Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act this week to provide relief for Americans during the Coronavirus outbreak. Among other items, this $2 trillion bill provides nearly $14 billion for higher education to assist with emergency financial aid, relief for federal student loan borrowers, and increased flexibility for Title IV funds and campus-based programs.
Approximately $12.5 billion of the funds allocated to higher education will be provided to institutions for emergency financial aid. The specific amount will be based on Pell and non-Pell recipients enrolled full-time at each institution. In the formula, Pell recipients will be weighted at 75% and all other students at 25%. Students who were enrolled exclusively online before COVID-19 are excluded from the formula. The CARES Act also provides additional funding to HBCU institutions.
Institutions will have broad discretion on the use of funds. However, at least half of the funds received by institutions must be used for emergency financial aid grants related to COVID-19. The remaining funds may be used for lost revenue or expenditures undertaken as a result of COVID-19. The bill stipulates that the funding will be distributed by the Secretary in the same manner that other Title IV aid.
Under the CARES Act, Direct Loan borrower payments will be suspended for six months, without interest accrual, until September 30,2020. Each month of suspended payments will be reported as if the borrower made a payment for the purpose of income-driven repayment plan loan forgiveness programs, Public Service Loan Forgiveness programs, loan rehabilitation purposes, and consumer credit reporting. Collection and garnishment on defaulted loans will also be suspended for six months.
The CARES Act increases flexibility for institutions working with Title IV funds, including updated campus-based funding allocations and modifications to Return of Title IV Funds (R2T4) and Satisfactory Academic Progress (SAP) requirements.
- Institutions are authorized to transfer unspent Federal Work Study (FWS) funds to the Federal Supplemental Educational Opportunity Grants (FSEOG) to assist with emergency funding. Institutions will also be permitted to use the FSEOG funding to award emergency financial aid grants up to $6,195. Standard FSEOG eligibility requirements will be waived and determined by institutions for students with unexpected expenses or financial need due to COVID-19. In addition, the institutional match requirement for FSEOG and FWS will be waived for the 2019-2020 and 2020-2021 award years.
- The Department of Education (ED) has authorization to waive R2T4 requirements for students and institutions for students who withdraw as a result of COVID-19. ED can also exclude the incomplete term from the lifetime eligibility calculation for Direct Subsidized Loans and Pell Grants.
- Institutions will have flexibility with SAP regulations for students who withdraw as a result of COVID-19. Institutions may exclude attempted but unearned credits from the SAP calculation without an appeal.
- The bill confirms the current flexibility from ED allowing institutions to continue paying FWS students who are unable to work due to COVID-19.
The Senate passed this bill on Thursday morning by a vote of 96-0. The House passed this bill by voice vote and President Trump signed it into law shortly after on Friday afternoon.
Sources:
Congress Strikes Deal for $2 Trillion COVID-19 Relief Package
Washington Watch: What the CARES Act holds for higher ed