On April 22, Stanford University in California announced it would not accept the $7.4 million share of federal emergency stimulus funding it received as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In its announcement, the university stated that giving aid to smaller colleges and universities is more important and that it will use its own funds to support students during the coronavirus pandemic. Education Secretary Betsy DeVos promptly applauded the decision and called on other wealthy colleges to do the same. Since then, a handful of others have followed suit.
Thanks to its $27.7 billion endowment, Stanford is the fourth-richest university in the United States. It doesn’t need the government’s money to survive the pandemic, but simply returning the funds was not the most effective way to help other, less-advantaged institutions.
Instead, Stanford should have accepted the federal aid and spent it all on its more than 17,000 students under the guidelines established by the Department of Education. Undoubtedly, students there need pandemic relief, too. However, the university should also have donated an equal amount to neighboring California community colleges with greater need such as Foothill College or De Anza College.
There are several reasons why an accept-and-donate strategy is better than what Stanford did. The biggest is that sending the money back through the same funding formula—which Congress created as part of the CARES Act—used to calculate Stanford’s initial allocation will not produce the most equitable results, especially for California.
The funding formula’s math works against community colleges. These colleges only received about 28 percent of all CARES Act higher education funding, even though they enroll 34 percent of all postsecondary students. That’s because colleges receive less credit in the funding formula for part-time students—who comprise most community college students—than for full-time students.
The funding formula is uniquely unjust for California community colleges. Three-quarters of the money is awarded based on the enrollment of Pell Grant recipients; however, California community colleges are free for many students because of the state’s tuition waiver programs. With tuition covered, some low-income students do not apply for Pell Grants—which results in California community colleges receiving less emergency aid for the low-income students they serve.
The funding formula also includes all institutions of higher education, including large public, private, and for-profit universities. So, while some of Stanford’s untouched allocation may go to help less-wealthy colleges, some will end up in the hands of other wealthy institutions.
Accepting the money and making a similar-sized donation to a neighboring community college would have allowed Stanford’s allocation to have a more equitable effect. Such a donation could have gone to Foothill College, for example, a public institution 7 miles from Stanford that offers mostly associate degrees and certificates. In 2018, the college served more than 14,700 undergraduate students, of whom 1,278 were Pell Grant recipients. That’s twice as many undergraduate students overall as at Stanford and 145 more low-income students—but Foothill College will receive just roughly a third of Stanford’s aid allocation.
Nearby De Anza College, also a public two-year institution, serves more undergraduates than Stanford’s entire student population. With a total enrollment of just less than 19,500 students, the college served 3,630 Pell Grant recipients in 2018—nearly three times that of Stanford. Yet De Anza will receive slightly less support aid than Stanford, at $7.2 million.
Imagine if Stanford had made a $7.4 million combined donation to these two colleges instead. Both Foothill College and De Anza College are known to have high rates of students with unmet basic needs, and this money could have gone directly to students to pay for housing, food, transportation, child care, health care, and to replace lost income—not to mention materials required for the abrupt shift to online learning such as laptops, high-speed internet, and textbooks. Cash, more than anything else, is what college students need now. Without it, students may have to drop out, increasing their odds of never completing a degree.
There’s one final benefit to the donation strategy: The funding would come with no strings attached to the receiving college. This is especially important given new guidance from the Department of Education declaring that CARES Act aid can only go to students who are eligible for Title IV funding, preventing undocumented students and international students from receiving federal relief. For the estimated 92,000 undocumented students and the nearly 161,700 international students in California, this unrestricted aid would be a critical resource.
Stanford University is right to acknowledge its colossal wealth. Unlike most institutions, it can weather this storm without bailout money from the federal government. If Stanford truly wants to help smaller colleges, however, it should have accepted its entire $7.4 million aid allocation and given an identical amount to neighboring public colleges, thereby ensuring that cash makes it into the hands of more California college students.
Bradley D. Custer is a senior policy analyst for Postsecondary Education at the Center for American Progress.
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