Dive Brief:

• U.S. colleges used almost $13 billion in federal pandemic assistance in 2021 to cover lost revenue, helping prevent cuts to jobs, academic programs and student support services. 
• The U.S. Department of Education on Wednesday released a report detailing how colleges leveraged pandemic aid in 2021, the same year Congress passed the American Rescue Plan, which provided nearly $40 billion in aid to colleges. The higher ed sector received about $76 billion total in relief money from several relief packages, beginning during the Trump administration.
• Colleges were legally required to dedicate a significant chunk of aid to financially distressed students. They reported distributing $19.5 billion in grants to 12.7 million students in 2021.

Dive Insight:

Policy experts largely credit federal pandemic aid dollars with cushioning colleges’ budgets during an economically tumultuous period, ensuring some institutions teetering on the brink of financial ruin survived. Colleges received funding directly from the federal government, but local and state governments also benefited from the aid packages, which likely helped them avoid egregious cuts to public higher education spending.

How colleges spend their share of the money remains of keen interest, as the federal government has not passed a coronavirus rescue bill since 2021, and the funding has started to dry up. Declining federal aid also potentially jeopardizes some institutions’ finances.

The White House has described the government aid as a lifeline to institutions and financially struggling students. Biden administration officials reiterated this argument at a virtual event Wednesday featuring Education Secretary Miguel Cardona and first lady Jill Biden.

Cardona said during the event that the money sets the stage for a more inclusive approach in the future to helping underresourced colleges and students.

Colleges, including private nonprofit and for-profit institutions, spent more than $39 billion in coronavirus aid during 2021, according to the new Education Department report.

Public four-year colleges spent the most, more than $21 billion, followed by public two-year colleges and private nonprofit four-year colleges, which spent about $9 billion and $8 billion, respectively, that year. 

Roughly three out of four institutions reported pandemic assistance helped them maintain net prices at pre-pandemic levels. And about 9 in 10 colleges said the money for students enabled them to keep some enrolled who were at risk of dropping out.

Public four-year colleges gave about $10 billion to students from their pot of relief funding during 2021. Public two-year institutions distributed approximately $4.5 billion to students that year, and private nonprofit colleges disbursed $3.9 billion. 

Two-year and four-year for-profits distributed $419 million and $250 million in student financial aid, respectively. 

The report notes that as of Wednesday, colleges have spent almost 90% of their pandemic aid. The Education Department will eventually release a detailed breakdown of 2022 spending.