Dive Brief:
- The $2.2 trillion economic stimulus package enacted last week could help colleges weather the financial fallout from the coronavirus pandemic, but only somewhat, according to analysts from Moody’s Investors Service.
- The roughly $14 billion earmarked for higher education institutions could help the sector retain financially at-risk students and blunt the “immediate budgetary impact” from the crisis, they wrote to investors this week.
- However, colleges will likely face a cascade of financial challenges in the 2021 fiscal year, including potential tuition revenue losses, decreased state support, and lower income from their endowments and gifts.
Dive Insight:
Although the stimulus package is “mildly credit positive” for the higher ed sector, the analysts note the amount it allocates directly to colleges for their own use is equal to just 1% of total university expenditures. The revenue losses and added expenses colleges will face due to the pandemic will “likely be in excess of that amount,” they write.
Colleges must spend half the funds they get through the legislation on emergency aid to students.
The coronavirus has upended most of the sector. Confirmed cases of COVID-19, the respiratory illness the virus causes, topped 1 million worldwide and 236,000 in the U.S. by Thursday afternoon, according to data tracked by Johns Hopkins University.
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