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Stimulus Aid Won't Suffice for Colleges, Fitch Warns

January 8, 2021
 
 

Billions of dollars dedicated to colleges and universities in the recently enacted stimulus legislation won't come close to helping the institutions fill budget deficits caused by pandemic, Fitch Ratings said Thursday.

The ratings agency stated that the $22.7 billion allocated to postsecondary institutions in the Consolidated Appropriations Act is significantly more than the $14.3 billion distributed through the federal CARES Act last spring, and that the new aid provides more flexibility to institutions in how they can spent the funds.

But the federal support likely pales in comparison to the current and future revenue shortfalls and cost increases many institutions will face, given enrollment decreases, flat or reduced state funding, and other factors.

"Federal funds will help provide crucial revenue, but these funds will only address a portion of short-term needs," Fitch said. "Continued expense reductions are expected to be necessary despite this additional federal support."

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