Congress to Blame for Ivy League Bailout Kerfuffle
Public ire has been understandably directed at well-endowed schools, but there’s a catch.
The $2.2 trillion CARES Act was Congress’s typically ham-handed way of throwing (massive amounts of) money at a problem without laying down good guidelines or thoroughly weighing the consequences. As Sen. Marco Rubio, the Florida Republican elected in the 2010 Tea Party wave, said of the Small Business Administration’s beleaguered lending program, “When you do things in an emergency situation, they’re going to be far less than perfect.” Government, er, imperfection was demonstrably at play with the $14 billion in bailout cash for institutions of higher learning, including well-endowed Ivy League schools.
Understandably, much of the public ire has been directed at the Ivy League. All eight schools have enormous endowments — Harvard ($41 billion), Yale ($30 billion), Princeton ($26 billion), University of Pennsylvania ($15 billion), Columbia ($11 billion), Cornell ($7 billion), Dartmouth ($6 billion), and Brown ($4 billion) — yet were slated for nearly $62 million in collective aid. Harvard’s endowment, for example, is nearly three times the size of the entire federal aid program for higher education. Someone with a brain at one of those ivory towers should have said, “Hey, maybe we don’t need millions of dollars in bailouts.”
Unfortunately, it took public ire and direct rebukes from Education Secretary Betsy DeVos and President Donald Trump for some of these schools to either withdraw aid applications or reject or return money already awarded.
Yet government shouldn’t get a pass when it comes to such screwed-up programs. Congress passed a faulty law. It’s true some schools shouldn’t have applied, but they were legally eligible. As DeVos noted, “Congress required by law that taxpayer Emergency Relief funds be given to all colleges and universities, no matter their wealth.” In that sense, why wouldn’t the Ivy League schools take their cut?
DeVos argued for balance: “Schools with large endowments should not apply for funds so more can be given to students who need support the most. It’s also important for Congress to change the law to make sure no more taxpayer funds go to elite, wealthy institutions.”
There’s no question that many colleges and universities are struggling mightily, just as the nation’s businesses are. The University of Michigan, for example, says it faces losses of $1 billion and will cut executive pay and faculty salaries, among other things. We suspect the greater danger lies ahead for small schools, and especially private institutions.
There’s already growing support for a second round of aid that will likely dwarf the first round. As with government aid to individuals and businesses, this is understandable given that government mandated the closures in the first place. That doesn’t mean future generations won’t get the bill.
Correction: Stanford is not an Ivy League school, though it was referenced in news reports about these bailouts. The article has been amended to remove it.
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