Amid criticism from Republican senators, Harvard says 100 percent of CARES Act funds will go to students
Several prominent Republican politicians, including Ted Cruz, argue that a school with tens of billions in its endowment should return the federal coronavirus relief money.
Harvard says it will allocate all of the $8.6 million it is slated to receive from the recent coronavirus relief bill to student assistance, following criticism from some Republican members of Congress, who say the Ivy League school never should have accepted the money in the first place.
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The recent $2 trillion CARES Act included a $14 billion fund to help colleges in the midst of the COVID-19 outbreak, including students whose lives have been disrupted by the pandemic. According to the law, schools must use at least 50 percent of the money to fund direct financial assistance grants to students, while the other 50 percent can go toward other coronavirus-related costs.
All colleges that participate in the federal government’s student aid program received relief funds from the CARES Act through a formula based mostly on the number of students that get need-based Pell Grants, as well as overall enrollment.
Jason Newton, a Harvard spokesman, told Boston.com that the the Cambridge university was allocated $8.6 million through the formula. And while they’re required to reserve 50 percent of the funds for student relief, Newton said the amount will actually be 100 percent.
“Harvard is actually allocating 100% of the funds to financial assistance for students to meet their urgent needs in the face of this pandemic,” he said in a statement Tuesday. “Harvard will allocate the funds based on student financial need.”
Newton noted the the assistance comes on the heels of the “significant support” Harvard has already provided to students, including assistance with travel, direct aid for living expenses, and support for students’ transition to online education.
None of the federal relief money will be used to cover institutional costs. Last month, Harvard announced it would guarantee regular pay and benefits through May 28 for all employees who suddenly found themselves unable to work due to the pandemic.
Still, the new commitment to students comes as Harvard gets squeezed from both sides in the midst of the pandemic.
Several prominent conservatives — who have often made Harvard, among other elite universities, a political target — recently protested the fact the school was getting any federal assistance, given the size of its unparalleled endowment.
Harvard reported an endowment of nearly $41 billion last September. Due to the pandemic’s effect on the stock market, the university’s top finance officer cited an estimate that it had declined to the “mid-30 billion range” in an interview last week with the Harvard Crimson.
That hasn’t stopped the backlash.
“This is ridiculous,” Sen. Ted Cruz, a Texas Republican and Harvard Law School alum, tweeted Sunday, responding to the news of the school’s CARES Act allocation.
“Taxpayer relief funds should go to those in real need,” Cruz said.
This is ridiculous. Taxpayer relief funds should go to those in real need. Harvard University has a $41bn endowment—the largest in the world. Put another way, Harvard’s endowment is $13mm per student, or $171mm per faculty member. https://t.co/DZEAqyVybJ
— Ted Cruz (@tedcruz) April 20, 2020
That sentiment was echoed on Twitter by several other far-flung Republican senators, all of whom voted for the CARES Act, which passed unanimously in the Senate. Florida Sen. Rick Scott called the assistance Harvard received unnecessary “waste.” Missouri Sen. Josh Hawley tweeted Monday that the “bailout” was “obscene.”
Given the university’s budget surplus of nearly $300 million last year, Cruz said Monday that Harvard should return the relief money.
“Thank you for my law degree and an excellent legal education,” he tweeted. “You’re very rich; many people are hurting. Now give the money back.”
Asked about the criticism directed toward big universities receiving federal relief funds, as well as large companies that have tapped a separate small business relief program, President Donald Trump said Monday that “if somebody got something that we think is inappropriate, we’ll get it back.”
“We’ll look at individual things, and some people will have to return it if we think it’s inappropriate,” Trump said.
However, the pressure isn’t only from the right.
As the Crimson reported Tuesday, a group of progressive students — and several local lawmakers — have signed a petition titled “#40BillionForWhat?” pressuring Harvard to “use its vast resources” to fund paid sick leave, hazard pay, and protective gear for frontline employees who must continue to work during the outbreak. Though unrelated to the CARES Act relief funds, the group is similarly using Harvard’s endowment to make its point.
“With its $40 Billion endowment, the university administration can afford it,” Cambridge City Councilor Jivan Sobrinho-Wheeler tweeted Friday.
Harvard students and community members are pushing the university to provide PPE, paid sick leave, and hazard pay to all its essential workers during the pandemic.
With its $40 Billion endowment, the university administration can afford it.#40BillionForWhat https://t.co/8LgNKsP7SC
— Jivan Sobrinho-Wheeler (@VoteJivan) April 17, 2020
Piper W. Winkler, the founder of Harvard College Students for Bernie [Sanders], told the Crimson that state Rep. Mike Connolly also signed the petition, which does not mention the CARES Act funds.
While the university is reportedly reconsidering its policies to support workers, officials note that wielding its endowment isn’t quite as simple as tapping into a $40 billion pool of money.
According to Harvard’s website, the “overwhelming majority” of the 13,000 funds that make up the endowment are restricted to specific programs, departments, or purposes and must be spent in accordance with the legal terms set forth by the donor. Still, roughly 20 percent of the endowment (which would be around $6 to 8 billion) is made up of unrestricted funds, which are “more flexible in nature” and can be used to support “structural operating expenses and transformative, strategic initiatives.”
Overall, the university says distributions from its endowment — $1.9 billion last year — make up about a third of its annual operating budget. The rest comes from other sources, including federal and non-federal research grants, student tuition and fees, and gifts from alumni, parents and friends.
Harvard also isn’t the only renowned university receiving significant sums from the CARES Act. Yale University, which has an endowment of roughly $30 billion, will get nearly $7 million in relief funds, according to Department of Education data. MIT, which reported an endowment surpassing $17 billion, is slated to get more than $5 million.
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