Ministry of Education is subject to financial supervision from Harvard University

The Education Department announced Friday that it has enabled Harvard University to conduct enhanced cash monitoring, a designation that allows federal government oversight of institutions and is often reserved for universities in the horrible financial strait.

As we all know, Harvard’s $53 billion donation is not.

“It’s harassment,” said Jon Fansmith, vice president of government relations and national engagement at the U.S. Board of Education. “Harvard has the money, yes, but it is adding a headache. It’s adding staff. It’s interfering with students’ ability to access federal financial aid … The government’s making it harder for Harvard to support low-income students, which speaks to exactly what the administration’s goals are here—they’re not to help students, they’re not to improve education, they’re not even to address what they see as concerns at Harvard—they’re just to attack Harvard.”

Robert Kelchen, head of the Tennessee Department of Education Leadership and Policy Research Division in Knoxville, Tennessee, explained that agencies that require enhanced payment monitoring require a letter of credit to serve as collateral for the education department or grant federal financial aid to their own stocks if reimbursed by the department. Harvard was asked to do both.

Department officials wrote that according to a Friday press release from the Department of Education, Harvard must present $36 million in irrevocable letters of credit or “providing other financial protections acceptable to the department.”

“Students will continue to receive federal funding, but Harvard will be required to cover initial spending as a guardrail to ensure Harvard spends taxpayer funds responsibly,” officials wrote.

The federal government freezes $2.7 billion in federal grants for Harvard after rejecting its comprehensive request in April. Harvard sued, and the judge ruled earlier this month that the freeze was illegal. The university reportedly received some frozen funds, but the Trump administration said it still hopes to reach a deal with Harvard.

The release said three incidents sparked an intensification of Harvard’s name of cash surveillance: the Department of Health and Human Services’ determination, which violated the 1964 Civil Rights Act title 4, allegedly allowed anti-Semitism on campus, accusing the university of non-compliance with civil rights, and won $100 million in Bond’s funding and raised $100 million in funding. Harvard did not respond Internal Advanced EDFriday’s comment request.

Education Secretary Linda McMahon in a statement. “While Harvard is still eligible for the federal student aid program, these actions are necessary to protect taxpayers.”

The department also noted layoffs at Harvard University and established a recruitment freeze in the spring. Several other wealthy universities have also frozen recruitment and layoffs this year, partly due to government actions related to federal funding. Some other universities have issued bonds or taken the loan to get immediate cash. But so far, the department has not publicly mentioned making these universities higher cash surveillance.

Federal data shows that as of June 1, 538 universities are conducting cash monitoring as of June 1. About one-third of these universities are private nonprofit organizations, while about 42% are for-profit organizations. Most institutions (464 of them) are in the United States

Many on the list are private institutions with lower comprehensive scores of financial responsibility, Kelchin said. The test allocates the institution between -1.0 and 3.0 based on the institution’s main reserve ratio, equity ratio and net income ratio. To be considered financially responsible, an institution must score at least 1.5 points, while Harvard must score.

In fiscal year 2023, publicly available data is Harvard’s comprehensive financial responsibility score of 2.8. Harvard’s estimated primary reserve ratio for fiscal year 2023 is 7.6, meaning the university can only spend its existing assets to operate for about seven and a half years. By contrast, Hampshire College is a private, nonprofit college that receives enhanced cash monitoring, a comprehensive financial responsibility score of 0.6 and an estimated primary reserve ratio of 0.3, meaning it can continue to operate for about four months before using depleted assets. Drew University is another agency about cash monitoring, with a comprehensive financial responsibility score of 0.6 and its main reserve ratio of -1.06.

However, there are many reasons why institutions may end up surveillance in cash, besides the financial responsibility score. Some agencies, including Hampshire and Arkansas Baptist Church, were listed due to lateness or lack of compliance audits. Other departments are listed when reviewing their plans or because their certification is revoked. But, “the department can also state that the agency is financially responsible,” Kelchin said.

Fan Smith said the political motivation behind the move was clear.

“There is a problem to some extent, and to be clear that there is a problem, it is not the ability of Harvard to pay the bill or fulfill its obligations. It is a problem posed by the administration,” he said. “They created the situation and then they blamed Harvard for taking reasonable steps to resolve the situation. It is also ironic when they send letters to Harvard in terms of terms such as “huge” and “massive” and “massive” and “massive” and “massive” and “massive” and “massive” and “massive” and now they suddenly determine that they are worried about Harvard being a financial risk … it is absolutely, it is absolutely.”