Latest Bill Was Too Little, Too Late for Higher Education

Blog Post
Feb. 1, 2021

The New America higher education program is diving into a number of higher education issues impacted by the COVID relief and spending deal in much greater detail in the coming weeks. Click here to check out a summary of the bill, and visit for future blog posts.

Just a few days before the end of 2020, the latest COVID-19 relief bill was signed into law, allocating $23 billion in much-needed relief for institutions of higher education.

The funding ensured that many campuses could sustain themselves during the pandemic, that students would have access to emergency aid, and even likely saved some campuses from closing. It also provided a more equitable funding allocation that weighs Pell eligibility more heavily than the first bill, as well as many other wins for higher education, such as removing the ban on Pell Grants for incarcerated students and FAFSA simplification. 

But the truth is that after 9 months of lobbying for the support necessary to help students through the pandemic and being forced to make difficult reopening decisions due to financial constraints, the latest bill falls short for colleges by not allocating funding for states or providing enough relief for institutions. What's more is that this underfunding could contribute to further exacerbating equity gaps that grew during the pandemic.

The CARES Act in March 2020 provided much needed funding to help colleges make up for certain lost revenue and to support students after the initial pivot to online learning. But this funding was insufficient to last through the COVID-19 pandemic. Political gridlock prevented additional funding from reaching students and colleges until the end of 2020 and forced many colleges to pick between the health and safety of students, faculty, and staff, or their very existence as an institution of higher education. 

Many colleges we spoke to in our interviews and focus groups shared that they could not afford to stay fully online even if they wanted to because that meant a loss in revenue. The loss in auxiliary revenue from dorms or parking in the Spring combined with a fear that a fully online return would lead to an even greater loss in enrollment and tuition revenue forced many colleges to opt into a fully in-person or hybrid return. One national membership organization representative we interviewed shared that many colleges tapped into their endowments or found other financial funding resources in order to support students at the start of the pandemic. However, this representative shared that if campuses went fully online in the fall and students did not enroll, the financial situation could become dire. Without auxiliary and tuition revenue or additional financial support from the state or federal government, many colleges risked permanent closure if they stayed fully online.

The lack of additional funding before the Fall 2020 semester led to 910 four-year colleges opting into a fully in-person or hybrid approach to learning. This approach helped keep colleges afloat but put thousands of lives at risk. The $23 billion allocated to higher education in December 2020, nine entire months after the CARES Act, was not enough to make up for this extensive time without additional resources. 

Not only was federal relief insufficient and late, it also left out an important piece of funding that would have helped higher education survive the pandemic: money for state and local governments. Though state governments are able to utilize the Governor’s Emergency Education Relief (GEER) Fund funding for local colleges and K12 education, states did not receive funds to stabilize their budgets in the December package. Without money to fill their sizable budget shortfalls, states are likely to enact sharp budget cuts that will negatively impact public higher education in the coming years and cause further financial stress for institutions already navigating the pandemic. 

Many colleges report that the financial burdens of COVID-19 are unlikely to let up this semester. Without additional and timely funding, these issues are likely to continue well beyond the pandemic. The Biden administration and new Congress need to prioritize funding for higher education, including funding to states and local governments, to prevent cuts to higher education. Not only are students and colleges struggling to get by right now, but without this investment, we will see exacerbated equity gaps for generations to come. Additional funding to higher education and state and local governments will help ensure that students are set up for success post-COVID, not looking toward a future of budget cuts and reduced access.

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