Stanford denies $7.4 million in coronavirus relief funds

Institutions that have received, and returned, government bailout money Shake Shack Upscale burger chain Shake Shack said it had returned $10 million received from a US small business loan program, raising fresh questions about how the emergency financing is being managed as Congress negotiates over adding funding. less Institutions that have received, and returned, government bailout money Shake Shack Upscale burger chain Shake Shack said it had returned $10 million received from a US small business loan program, raising ... more Photo: Jim Watson, AFP Via Getty Images Photo: Jim Watson, AFP Via Getty Images Image 1 of / 8 Caption Close Stanford denies $7.4 million in coronavirus relief funds 1 / 8 Back to Gallery

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Stanford University was set to receive $7.4 million in coronavirus-relief funds from the federal government and said Wednesday it has refused the money to give smaller colleges and universities the opportunity for funding. Harvard, Princeton and Yale are doing the same.

The Palo Alto, Calif.-based institution, which has an endowment of $27.7 billion, contacted the Department of Education Monday morning and rescinded its application for relief funds under the Higher Education Emergency Relief Fund section of the CARES act, according to a statement.

The university said that while it's facing significant financial pressures amid the pandemic with revenue lost and costs increasing, it recognizes that others face a more dire economic future.

"We realize that this crisis represents an existential threat for many of the smaller colleges and universities that are such a critical part of the fabric of higher learning in the United States," Stanford said in a statement. "We believe strongly in the importance of keeping these institutions viable in order to provide access to higher education for as many students as possible, and we had concluded that this should be a priority."

Several Bay Area universities with much smaller endowments are accepting the money according to KTVU. These include Santa Clara ($1 billion endowment), the University of San Francisco ($345 million endowment), Mills College ($196 million endowment) and Saint Mary's ($181 million endowment).

Trump directly thanked Harvard and Stanford at a White House press conference, saying he was pleased the schools turned down the funding.

"They stopped it," he said. “They’re not accepting the money and that’s great. So I want to thank Harvard. I want to thank Stanford.”

Congress is offering $14 billion to the nation's colleges and universities as part of a $2.2 trillion rescue package. Schools were allotted varying sums based on their size and the number of students they teach from poorer backgrounds.

But Trump said Tuesday that Harvard “shouldn’t be taking” its share because it has such deep financial reserves. It echoed concerns from other critics, including some alumni, who said Harvard doesn't need the money and can rely on its nearly $40 billion endowment.

Education Secretary Betsy DeVos on Wednesday said other rich schools should reject the funding. Affluent schools that do not primarily serve low-income students “do not need or deserve additional taxpayer funds," she said in a statement.

“Schools with large endowments should not apply for funds so more can be given to students who need support the most. It’s also important for Congress to change the law to make sure no more taxpayer funds go to elite, wealthy institutions,” she said.

Only hours later, Sen. Josh Hawley, R-Mo., said he was introducing legislation to block colleges from receiving coronavirus relief if they have endowments topping $10 billion. Under the proposal, those schools could access federal relief only after they spend a large share of their own money — an amount 10 times the size of their federal allotment — on direct aid for students.

About a dozen U.S. schools have endowments large enough to be affected by the proposal.

The higher education funding was meant to help colleges and students facing financial losses triggered by the pandemic. If colleges accept the funding, they're required to spend at least half on direct grants for students. Harvard had previously committed to spending its entire share on students, and on Wednesday said it is “fully committed to providing the financial support that it has promised to its students.”

The Associated Press contributed to this story.

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Amy Graff is a digital editor with SFGATE. Email her: agraff@sfgate.com.