges to distribute emergency grants to students in the area of financial aid. Students face the prospect of being left out in the cold financially as their families deal with job loss and economic devastation. In fact, the funding formula is based on the number of students in the university who are receiving financial aid. In other words, this is not money that is meant to line the pockets of rich educational institutions. Nonetheless, sensitive to public pressure and their reputations, top schools have turned down this money. The effect of the decision to forgo the funding on the students is unclear.
