Federal emergency funding programs granted to higher education and K12 during the pandemic provided them with a significant budget to help support students on the verge of disengaging and falling by the wayside. However, as initiatives like the CARES Act and HEERF have expired, some schools are bound to feel the heat of a diminishing cash flow.
Half of K12 school system leaders surveyed by The School Superintendents Association reported they would have to decrease the staffing of specialists for the new school year. Such layoffs affect the K12-higher ed pipeline: 19 college transition advisers in Detroit have been laid off since their emergency funding dried up, AP News reports.
As for colleges and universities specifically, the effects of HEERF funding expiring on June 30 have not made such a huge splash on school budgets—for now.
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Bill Guerrero, chief financial officer and vice president for finance at the University of Bridgeport, expects the dust will truly settle and reveal which institutions are in good academic standing come the 2024-25 academic year.
“You get about 12 months before the big impact is going to show,” he says. “We have all ideally planned and adjusted without these federal budget dollars, but now, when we get to fall ’24, we’ll really get to see it.”
The biggest challenge higher education is bound to face without access to federal financial aid is student support, says Guerrero. Specifically, colleges and universities will need to find innovative ways to generate non-tuition revenue that can support student financial aid services.
“A lot of the challenges are on building new revenue streams that are not on students’ backs,” he says. “Every college is trying to find that. There is no panacea.”
If schools cannot generate new revenue streams outside of student dollars, students may endure the price of college going up and a slowdown in institutions’ impressive streak of tuition discount rates.
“When COVID hit, higher ed really demonstrated that you could be flexible, nimble and, frankly, entrepreneurial. You really had a chance to reinvent your institution,” Guerrero says. “Hopefully, a lot of institutions have done that and haven’t reverted to being slow and stale. Crisis is a terrible thing to waste.”
As the loss of emergency funding pressures institutions to find new money, student loan forbearance ending in October and the Supreme Court’s denial of Biden’s loan forgiveness program may lead to a swath of borrowers fighting against repayment. “A lot of folks were waiting for their loans to be forgiven,” Guerrero notes.
Maureen Amos, executive director of financial aid at Northeastern Illinois University, said the institution received 16 borrower defense claims on Aug. 30, reports WTTW.
“Institutions across the country are receiving these because of these social media groups that are telling people not to pay back their loans. Whether you don’t like your program, you’re not working in the field you thought you were going to be working in, students are filing these claims,” she said. “Schools are having to deal with educating students on a whole lot of levels, working with senior-level administration explaining what some of this means.”
