Colleges turn to Federal Reserve for more coronavirus aid
An organization that represents over 1,700 colleges and universities asked Fed Chairman Jerome Powell to expand the Main Street Lending Program to include higher education institutions.
Despite receiving $14 billion in initial coronavirus aid funding, colleges and universities are looking to the Federal Reserve for more help.
After receiving $14 billion in Coronavirus Aid, Relief, and Economic Security (CARES) Act funding, colleges and universities are now turning to the Federal Reserve for more aid.
The American Council on Education (ACE) recently sent a letter to Federal Reserve Chairman Jerome Powell asking for clarification and exemptions for the newly announced Main Street Lending Program. The organization, which represents more than 1,700 colleges and universities, asked the Fed whether “nonprofit private and public institutions” are eligible for the program, and if student employees can be exempt from the employee cap.
“Institutions of higher education, often the largest or one of the largest employers in their local communities, are facing a major cash flow crisis in light of the reduced revenue and increased expenses imposed by the COVID-19 pandemic,” ACE President Ted Mitchell said in the request to the Fed.
Mitchell, who wrote Powell on behalf of more than two dozen other higher education interest groups, claimed access to the loan program was “vital” for colleges and universities.
“It is vital to provide this access to low-interest loans to nonprofit colleges and universities financially devastated by the pandemic and struggling to continue to educate and assist students and employ the millions of faculty and staff who work on campuses around the country,” Mitchell added.
The Fed first declared that only small and mid-sized businesses that employ up to 10,000 employees would be eligible for the loans, which currently range from $500,000 to $200 million. The cap on employees has since increased to 15,000 employees.
The Fed also increased revenue requirements so businesses with $5 billion in annual revenue are eligible.
Though the Fed made changes, the question on public and nonprofit institution eligibility remains unclear. Additionally, according to Yahoo Finance, a Fed-imposed earning requirement would likely prevent nonprofits that are operating at a loss from participating in the program.
One university already said it is ineligible. The University of Kentucky told Yahoo Finance that it does not currently qualify for the loan program.
Campus Reform reached out to the Federal Reserve Bank of Boston, which is leading the implementation of the Main Street Loan Program, for comment, but did not receive a response in time for publication.