May 15, 2020
Coronavirus Relief Bill Allocates $7 Billion to Independent Higher Education
In an effort to continue addressing the COVID-19 health and economic crisis, House Democrats released the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act earlier this week. The $3 trillion relief package would provide $37 billion for higher education. Of that total, private, nonprofit colleges and universities would receive $7 billion and $27 billion would go to public colleges. This is roughly the same proportion as the sector shared under the CARES Act.
While the higher education community requested $46.6 billion, the House funding level would be a significant second wave of emergency spending in response to the coronavirus.
The bill provides more flexibility for the use of funds for private, nonprofit colleges than the division between “student” and “institutional” funds in the CARES Act. Funds can be used for emergency grants to students who attended at any point during the coronavirus emergency, and can be used for any component of the student’s cost of attendance.
Institutions may also use funds to defray expenses, including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff training, and payroll. The bill also allows all students to be eligible for grants (including international and DACA students), and opens up the Main Street Lending programs to nonprofits. However, it is not clear if the Federal Reserve can add eligibility restrictions. Another critical provision for nonprofit colleges is one that allows states to waive 50 percent of the amounts self-insured nonprofits owe in Unemployment Insurance (UI).
NAICU has prepared a summary of the major funding components and key provisions of interest to private colleges.
This is the fourth bill in response to the COVID-19 public health emergency, which is expected to pass the House today, but is expected to face a more prolonged process when it reaches the Senate for modifications. The House bill is expected to be the high water mark for funding levels as the Senate is expected to significantly reduce the total spending amounts. Careful negotiations will take place during the rest of May and into early June to reach a final deal.
While it is unlikely this bill will become law, the HEROES Act provides a good baseline for the higher education sector, especially independent colleges and universities, to work from as the debate moves to the Senate.
While the higher education community requested $46.6 billion, the House funding level would be a significant second wave of emergency spending in response to the coronavirus.
The bill provides more flexibility for the use of funds for private, nonprofit colleges than the division between “student” and “institutional” funds in the CARES Act. Funds can be used for emergency grants to students who attended at any point during the coronavirus emergency, and can be used for any component of the student’s cost of attendance.
Institutions may also use funds to defray expenses, including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff training, and payroll. The bill also allows all students to be eligible for grants (including international and DACA students), and opens up the Main Street Lending programs to nonprofits. However, it is not clear if the Federal Reserve can add eligibility restrictions. Another critical provision for nonprofit colleges is one that allows states to waive 50 percent of the amounts self-insured nonprofits owe in Unemployment Insurance (UI).
NAICU has prepared a summary of the major funding components and key provisions of interest to private colleges.
This is the fourth bill in response to the COVID-19 public health emergency, which is expected to pass the House today, but is expected to face a more prolonged process when it reaches the Senate for modifications. The House bill is expected to be the high water mark for funding levels as the Senate is expected to significantly reduce the total spending amounts. Careful negotiations will take place during the rest of May and into early June to reach a final deal.
While it is unlikely this bill will become law, the HEROES Act provides a good baseline for the higher education sector, especially independent colleges and universities, to work from as the debate moves to the Senate.
For more information, please contact:
Stephanie Giesecke