Cornell received $12.8 million in federal stimulus money as part of the government’s coronavirus relief package in May. Of this total, at least half must be distributed directly to students who have suffered financially because of the pandemic.
Cornell’s grant was allocated from the Higher Education Emergency Relief Fund, which provided $14 billion in grants to higher education institutions across America. The HEERF fund was established and funded by the Coronavirus Aid, Relief and Economic Security Act, a $2.2 trillion stimulus package aimed at providing fast and direct economic relief to Americans.
Approximately 10,170 students are potentially eligible for these funds, all of whom must have submitted a Free Application for Federal Student Aid according to University requirements.
Under the guidelines of the CARES Act, eligible expenses for which the University can grant awards include technology, course materials, food, housing, health care and childcare costs. Cornell announced that stimulus funds would be transferred to students directly, and not used to “offset any charge, debt, tuition, fees or other unpaid balance in a student account, nor will it be encumbered in any manner by Cornell.”
As of July 22, Cornell has distributed a total of $4.7 million in Emergency Financial Aid Grants to 3,388 students from the CARES Act funds, with awards typically ranging from $300 to $2,500. The University has not yet announced when the remaining funds will be distributed to students.
While not all funds have been distributed, in a previous statement to the Sun, Joel Malina, Vice President for University Relations, wrote that the University pledged to “ use 100 percent of [its] CARES Act funds to support students.”
Although Cornell was among the larger recipients of federal aid, the stimulus funds represent only a marginal fraction of the University’s projected Covid-related expenditures. Cornell expects to face a deficit ranging between $160 million and $210 million deficit by the end of the next fiscal year, mostly owing to an anticipated spike in financial aid requests.
According to Prof. Ronald Ehrenberg, industrial and labor relations, the CARES Act funds offer the University some relief from increased financial aid requests. Under existing policies, as more students request financial aid, the University “would have provided the increased financial need out of its own funds.” This means the CARES Act funds “may have saved the University from spending more of its own resources,” Ehrenberg said.
Despite the financial strain felt by the University and many Cornell students, Ehrenberg explained that the University is in a much better position to handle this economic crisis than it was in the 2008 recession.
When the economy crashed during the Great Recession, borrowing money became difficult — in the current crisis, however, historically low interest rates have made the cost of loans much cheaper. Because the University has access to sufficient liquidity through credit markets, Ehrenberg explained, the current recession may be “much less painful” to the finances of the University this time around.
Ehrenberg noted that in both crises, as financial aid and other costs weighed on the University’s budget, the administration cut salary increases for staff. In 2008, the University also restructured the administration to limit expenses, a cost-cutting measure being considered for this crisis as well.
Another positive sign is the upward movement of markets. Ehrenberg said that the endowment is probably higher than it was at its low point in March. The surprising resiliency of equity markets — the S&P 500 defied most expectations by reaching another all-time high this week — has prevented the endowment from “taking as big a hit as it did back [in 2008].” But even with an over $7 billion endowment, restrictions on how much institutions can draw down prevent Cornell from directly using much of these funds to immediately offset COVID-19 losses.
Now, as federal lawmakers debate a second-round of stimulus funds, the University is potentially looking at more aid. Many higher education lobbyists expect that a second-round of stimulus funds would only target universities holding in-person classes, a decision that would further benefit Cornell, which has remained firm in its commitment to reopen campus.