Update April 10, 2020:  Since launching its relief programs on April 3, the Small Business Administration (SBA) has clarified that students employed by the institution should be counted as employees when determining eligibility for the Paycheck Protection Program and Economic Injury Disaster Loan (discussed below). As a result, many small colleges and universities may now exceed the 500-employee maximum and will no longer qualify for assistance through these programs. An institution with more than 500 employees may still be eligible if it meets the SBA industry size standards.

*Disclaimer: The information in this blog post is based on publicly-available information; it is not official or final and should not be considered as such. Ithaka S+R and the authors are not financial advisers and the information contained here should not be construed as financial or legal advice. All readers of this blog post should seek professional financial and legal advice before pursuing CARES Act or SBA relief.

On March 27, Congress approved the Coronavirus Aid, Relief, and Economic Security Act (CARES) which provides approximately $2 trillion in assistance to individuals and businesses. The CARES Act creates the Higher Education Emergency Relief fund (HEER), which provides $14 billion in direct funding to institutions impacted by the COVID-19 pandemic. Receiving institutions must spend at least 50 percent of funds distributed on emergency student financial aid and any remaining funds can cover additional costs incurred as a result of disruptions caused by COVID-19.

The majority of the HEER funds ($12.6 billion) will be distributed to Title IV-participating two- and four-year colleges and universities using a funding formula that is based on the number of full-time Pell students enrolled (75 percent of $12.6 billion, or $9.4 billion) and on the number of in-person students enrolled prior to the shift to remote learning (25 percent of $12.6 billion, or $3.1 billion). Using the most recent IPEDS data from academic year 2017-18 and assuming the funds are allocated evenly across students, we estimate that the Higher Education Emergency Relief fund will allocate $3,593 per Pell student enrolled and $475 per non-Pell student enrolled.[1] For estimates of the amount of CARES Act funds by institution, see the American Council on Education simulated distribution of funds.

While the Higher Education Emergency Relief Fund is the most prominent source of aid to struggling colleges and universities, it is important for those institutions to be aware of other provisions of the CARES Act that they may be able to access to weather the COVID-19 crisis and its fallout.

The Mid-sized Business Loan Program, added late in the drafting process, applies to organizations–including public and private non-profit colleges and universities–with between 500 and 10,000 employees. While additional guidance is needed to decipher some of the program’s details, the program is intended to help organizations retain 90 percent of current employees through payroll support, and the money will be drawn from the $454 billion of U.S. Department of Treasury support for Federal Reserve lending to businesses, states, and municipalities. Many colleges and universities are potentially eligible for this program.

Small colleges may receive limited support from the Higher Education Emergency Relief Fund, which is allocated based on enrollment, and may not be eligible for the Mid-sized Business Loan Program. Yet, small colleges and universities often have significant fixed costs and serve as the economic hub of their local communities. These institutions should investigate two other relief options that may be available to them.

The first is the U.S. Small Business Administration’s (SBA) new Paycheck Protection Program (PPP), which has extended access to loans to private, non-profit institutions, formerly ineligible for SBA support.[2] The PPP makes $349 billion in loans available to small businesses that employ fewer than 500 employees (including full-time and part-time, not including independent contractors) as long as they are registered as 501c(3)s.[3]

Between April 3 and June 30, 2020, institutions can apply for two-year loans with an interest rate of 1 percent via their SBA lender or any participating, federally insured credit union, depository institution, or Farm Credit System institution.[4] The maximum loan amount is the lesser of $10 million or 2.5 times the average monthly payroll, and must be used to cover payroll, employee benefits, rent/mortgage, utilities, and/or debt services. Loan payments can be deferred up to six months.

The loans will be distributed on a first-come, first-served basis, but there is a possibility the SBA will increase the amount of aid available. To apply, institutions should first reach out to their regular lender to see if the lender is participating in PPP; the list of currently participating lenders is available here. In addition, the SBA will forgive the loans if the institution meets certain provisions related to maintaining employment levels and rehiring employees who were fired or furloughed before April 26. See this guidance for more information about loan forgiveness terms.

In addition to the PPP, the Small Business Administration has also extended its Economic Injury Disaster Loan (EIDL) to nonprofits, with the same eligibility rules on the number of employees. Institutions should consult with their lender to determine whether they are eligible to participate in the EIDL program.

Many experts expect additional phases of federal relief programs. Colleges and universities should continue to monitor these relief programs to identify potential opportunities to sustain their operations through the crisis. Small colleges, in particular, should pay attention to any new offerings from the SBA.

Below we’ve compiled some additional resources on financial relief for colleges and universities that may be helpful.

Additional Resources:



[1]Similar to the ACE methodology, we estimate the number of full-time Pell and non-Pell students who are not exclusively enrolled in distance learning at each Title IV participating institution. We then total these estimates across all Title IV institutions, and using the stated formula (i.e., 75 percent of funds to Pell students and 25 percent of funds to non-Pell students), divide the fund allocations by the totals to generate a per-student dollar amount.

[2] The Council of Nonprofits has published a helpful summary of PPA loan terms.

[3] The SBA has not yet provided clear guidance as to whether student workers count toward the number of employees in the PPP eligibility determination. Higher education advocacy groups recommend that small colleges proceed with their application now rather than waiting for the SBA to update their guidance.

[4] The SBA is experiencing challenges in administering the PPP as planned. Lenders received guidance hours before the PPP launched, creating a backlog of inquiries. Given the complexities of the program, delays in application filing and loan issuing are likely.