Harvard University officials announced Wednesday that they won’t seek or accept federal funds from the Coronavirus Aid, Relief, and Economic Security (Cares) Act, following a public dispute with President Trump over whether the university needs the money.
Harvard has decided not to seek or accept the funds allocated to it by statute.
The decision, which follows similar announcements from Stanford and Princeton Universities, came after the Trump administration stepped up pressure on elite universities to forgo the aid that Congress had set aside for all higher-education institutions that receive federal money.
The $2-trillion Cares Act, signed into law last month, provides about $14 billion in relief to colleges and universities based on a formula that considers the number of Pell Grant recipients at each college, along with its total enrollment. Half of that money is designated for emergency grants to students for food, housing, childcare, technology, and other expenses.
The money is intended to go to colleges regardless of the size of their endowments. But critics, including Trump, have blasted relatively wealthy universities for not turning it down. Harvard’s endowment was valued at $40.9 billion before the recent economic downturn, making it the largest academic endowment in the world. The Trump administration says the university could tap into that pool to cover its pandemic-related expenses.
Endowment experts point out, however, that donors typically specify how their gifts should be used, and that it isn’t always feasible, or wise, to divert endowment funds, as Harvard’s critics are calling on it to do.
During a news conference Tuesday evening with U.S. Treasury Secretary Steven T. Mnuchin, Trump called on Harvard to return the nearly $9 million it was allocated as part of the Cares Act.
Mnuchin said the federal relief money was not intended “for big public companies.” Trump chimed in: “And not for Harvard.”
Betsy DeVos, secretary of the U.S. Department of Education, doubled down on that message Wednesday morning with a tweet in which she congratulated Stanford University for giving up its relief money and called on Harvard to do the same.
Kudos to @Stanford for withdrawing its application for #CARESAct funds. As I’ve said since day 1, wealthy institutions like @Harvard don’t need this money. They should follow Stanford’s lead & embrace the @ShakeShack principle – leave the $$ for those with the greatest need!
— Secretary Betsy DeVos (@BetsyDeVosED) April 22, 2020
That was followed by a statement in which she acknowledged that Congress had directed that assistance be given to all colleges and universities that receive federal aid. “But as I’ve said all along, wealthy institutions that do not primarily serve low-income students do not need or deserve additional taxpayer funds,” DeVos’s statement added. “This is common sense. Schools with large endowments should not apply for funds so more can be given to students who need support the most. It’s also important for Congress to change the law to make sure no more taxpayer funds go to elite, wealthy institutions.”
As colleges and universities have struggled to devise policies to respond to the quickly evolving situation, here are links to The Chronicle’s key coverage of how this worldwide health crisis is affecting campuses.
In an April 9 letter to college presidents, DeVos suggested that if their students didn’t have significant financial need, colleges should consider giving their allocations to struggling institutions in their state or region.
Critics accused the Trump administration of conflating Harvard’s potential acceptance of coronavirus-relief money with decisions by some large companies to accept money intended for small businesses. DeVos nodded to that with her “Shakeshack principle” reference in the tweet aimed at Harvard. (After a public outcry, the major hamburger chain decided to give back money earmarked for small businesses.)
In an email to The Chronicle on Tuesday evening, a Harvard spokesman sought to clarify that the money Harvard was slated to receive had nothing to do with the U.S. Small Business Administration’s paycheck protection program.
“President Trump is right that it would not have been appropriate for our institution to receive funds that were designated for struggling small businesses,” the statement said.
It added that Harvard, like thousands of other colleges and universities, had received an allocation from a separate pot of money, the Cares Act Higher Education Emergency Relief Fund. The university had decided to give all of that money to students whose lives and educations have been disrupted by the Covid-19 pandemic.
On Wednesday — after widespread news reports, growing criticism on social media, and the Trump administration’s renewed call for it to reject the money — Harvard changed its stance.
“We have previously said that Harvard, like other institutions, will face significant financial challenges due to the pandemic and economic crisis it has caused,” Harvard’s statement on Wednesday said. “We are also concerned however, that the intense focus by politicians and others on Harvard in connection with this program may undermine participation in a relief effort that Congress created and the President signed into law for the purpose of helping students and institutions whose financial challenges in the coming months may be most severe.” Because of that, and the evolving guidance about how the money should be spent, “Harvard has decided not to seek or accept the funds allocated to it by statute.”
Harvard said that it will encourage the Education Department to reallocate the money to other Massachusetts institutions that are struggling and that it is committed to providing the financial support it has promised its students.
Ronald H. Ehrenberg, who directs Cornell University’s Higher Education Research Institute, pointed out that it’s up to the Education Department to determine where that money will go and that institutions that give up their allocations can’t be sure it will go to the neediest students.
He also pointed out that institutions like Harvard can’t easily dip into endowment funds to pay for pandemic-relief efforts. “Most of the endowments at many of these institutions are for very specific purposes and they don’t have the option of using them for other purposes,” he said.
Still, Harvard’s decision not to accept the money reflects a recognition of the public-relations hit it could continue to suffer. Its decision was announced just hours after Princeton University said on Twitter that it would follow Stanford’s lead and forgo the federal stimulus money.
Princeton said it remains committed to providing financial-aid grants to students, including beneficiaries of the Deferred Action for Childhood Arrivals program and international students, all of whom were excluded by the Education Department from receiving emergency stimulus grants.
“We have also taken steps to meet additional needs resulting from #COVID19, and will continue to look for opportunities to do so throughout this crisis,” Princeton’s statement adds.
Stanford, in a thread on Twitter, explained its rationale for rescinding its application for emergency funds.
Like all universities, Stanford said, it expects its finances to suffer for some time from “the combination of lost revenue, increased costs, and a market downturn that could have a substantial impact on our endowment.”
However, it added, “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.” Keeping those institutions viable in order to maintain higher-education access for as many students as possible should be a priority, the university decided.
Because half of the emergency relief money was to go directly to students with the greatest need, Stanford reassured students that it remains committed to the financial aid that’s already been promised.
In turning down federal relief money, even the wealthiest universities point out that their financial challenges will be staggering. In addition to returning prorated room-and-board fees for the spring semester, Harvard, like many universities, has announced salary and hiring freezes, executive salary cuts and other spending reductions. Harvard’s president, Lawrence S. Bacow — who, along with his wife recently recovered from Covid-19 — was not immediately available for comment on the university’s decision to forgo the aid.
