U.S. Senators Marsha Blackburn (R-Tenn.), Martha McSally (R-Ariz.), and Marco Rubio (R-Fla.) have cosponsored Senator Josh Hawley’s (R-Mo.) bill to prohibit universities from receiving Higher Education Emergency Relief Funds from the CARES Act if they have an endowment larger than $10 billion, unless they first spend some of their own money on coronavirus-related financial assistance for students. Representatives Jim Jordan (R-Ohio) and Ben Cline (R-Va.) are introducing companion legislation in the House.
“Universities with massive endowments should not be getting taxpayer money unless they spend some money out of their own pockets to actually help their students. This is common sense. Relief funds were intended for schools that need it, not wealthy universities that sit on huge endowments. It’s greed, plain and simple, and it’s wrong.”
Senator Josh Hawley
Senator Blackburn said, “Federal funds to help America through this unpreceded healthcare and economic crisis should be reserved for those who truly need it, and should not go to well-endowed universities.”
Senator McSally said, “Universities with large endowments should not receive a dime of federal relief cash without first tapping into their own funds to help struggling students who have been impacted by this crisis. Our legislation will compel universities to set aside a portion of their endowment funds to support suffering students before they can receive federal help.”
Senator Rubio said, “The wealthiest colleges and universities in the U.S., which are sitting on tens of billions of dollars in endowments, but extending a hand to federal taxpayers for relief funding need a reality check. The unprecedented coronavirus pandemic plaguing our nation has impacted millions of Americans — including students — who desperately need help to weather this storm. When there is a finite amount of money available for students, Congress should ensure aid is going to those who need it most, and I’m proud to join my colleagues in this effort to do exactly that.”
Congressman Jordan said, “This bill shouldn’t be controversial or partisan. If universities have large endowments, they should spend some of that endowment on their students first, before seeking a federal bailout. This legislation ensures that large universities are held accountable to taxpayers in the future, while at the same time directing funds to those actually in need. I’m proud to stand behind this important legislation with Senator Hawley and Congressman Cline.”
Congressman Cline said, “Colleges and universities with multibillion-dollar endowments should not be requesting funds from the CARES Act. Money allocated through this legislation should be reserved for businesses and institutions in need, not entities that have virtually unlimited resources through their foundations and endowments. This bill ensures that our Nation’s wealthiest schools can no longer take advantage of coronavirus relief funding at the expense of the American taxpayer.”
Under the proposal, universities with over $10 billion in endowments would have to spend 10 times the amount appropriated to them according to the formula in the CARES Act to be eligible for federal relief funds. The university would have to demonstrate it spent the money on the same uses of funds required by the CARES Act – emergency financial aid grants to students to cover costs like food, housing, healthcare and childcare, and costs related to the disruption to the delivery of instruction due to COVID-19.
Background
The CARES Act provided nearly $14 billion for higher education institutions through the Higher Education Emergency Relief Fund. 90 percent of these funds were awarded to higher education institutions to be used to cover the cost of changes in delivery of education services due to COVID-19 and to provide emergency financial assistance to students. Funds are allocated based on the number of Pell Grant recipients and overall student enrollment at each institution of higher education.