Schools saw a 5% drop in enrollment - but got federal aid worth four times as much.

Part Two in a Series

By Patrick Nelson

          When the first global pandemic in more than a century began spreading around the world in early 2020, the U.S. government mounted a shock & awe response worth trillions of dollars.

          The inflationary and market-warping effects of this spending binge will reverberate for years. As will the debt payments—U.S. government debt just surpassed $30 trillion for the first time in our history. That is a growth-sucking 130% of annual GDP.

          For a preview of the effects of a huge sum of government money flooding any market, look at higher education. My firm, Nelson Partners, manages 23 investor-owned apartment complexes near 15 campuses in 13 states.

          The Covid crisis produced a windfall of billions of dollars for colleges and universities, even as they shut down most of their operations and taught courses online—and kept charging full-boat tuition. My company lost $12 million and managed to get a $1.2 million loan.

          In the 15 years since I formed Nelson Partners, tuition at public four-year schools is up 180%; at private universities the cost is up 124%. In fact, college costs have risen more than four times as fast as the inflation rate for fifty years!

          So, if any business had a financial foundation strong enough to weather Covid-19, the higher education business qualifies. Yet the amount of money the federal government pumped into colleges and universities was mindboggling.

          I have done some figuring, and the short version looks like this:

          Universities and colleges take in $670 billion a year in tuition and fees. Their enrollment fell 5.1% in the pandemic, down almost one million students, a revenue hit of $34 billion a year.

          Yet they received more than triple that amount in federal aid: upwards of $115 billion (see the breakdown, below). In the government’s all-out spending binge to counter Covid, higher education made one of the biggest hauls of all.

          It started on March 27, 2020, when Congress passed the CARES Act (Coronavirus Aid, Relief, and Economic Security) to provide $2.2 trillion to “provide fast and direct economic aid to the American people negatively impacted by the COVID-19 pandemic.”

          Included in that sum was $14 billion for HEERF, the Higher Education Emergency Relief Fund. Just $14 billion.

          Then came HEERF II, on Dec. 27, 2020, when Congress passed CRSSAA, the Coronavirus Response and Relief Supplemental Appropriations Act. It included $81.88 billion for education, including an extra $22.7 billion for higher education.

          This was “in addition to $30.75 billion expeditiously provided last spring in CARES,” as the U.S. Department of Education puts it. So, $14B originally had grown to almost $31B, and now over $23B was added to that: we’re up to $54 billion.

          And it’s not enough! Just 18 days later, on January 14, 2021, an extra $21.2 billion was set aside for colleges and universities as part of HEERF II. We’re at $75 billion or so.

          Less than two months after that came HEERF III as part of the American Rescue Plan (ARP): another $39.6 billion piled on top of all those previous dollars. We are at $115 billion.

          That is a huge handout to some of the richest institutions in the land, which were contending with all of a 5% reduction in their tuition revenue.

          Why so much? Sure, higher education is important for our future, blah blah—but, also, for 30 or 40 years, schools have been indoctrinating young students in liberalism, social activism, big government, and the evils of business and capitalism.

          The liberal agenda is popular in the federal bureaucracy and among the Democrats who control the House and Senate. America’s campuses are fertile ground for future voters, and the Dems are trying to buy them on a scale so massive you have to admire their moxie.

Patrick Nelson is the CEO and founder of Nelson Partners in San Clemente, Calif.