Economic recovery and higher education

If the stimulus package approved by Congress over the weekend is going to work, a good chunk of its success may depend on higher education.

Higher ed figures to play a prominent role in a long-term economic recovery under the provisions of the American Recovery and Reinvestment Act passed by Congress on Friday and expected to be signed into law by President Obama on Tuesday. In the short term, though, the stimulus will consist of infusions of money and tax breaks for individuals: more relief for the unemployed and uninsured, help for first-time home buyers, modest incentives for car purchasers, and some additional tax credits.

But beyond those measures, the stimulus package includes several items that relies on a stronger, longer-term partnership between colleges and universities and state and federal government. If handled wisely, they could help pave the way toward a transformation of our economy.

Last Friday, Inside Higher Ed‘s Doug Lederman analyzed how the economic stimulus package will affect higher education. It’s mostly good news, but public colleges are more likely to be happier with the end result than private institutions, Lederman points out.

Administrators at public colleges and officials in state higher education agencies were probably relieved that the compromise legislation would deliver a total of $53.6 billion in new aid to states over the next two years. … [T]he compromise figure is far higher than the $39 billion that was in the Senate version of the legislation, and $53.6 billion — $39.6 billion of which is designed to fill gaps left by state budget cuts, and $8.8 billion of which is set to go to governors to use for education and other purposes — should go a significant way toward softening the impact of the economic downturn on state colleges and universities.

University research should also benefit from the legislation, which “allots roughly $16 billion to several federal agencies for research grants and facilities over two years, most of which will eventually flow to academic institutions,” Lederman writes. The lion’s share of those funds will go to the National Institutes of Health, National Science Foundation and Department of Energy — three huge funding agencies that, working in partnership with colleges and universities, can help to focus research on areas of national need, like biotech, health and medicine, infrastructure, engineering and science education, and energy and environmental sustainability.

The increase in Pell Grant funding will also help make college more affordable for students, which in turn will lead to a more educated work force and upward mobility.

“If there was bad news in the final stimulus bill,” writes Lederman, “it was probably for officials at private nonprofit institutions.”

Their students will surely benefit from the increased Pell Grants and tax credits, but they had hoped that Congress would increase the limits on unsubsidized loans (as the House had planned to do), and they lost at the last minute nearly $60 million in new capital contributions to the Perkins Loan Program. They were also hardest hit by the Congressional negotiators’ decision to eliminate the separate pot of money ($6 billion in the House bill, $3.5 billion in the Senate) for higher education facilities, which was envisioned to be distributed by the higher education agency in each state.

The compromise stimulus bill wiped out those funds and up to $16 billion for school districts — reportedly in the face of opposition from Sen. Susan Collins of Maine, one of three Republicans whose votes the White House and Senate Democrats desperately needed in order to pass the legislation, which most GOP members oppose as too heavily tilted toward non-stimulative spending rather than tax cuts.

In the final analysis, much more needs to be done to nurse our economy back to health. The banking and investment system needs an overhaul. The automotive industry needs to be retooled, as do many other sectors of our economy in order to be positioned for a transition into a more environmentally sustainable economy. But education must play a role in these sectors, too. For our colleges and universities must provide the kind of holistic education that will prevent future mismanagement — of money, of talents, and of precious natural resources. We must do our part to ensure that “the smartest guys in the room” of our country’s major institutions are managing their resources wisely and ethically.


Author: andrewcareaga

Higher ed PR and marketing guy. Communications director for Missouri University of Science and Technology (Missouri S&T) in Rolla, Missouri, USA. Slow runner, mediocre guitarist, lover of music and puns, and an avid St. Louis Cardinals fan. I blog and Tweet about #highered, #music, #gocards and #random stuff.

4 thoughts on “Economic recovery and higher education”

  1. Andrew,

    Thanks for this fantastic write up. I always appreciate it when someone provides the “Cliffs Notes” on voluminous information. I greatly appreciate you breaking down the higher ed portions of the stimulus package for us.

  2. Thanks, Tom. My post is more of a Cliff’s Notes of the Cliff’s Notes, though, as Doug Lederman’s post is the real Cliff’s Notes version. Now maybe you can write the Twitter Notes version? Heh.

  3. It will be interesting to see how Higher Ed takes this administration’s interested in technology. Did you see Bill Gates TED talk this month where he talks about the importance of video annotation? Are colleges and universities going to start taking video seriously? Yes, Stanford, MIT and Berkeley are teaching the world online, but what about everyone else?

    I’m off my soapbox, thank you for offering me this forum to rant. :)


  4. Troy – My greatest hope (speaking as someone who works at a technological university) is that this infusion of funding helps move us forward into renewable and alternative energy in a big way. Even though Department of Energy got a few billion, I question whether that is enough of an investment to get alternative energy moving. More tax credits are needed for alternative energy innovations, too.

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