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Many Ivy League universities are in the weeds over stimulus payments, as critics argue that the schools should draw on their endowments, and not taxpayer money, to support students and faculty during the coronavirus pandemic.
Harvard has become the lightning rod in this debate, as its $40 billion endowment is the largest of any academic institution in the world. Yet the Harvard Crimson reported last week that the elite university in Cambridge, Mass. is receiving almost $9 million in funding from CARES Act, which critics including President Trump say should be earmarked for smaller businesses and schools.
“Harvard is going to pay back the money. They shouldn’t be taking it,” Trump said during his daily press briefing on Tuesday. “I’m not going to mention any other names, but when I saw Harvard — they have one of the largest endowments anywhere in the country, maybe in the world. They’re going to pay back the money.”
Harvard responded in a Twitter US:TWTR thread that has since gone viral, explaining that it did not receive any money through the U.S. Small Business Administration’s Paycheck Protection Program, but it was allocated funds as part of the CARES Act, the $14 billion Higher Education Emergency Relief Fund.
“Harvard has committed that 100% of these emergency higher education funds will be used to provide direct assistance to students facing urgent financial needs due to the COVID-19 pandemic,” the university said in a statement. “This financial assistance will be on top of the support the University has already provided to students – including assistance with travel, providing direct aid for living expenses to those with need, and supporting students’ transition to online education.”
The president responded later on Tuesday evening by tweeting, “Harvard should give back the money now,” and suggested investigating the university’s endowment system.
Harvard is not the only Ivy receiving financial assistance from the CARES Act. Columbia and Cornell universities are receiving the largest rewards among the Ivies, at $12.8 million each. Yale will get $7 million, and Princeton will get around $2.5 million. The biggest allocation of all actually went to Arizona State University, which got $63.5 million.
Secretary of Education Betsy DeVos praised Stanford University for withdrawing its application for funds on Twitter on Tuesday, writing, “wealthy institutions like Harvard don’t need this money.”
An Education Department spokesperson also recently told Newsweek that DeVos “shares the concern that sending millions to schools with significant endowments is a poor use of taxpayer money.”
Harvard notes there is a misconception that schools can withdraw from endowments like taking cash out of a bank account, when “in reality, Harvard’s flexibility in spending from the endowment is limited by the fact that it must be maintained in perpetuity and that it is largely restricted.”
For example, donors may request that their money be set aside for a specific purpose — and that ties up about 80% of Harvard’s endowed funds. “Even with endowment support, Harvard must fund nearly two-thirds of its operating expenses ($5.2 billion in fiscal year 2019) from other sources, such as federal and non-federal research grants, student tuition and fees, and gifts from alumni, parents, and friends,” its endowment webpage states.
Still, a rising chorus of politicians, taxpayers and editorials is calling for Harvard to give the money back, leading the university to trend on Twitter on Wednesday morning.
Republican senators Ted Cruz and Rick Scott, and former White House press secretary Sean Spicer chimed in against Harvard online.
The Washington Post published the op-ed “Harvard, give back the $8.7 million in taxpayer money” on Tuesday, noting that, Shake Shack US:SHAK is returning the $10 million loan it was granted under the Paycheck Protection Program in the CARES Act. “It’s going to take care of its employees itself. Let these schools do the same,” the column reads, adding, “Who knew that some of our most prestigious institutions of higher education could have so much to learn from Shake Shack?”
But Terry Hartle, a senior vice president at the trade group the American Council on Education, told the New York Times that Congress was the entity that drew up the formula that allocated this money to elite schools like Harvard in the first place.
“It was purely mechanical,” he said. “Harvard got that money because that’s the way the formula allocated it … formulas that are created quickly usually have anomalies that might have caught attention if there had been more opportunity to think it through.”
