Updated at 3:30 p.m.
In a reversal, Harvard University has announced it will not accept funds from the federal government’s stimulus package.
The announcement comes less than 24 hours after President Donald Trump singled out Harvard in his coronavirus media briefing Tuesday evening, saying that Harvard should return stimulus money the school received, which he said was intended for small businesses.
“Harvard’s going to pay back the money,” Trump said. “They have one of the largest endowments anywhere in the country, maybe in the world, I guess, and they’re going to pay back that money.”
The university was slated to receive nearly $9 million from the federal government, thanks to the CARES Act. These funds would have come from a pool of money for colleges, however, not from funds designated for small businesses.
Education Secretary Betsy DeVos announced Wednesday that Stanford University had withdrawn its application for funds, leaving more than $7.3 million on the table. DeVos tweeted that Harvard and other wealthy institutions should follow Stanford’s lead. Princeton has also said it will not accept the funding.
“Wealthy institutions that do not primarily serve low-income students do not need or deserve additional taxpayer funds,” DeVos said in a statement. “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.“
Harvard also said it will encourage the Department of Education to reallocate the money to Massachusetts institutions that are struggling to serve their communities.
What was Harvard's initial response?
Harvard denied Trump's claim that it took or applied for coronavirus stimulus money meant for small businesses and says Trump is right that it would not have been appropriate for the university to receive such funds.
Harvard's endowment, the largest of any college in the world, was valued at $42 billion before the recent economic downturn. The endowment is a collection of investment funds; donors have restricted the use of many of them. Some returns on those investments support Harvard's annual operating budget, but the assets in the endowment are separate from that budget.
How much money was Harvard going to get?
Harvard was supposed to receive nearly $9 million from a separate $14 billion pool of money for colleges in the $2 trillion CARES Act that Trump signed March 27. The amount of money a college receives is based on how many low-income students it enrolls and the number of students with higher incomes.
What about other schools in Massachusetts?
According to preliminary figures from the U.S. Department of Education, the state's colleges are in line to receive a total of $290 million. Boston University will receive nearly $15 million, Northeastern will receive more than $12 million, MIT will receive $5 million, UMass Amherst will receive $18 million and UMass Boston will receive $12 million.
How are schools spending this money?
The federal government has directed colleges to spend half of the funds on financial aid for students and to use the rest to cover extra costs related to the pandemic.
Harvard says it has committed all of the money it has received from the government to "provide direct assistance to students facing urgent financial needs due to the COVID-19 pandemic."
The American Council on Education (ACE), an umbrella group that represents Harvard and hundreds of other colleges in Washington, D.C., has said that the federal aid colleges are receiving is not nearly enough, because it won’t cover refunds and other expenses associated with moving courses online, deep cleaning campuses and halting research unrelated to COVID-19.
ACE estimates colleges will have to refund $8 billion in room and board charges alone after nearly all students have moved off campus. The total amount lost could be closer to $30 billion, since some colleges that have closed their campuses will also have to refund at least some tuition.
Education Secretary Betsy DeVos announced Wednesday that Stanford University has withdrawn its application for funds, leaving more than $7.3 million on the table. DeVos tweeted that Harvard and other wealthy institutions should follow Stanford’s lead.
Stanford had a $27.7 billion endowment as of last October, according to the school's website.
While much of the debate is around private colleges, public universities are facing the biggest challenge as state tax revenues dry up.
The five campuses in the UMass system are facing about $70 million in refunds for room and board charges, according to Martin Meehan, the system's president.
