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United States: US$40 billion relief for higher education in COVID package

Annalink OSHCstudents – United States President Joe Biden signed into law a US$1.9 trillion COVID relief package – the American Rescue Plan – that included nearly US$40 billion in new relief for students and colleges.

The rescue plan is aimed at easing the economic impact of the virus on tens of millions of people, and colleges and universities will be required to spend half of the relief money they receive on emergency grants to students.

“This historic legislation is about rebuilding the backbone of this country,” Biden said as he signed the bill in the Oval Office.

The funds will extend the Higher Education Emergency Relief Fund (HEERF) through to September 2023.

The emphasis in higher education will be on supporting institutions with an endowment fund of less than US$1 million and funds will be distributed to institutions on the basis of their share of students receiving Pell Grants. These are subsidies for undergraduate students, or students on some post-baccalaureate programmes, who might not otherwise be able to afford to enrol at college or university.

American Council on Education President Ted Mitchell welcomed the package, which he said represents the largest federal effort so far to help struggling students and families and colleges and universities facing severe financial pressures. But he said it was US$57 billion short of what was needed.

He said: “The COVID-19 relief measure approved by Congress today and headed for President Biden’s signature is a win for students and higher education institutions hit hard by the pandemic.

“The nearly US$40 billion included for students and campuses will be enormously helpful, but this emergency is not over for either higher education or the country as a whole. There remain many pressing problems, including students and families struggling to cope with lost jobs or reduced wages and colleges and universities battered by steep declines in revenues and soaring new expenses.

“Based on our most recent estimate, students and institutions need at least US$57 billion in additional relief.

“We will continue to encourage the Biden administration and lawmakers to fully address the challenges students and colleges and universities face as future stimulus measures are considered.”

Targeted support

There will be additional targeted support for historically black colleges and universities (HBCUs), tribal colleges and universities, Hispanic-serving institutions and other minority-serving institutions (MSIs) to address the disproportionate effect the pandemic has had on those institutions and their students.

Some 91% of HEERF funding is spent on all non-profit and public colleges and universities, 7.5% of which is for additional funding to HBCUs, MSIs and institutions that qualify for the Strengthening Institutions Program. Remaining funds are provided by the US Department of Education to institutions that “have the greatest amount of unmet need” and to for-profit institutions.

Association of Public and Land-grant Universities President Peter McPherson said on 10 March: “The public university community is very grateful for the funding the bill provides to schools and their students.”

He said this past year has brought great hardship to public universities and many of their students. Universities have faced the multiple financial hits of increased costs to keep their campuses safe, precipitous revenue losses, and alarming losses of state funding.

“This emergency funding is so critical to enable public universities to continue advancing their critical public service mission.”

In an important concession for advocates of student debt forgiveness, student loan forgiveness will be exempt from federal taxes for five years, in the event of the president or Congress choosing to cancel any debt. This will address fears that many students would be hit with a tax bill they can’t afford to pay when debt is written off.

Senator Elizabeth Warren tweeted on 9 March, after the Senate passed its version of the bill: “Some naysayers have argued that cancelling student debt would saddle borrowers with surprise taxes. SenatorMenendez and I took care of that in the relief bill by ensuring any student loan forgiveness will be tax-free, so let’s CancelStudentDebt.”

Annalink OSHCstudents (The PIE)

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Xiaoyu Cheng | Monash University

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