Secretary of Education Betsy DeVos, stressed that the federal grants aided to universities should go towards students' expenses.

Erin Schaff / The New York Times

Secretary of Education Betsy DeVos, stressed that the federal grants aided to universities should go towards students' expenses.

April 23, 2020

Cornell Nets $12.8 Million From Coronavirus Relief Bill As Pollack Warns of Mounting Deficit, Likely Layoffs

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Like millions of Americans across the country, Cornell may soon expect a check from the federal government.

The sprawling $2.2 trillion coronavirus relief bill earmarked $14 billion in grants to be sent to higher education institutions across the country — and according to the Department of Education, the University will receive over $12.8 million of it.

Of that amount, at least 50 percent must be used to provide students with emergency financial aid grants to help cover expenses related to coronavirus disruptions.

According to Secretary of Education Betsy DeVos, while institutions are afforded “significant discretion” on how they choose to award this money, she stressed that funds should be used to directly help cover students’ expenses — such as cost of attendance, housing, course materials and healthcare.

The education department allocated most of the $14 billion Higher Education Emergency Relief Fund based on colleges’ total enrollment numbers and their share of federal Pell Grant recipients. Columbia University and Cornell will receive the most in the Ivy League, followed by the University of Pennsylvania and Yale University.

“We know that many of our students will have increased need as a result of the pandemic,” wrote Vice President for University Relations Joel Malina in a statement to The Sun. “Cornell will use 100 percent of these CARES Act funds to support students, going beyond the federal requirement that half of the funds be put towards emergency financial assistance to our students.”

Reeling from slashed endowments and budgetary uncertainty, the money comes as the coronavirus fallout has thrust Cornell into a financial vice.

In an email sent on Wednesday afternoon, President Martha E. Pollack said that the University’s Ithaca and Cornell Tech campuses face losses of between $160 million and $210 million by the end of the next fiscal year.

Most of the deficit stems from an anticipated spike in financial aid requests as families grapple with evaporating jobs and income. Spending on tuition assistance is expected to grow dramatically by $145 million, a projection that amounts to a 35 percent surge over last year’s expense.

Weill Cornell’s fiscal health is even more precarious, hemorrhaging almost $200 million this year alone due to plunging clinical revenue. Although overflowing hospitals have been center stage in the battle against COVID-19, widespread cancellations of elective procedures have left the medical school unable to bill for its most profitable services.

“As is true across higher education in any downturn, the economic impact of the coronavirus will reach us from both sides, with the demand for financial aid and student assistance rising just as available sources of support fall,” Pollack wrote. “We learned a lot from the Great Recession of 2008, and we are better prepared financially now than we were then.”

Even so, the cost-cutting measures announced last month — which called for a freeze on hiring, pay raises and capital projects — are no longer expected to be enough as “previously unanticipated expenses” mount. According to Pollack, “painful steps,” such as layoffs or furloughs, are now almost certain.

Just hours before Pollack’s email, Malina said in a statement to The Sun that Cornell “anticipated a COVID-related budget shortfall of over $100 million for the coming fiscal year” — significantly lower than the latest estimates.

The change in posture likely reflects a growing consensus that the impacts of COVID-19 may persist longer, and more severely, than previously hoped.

Amid warnings from public health experts that coronavirus turmoil will likely not fully end until a vaccine is widely available, colleges across the country have begun preparing for the possibility of another virtual semester. If that happens, Pollack warned “we are looking at hundreds of millions in additional impact.”

The almost $13 million in federal funding is only a small fraction of Cornell’s expected surge in financial aid spending. However, that endowment-rich Ivy League schools are eligible to collectively receive over $44 million from the CARES Act has drawn scrutiny, with critics saying that it deprives funding from more deserving institutions.

At a Wednesday afternoon press conference, President Donald Trump singled out Harvard University, which, at $41 billion, possesses the largest endowment of any college in the world.

“Harvard should pay that money back. I want Harvard to pay the money back,” Trump said on the school’s $8.7 million federal grant. “OK? And if they won’t do that, then we won’t do something else. They have to pay it back. I don’t like it.”

DeVos later echoed Trump’s criticisms in a Wednesday statement, asking that schools with “large endowments [to] not apply for funds so more can be given to students who need support the most.” The secretary also urged Congress “to change the law to make sure no more taxpayer funds go to elite, wealthy institutions.”

Just hours after her and Trump’s statements, Harvard reversed course, joining Stanford University and Princeton University in refusing to “seek or accept” federal funds.

For now, there is no indication that Cornell — whose $7.3 billion endowment is a fraction of those schools’  — plans to refuse the money, which, according to Malina will help the University make good on its promise “to meet the full financial needs of our students.”

“We aim to guarantee that every single one, currently enrolled or newly admitted, has the financial resources to complete their Cornell education,” the spokesperson wrote.