Summary of Education Provisions of the Coronavirus Aid, Relief and Economic Security (CARES) Act
Today, Congress passed the Coronavirus (CV) Aid, Relief and Economic Security (CARES) Act. This is the third piece of legislation to provide relief to large and small business, educational institutions (K-12 and higher education alike), as well as to individuals, as a result of the Coronavirus crisis. Congress provided for significant funding and relief to students, schools, and institutions of higher education (IHEs). The following is a brief summary of both. Interested parties should not rely on this summary as legal advice and should seek additional advice and counsel.
The Appropriations Provisions
The appropriations legislation creates an Education Stabilization Fund of $30.75 billion to cover education from K-12 through higher education.
The Education Stabilization Fund is allocated through four different funding streams:
Approximately 2% of the funding will be dedicated to rural communities, the Bureau of Indian Education (BIE) and to states with the highest CV burden.
9.8% of the remaining funding will be allocated to a Governor’s Emergency Education Relief Fund
43.9% of the remaining funding will be allocated for K-12 purposes through an Elementary and Secondary School Emergency Relief Fund
46.3% of the remaining funding will be allocated to a Higher Education Emergency Relief Fund
Governor’s Emergency Education Relief Fund
Under this provision, the States will be able to apply to the U.S. Department of Education (USDOE) for funds. The U.S. Secretary of Education (Secretary) will allocate these funds based 60% on the states’ relative population of ages 5-24 years and 40% on the relative number of children counted under the Elementary and Secondary Education Act (ESEA).
Governors will focus the use of the allocated funds on local education agencies for the purposes of ensuring continuity in K-12 education and to provide grants to the most severely impacted IHEs within their states. Governors may also allocate funds to IHEs and other education related entities in the state that are essential for carrying out educational services for students under certain provisions of the ESEA, the Individuals with Disabilities Act (IDEA), the Perkins Act, or the Higher Education Act (HEA), as well as for additional services or purposes, including as examples, for childcare, early childhood education, and social and emotional support.
ESEA Emergency Relief Fund
This fund would provide grants to state education agencies apportioned in the same manner as ESEA, with 90% going as sub-grants to local education agencies. The uses for these funds are outlined to include the following, which is not the exhaustive list: existing purposes under ESEA, IDEA, Perkins and other laws, for preparedness coordination between agencies, for resources for principals and other school leaders, for services to address unique needs of need-based students, students with disabilities, English learners, homeless students, preparation, prevention, sanitation services and training, technology and training for online education, summertime education, and mental health services.
Higher Education Emergency Relief Fund
A significant amount of the education funding is dedicated here – approximately $14 billion. Of this amount, 90% would be provided to institutions whose students were not exclusively enrolled online prior to the emergency, using the following breakdown:
75% according to relative share of full-time Pell recipients who are not exclusively enrolled online prior to the emergency; and
25% according to relative share of full-time non-Pell students who are not exclusively enrolled online prior to the emergency
Seven and one-half (7.5%) percent of the remaining funds would be dedicated to Title III and V institutions, i.e. historically black colleges and universities (HBCUs) and Hispanic Serving Institutions (HSIs), in addition to any funds otherwise provided to them and used to defray expenses due to the emergency and for student cost of attendance purposes.
The remaining 2.5% of these funds would be available to all IHEs (without restrictions to online institutions) as grants. The Secretary will approve these by institution based on the greatest unmet needs by CV to defray institutional expenses and students’ cost of attendance. The Secretary will prioritize those institutions which haven’t already received funds of at least $500,000 under other provisions.
It is important to note that the funds may be used for many purposes, but that the legislation imposes a restriction on payments by institutions to contractors for pre-enrollment recruitment activities, endowments, or for capital outlays related to certain facilities. The legislation also states that no less than 50 percent of funds received must be directed to the IHE’s students. Assistance to non-public schools – i.e., K-12 – provides for their eligibility.
