Federal Fiscal Response to COVID-19: Students + Stimulus Money

Summary

Because college students aren’t eligible to receive stimulus money from the CARES Act unless they are financially independent from their parents, in many ways this group of young adults — over 18 but not fully independent — have been left out of the millions of Americans receiving financial assistance from the federal government. Many are struggling with unemployment and a jarring shift to a new way of academic life. While these students will not get stimulus money from the CARES Act, some will receive assistance that has been allocated to and will be distributed by their colleges.

Last month, more than $6 billion was sent to colleges and universities so that the institutions are able to provide direct cash payments to students affected by coronavirus as part of the CARES Act. The amount given was dependent on the amount of full-time students and Pell Grant recipients enrolled in the institution. However, colleges are struggling with the best way to distribute these funds to students who are in need, partially in fear of possible repercussions coming later as a result of the lack of guidance over this money that has been provided by the federal government.

Addressing the Problem

College students have been severely financially impacted by the coronavirus.
- As non-essential workers, college students with on-campus jobs were laid off en masse at the beginning of the pandemic.
- 38% of college students have seen their internships and post-graduate work opportunities canceled.
- 37% say those plans have been delayed or made to work remotely.

How are States Impacted?

Not all colleges have received this designation of money.
- For example, most college students in Arizona have not yet received any financial help.
Due to lack of direction from the U.S. Department of Education, colleges remain unsure of the best way to distribute money or the best way to do so without facing repercussions later.
- As of last month, colleges in California, South Carolina, Texas, Indiana and Louisiana lacked a plan for distribution.

Action by the States and Federal Governments

At the federal level:
- Through the CARES Act, colleges were given $14 billion, $6.3 billion of which is directed to go to students who have been financially impacted by COVID-19.
- The initial wave of funding was allocated at $6 billion, but shortly after, the government allocated an additional $6 billion to support continued education.
- Following those funds, an additional $1.4 billion was given to institutions that serve minorities and low income students.
At the state level:
- Most colleges will either ask students to apply for the money or distribute it based on the student’s preexisting financial aid information.
  - No state has a sweeping policy regarding how the money will be distributed.
  - University examples:
    - Ohio State University, who received $42.9 million in federal aid, will distribute the money to students via emergency grants that students must apply for.
    - Dalton State College in Georgia, who received $2.4 million, is giving eligible students grants between $300-$700 while working with the Dean of Students to provide additional resources to help students with emergency needs.
    - Mercer County College in New Jersey, who received 3.85 million, is issuing checks to students through a need-based formula.

What is the Expected Outcome?

Most college students did not receive stimulus checks, however the federal government took steps to ensure they would receive some form of financial aid. Similar to the stimulus checks, however, the benefits of these payments, and whether they reach all students, remain to be seen. It does not appear that states will attempt to regulate how the money will be allocated to students or when, so for now, responsibility has been placed on the college or university which unfortunately has given many of them pause for fear of doing it incorrectly.

Resources for State Leaders: