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More than $2 billion in stimulus relief for Pa. and N.J. colleges will mean more student aid

Overall, the stimulus package will award nearly $40 billion to the nation’s public and private colleges. Pennsylvania’s will receive about $1.3 billion and New Jersey's $895 million, estimates show.

Students walk around campus at Cheyney University in Cheyney, Pa. on Monday, August 10, 2020.
Students walk around campus at Cheyney University in Cheyney, Pa. on Monday, August 10, 2020.Read moreJose F. Moreno/Staff Photographer

More than half the students surveyed at Cheyney University have been impacted by pandemic-related job loss, with 134 reporting a parent or guardian who lost work and 141 saying they had lost jobs.

“It bears out the disproportionate impact the pandemic has had on people of color,” said Aaron A. Walton, president of the historically black state university, which straddles Chester and Delaware Counties.

Cheyney, which enrolls about 550 students, could receive nearly $5 million in the latest round of stimulus funds, if estimates hold. Pennsylvania has not released amounts that colleges will receive, but the American Council on Education, a nonprofit higher education association, has made projections that show Cheyney could get about $2 million in its basic grant. And the university could receive an additional $2.8 million if a prior funding formula is used to distribute about $3 billion targeted for minority-serving institutions said Dan Madzelan, a senior fellow at ACE.

Overall, the new stimulus package will award nearly $40 billion to the nation’s 3,500 public and private nonprofit colleges and universities. About $396 million will go to 1,630 for-profit schools. Pennsylvania’s universities will receive about $1.3 billion and New Jersey’s schools about $895 million, according to an early estimate from the Congressional Research Service.

» READ MORE: Colleges will receive millions in stimulus funds, but coronavirus costs are greater

The money is being distributed based on a number of factors including enrollment and number of students who get federal Pell grants targeted to lower-income families. Schools must use half of their grants for emergency aid to students, similar to the prior round of stimulus funding.

Pennsylvania State University would receive nearly $150 million, while Rutgers University would get nearly $148 million, according to the ACE estimates. While ACE couldn’t say for sure what formula the U.S. Department of Education will use to disburse the money, it noted that its previous projections for stimulus payouts were “very accurate.” The 14 universities in the Pennsylvania State System of Higher Education, which include Cheyney and West Chester, would get a total of about $219 million, a critical boost as the system copes with declining enrollment and effects from the pandemic. And Temple would get nearly $78 million.

Lincoln University, a historically Black college in Chester County, is slated to receive about $9.6 million in its basic grant and could get an additional $12 million from the minority-serving institution fund if the same formula is used, Madzelan said.

Some community colleges could see big numbers. Community College of Philadelphia would get $55.4 million, according to ACE. Chestnut Hill, a small private college, would receive nearly $4.4 million.

» READ MORE: The student debt crisis hits black borrowers hardest

The stimulus legislation also includes a mechanism that would make student debt cancellation nontaxable. That will help a small number of current borrowers but could help many, many more if large-scale debt cancellation is passed, said Terry W. Hartle, a senior vice president at ACE. President Joe Biden has said he wants to forgive up to $10,000 per borrower to help lessen the burden of the current $1.7 trillion in student loan debt nationally, while others have talked about as much as $50,000.

Colleges were reluctant to say how they would use their funds until they learn officially what they will receive and if there are any restrictions on use.

“What’s clear is that the administration and Congress recognize the deep financial impact felt by students and universities,” said Temple spokesperson Ray Betzner.

He said Temple is “in the process of ensuring the students with the highest need get their second round of federal funds right now.”

Penn State also welcomes the new stimulus funds, with its president, Eric J. Barron, recently estimating the financial impact of the pandemic at $400 million.

Penn State leaders, with the help of a task group, will develop a plan to distribute the funds to students in need, said university spokesperson Lawrence Lokman. The university will share details on the grant award process as soon as they are available, he said.

“This is going to help a great deal,” Hartle said of the new stimulus allotment, “but it will not make any institution whole.”

Between lost revenue and additional expenses, colleges are down about $125 billion, Hartle said. The stimulus package approved this week and the previous two will end up pumping about $78 billion into colleges, he said.

Hartle said colleges likely will use the half of the stimulus grant that doesn’t have to be used for emergency aid to offset lost revenue from room and board, cover additional expenses for COVID-19 testing and other safety protocols, and bring back some of the employees they’ve had to lay off or furlough. In the last year, the higher-education sector has lost more than 650,000 jobs out of 3.5 million, Hartle said.

“Schools will have a good deal of flexibility in using this money,” Hartle said, and he expects it to go out to colleges relatively quickly if the same or similar formula is used as anticipated.

Walton, the president of Cheyney, said the money will help, noting that 80% of his students qualify for federal Pell grants, and that was before the impact of the pandemic.

“But the need is still greater than the amount of money we have,” he said. “It in no way makes us solvent, but it helps with a bad situation.”