There are a number of additional miscellaneous provisions regarding the availability of funding to non-public K-12 schools, the desire that schools and institutions continue to keep employees employed, directed funds to specific institutions and other provisions.
Additional Relief Provisions
These provisions of the legislation focus on relief to federal financial aid borrowers, students and institutions.
Relief to borrowers
The legislation provides temporary relief to student loan borrowers by suspending any current loan payments due on FFEL or Direct loans through September 30, 2020 without any interest accruing and without impact on a students’ credit record. During this period, borrowers may continue to pay down their principal if they so choose (recall that interest rates are now 0% in any event) and any suspended payments will be treated as paid for the purposes of loan forgiveness. The legislation also suspends wage garnishment and other methods by which the government attempts involuntary loan collections. As part of these provisions, the Department will also implement certain notifications to students so they are aware of these options and benefits.
In addition to these provisions, currently enrolled student borrowers who are forced to withdraw from enrollment will receive relief from having to repay a portion of their loans or Pell Grants.
Relief to Institutions and their Current Students
The legislation provides a number of specific waivers and forms of relief to the Title IV provisions of the HEA that should alleviate institutional concerns regarding compliance with certain USDOE regulations while helping students focus on their education during this critical time. The following provides examples of the types of relief provided:
Campus-based waivers. The legislation waives required matching requirements by IHEs in most instances.
Supplemental Educational Opportunity Grant (SEOG). The bill expands use of SEOG for emergency aid purposes for both undergraduate and graduate students and provides that any additional funds used under this provision won’t affect a students’ overall limits.
Federal Work Study (FWS). The bill permits payments to students under FWS even if students were unable to fulfill the work-study obligations.
Return to Title IV (R2T4). If a student withdraws as a result of this emergency during the payment period or period of enrollment, the bill waives an institution’s requirement to refund the Title IV loans to the USDOE. Institutions using this waiver will need to report to USDOE on amounts, students, and other information relating to the unreturned funds.
Approved leaves of absence. Under this legislation, an IHE may provide students with approved leaves of absence without requiring the student to return at the same point in the academic program as when the student began the leave, as long as the student returns within the same semester/equivalent period.
Satisfactory Academic Progress (SAP). IHEs may exclude quantitative components of the SAP calculation for any attempted credits not completed as a result of CV without requiring student to appeal.
Relief to Affected Eligible Foreign Institutions
The legislation addresses interruptions at foreign institutions which may enroll U.S. students currently receiving federal financial aid. Under the legislation, eligible foreign institutions will be able to offer distance education to their eligible U.S. students during the emergency and for one further payment period, with required reporting. The CARES Act also permits such foreign institutions to enter into written agreements with non-profit U.S. eligible IHEs for the purposes of allowing their U.S. eligible students to enroll in that non-profit U.S. institution, with reporting requirements.
Additional Waivers
The CARES Act provides broad authority to the Secretary to waiver certain statutory or regulatory provisions, for example under ESEA. She also has the authority to waive certain reporting under the Paperwork Reduction Act, requirements around the Master Calendar, as well as the requirement to implement or amend certain Title IV regulations through negotiated rulemaking. This waiver authority is meant to enable the Secretary to provide relief more quickly, as necessary. Under no circumstances, are waivers to the civil rights provisions permitted.
Additional Provisions
The bill also includes a number of provisions to provide additional relief to HBCUs and HSIs, the Corporation for National and Community Service, the Workforce Innovation Opportunity Act (WIOA), and to teachers utilizing TEACH Grants and/or loan forgiveness.
Finally, there is also an amendment provided to the tax code providing favorable tax treatment to employers paying off an employee’s student debt under certain circumstances.
Conclusion
This legislation is the most substantive relief package to-date thus far during the crisis, but the higher education community should anticipate additional relief from a fourth potential relief package in the coming months.
As mentioned above, this overview represents a summary of the appropriations provisions and should not be relied on as legal advice.