Democratic lawmakers worry about for-profit colleges reaping benefits from coronavirus stimulus package

Congress provided $14 billion to help the higher education industry in the $2 trillion stimulus package. And Democratic lawmakers are worrying about whether for-profit colleges would be able to access that money.

In a letter obtained by Yahoo Finance, Senators Elizabeth Warren (D-MA), Dick Durbin (I-IL), Sherrod Brown (D-OH), and Richard Blumenthal (D-CT) expressed concern over how the Education Department (ED) was going to interpret the CARES Act and how that money would be directed.

“The coronavirus disease 2019 (COVID-19) pandemic has jeopardized the health, learning, and livelihoods of millions of vulnerable students and currently threatens to critically destabilize colleges and universities across the country,” the lawmakers wrote. “We write to request that the U.S. Department of Education … clarify whether it will allow for-profit colleges to be eligible for the Higher Education Emergency Relief Fund authorized by Congress in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).”

NEEDHAM, MA - MARCH 12: Emotions run high at the Olin College of Engineering "Fauxmencement" for senior students on March 12, 2020, two months early, held because of coronavirus fears in Needham, MA. (Photo by John Tlumacki/The Boston Globe via Getty Images)
Emotions run high at the Olin College of Engineering "Fauxmencement" for senior students on March 12, 2020, two months early, held because of coronavirus fears in Needham, MA. (Photo: John Tlumacki/The Boston Globe via Getty Images)

‘The amounts going to for-profits are larger than I anticipated’

As college campuses across the country remain closed with the possibility of a dip in revenue looming, higher education institutions have been eager for some help from the federal government. But ED has yet to make a decision on whom it will be funding.

“The amounts going to for-profits are larger than I anticipated,” the Century Foundation’s Bob Shireman told Yahoo Finance, explaining that the way ED counts each school is going to be based on how many full-time equivalent Pell Grant recipients and non-Pell Grant recipients students are enrolled.

And even though students at community colleges are low-income, they’re not full-time — and are thus likely to see less funding as compared to those attending for-profit colleges.

In addition, for-profits have an added incentive: “A for-profit school owner gets to pocket all that tuition money, so they sign everyone up full time and they fill out the forms for them,” Shireman noted, as opposed to “community colleges, where tuition is often low, eligible students often are not receiving the aid.”

University of New Haven students Victoria Salazar and Alexis Cervantes (from left) leave their nearly deserted residence hall room with bags packed after the campus closed due to coronavirus concerns on March 11, 2020. California natives, the two planned to live in a hotel until a flight they booked for their spring break will bring them home. (Mark Mirko/Hartford Courant/Tribune News Service via Getty Images)
University of New Haven students leave their nearly deserted residence hall room with bags packed after the campus closed due to coronavirus concerns on March 11, 2020. (Photo: Mark Mirko/Hartford Courant/Tribune News Service via Getty Images)

Democratic senators are encouraging the department to give that money to public and nonprofit colleges, and prohibit for-profit colleges from accessing that pool of funds.

“If the Department determines that for-profit colleges are eligible for this funding, we urge the Department to include in such a determination strong accountability policies to support students and protect taxpayers, including policies to prohibit for-profit colleges from using such funding for any purposes beyond those which directly support student instruction, emergency financial aid to students, and student support services central to schools’ educational missions,” the letter stated.