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On March 27, 2020, Congress passed the “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act” (“Act”), which contained roughly $30 billion in education stabilization funds, of which $14 billion will be allocated to provide relief for Institutions of Higher Education (IHE).

Additionally, the bill provides administrative and burden relief to IHEs and modifies existing key federal requirements affecting the administration of Title IV aid.

Definitions and key provisions:

Qualifying emergency

  • A public health emergency declared by the Secretary of Health and Human Services pursuant to section 319 of the Public Health Service Act
  • An event for which the President declared a major disaster or an emergency under section 401 or 501, respectively, of the Robert T. Stafford Disaster Relief and Emergency Assistance Act
  • A national emergency declared by the President under section 201 of the National Emergencies Act

Secretary

  • Secretary of Education

Direct relief for institutions

All institutions: Of the $14 billion, 90% will be allocated to institutions based on a formula that factors in 75% of the distribution based upon enrollment of full-time equivalent (FTE) Pell Grant recipients and 25% on enrollment of FTE non-Pell Grant recipients

Will be allocated 50/50 between direct grants to students for expenses related to the disruption of campus operations and emergency aid for the institution to supplement lost revenue, reimbursement for expenses incurred, technology costs associated with transitioning to distance education, faculty and staff training, and payroll

Funding will be distributed by the Secretary in a manner similar to other Title IV aid distributions

  • Minority-serving institutions: Additional $1 billion to be distributed by the Secretary
  • Other: For institutions most affected by the crisis, an additional $350 million was made available for distribution by the Secretary
  • Public institutions: Each state will receive a share of roughly $3 billion for governors to allocate at their discretion for emergency support grants to local education agencies (LEAs) and institutions of higher education (IHEs) that have been most significantly impacted by the coronavirus

Campus-based aid waiver

  • For award years 2019-20 and 2020-21, the requirement for an institution to provide a match to the federal share of campus-based aid programs (e.g., Federal Supplemental Educational Opportunity Grants [FSEOG] and Federal Work Study [FWS] programs) is waived
  • During a period of a qualifying emergency (as defined in the Act, see above), an institution may reallocate up to 100% of their unspent FWS funds to be awarded under the FSEOG program
  • Affirmed the Department of Education’s previous directive to allow institutions the ability to pay students FWS wages in the event of a qualifying emergency that prohibits them from fulfilling their work obligations

Use of FSEOG for emergency grants

Institutions are permitted to use any amount of their allocation for emergency grants to students for unexpected expenses and unmet financial need as a result of a qualifying emergency

When calculating aid, an institution may:

  • Waive the standard FSEOG awarding rules (e.g., maximum award limits), and awarding would be determined solely by institution,
  • not exceed the maximum Pell Grant award amount for that award year ($6,195 for 2019-20)

Emergency aid will not be counted as estimated financial assistance for purposes of calculating Title IV eligibility.

Subsidized loan usage limits and Pell Grant duration limits

  • If a student leaves the institution due to a qualifying emergency and is unable to complete the semester (or the equivalent), the Secretary shall exclude semester from period of enrollment for purposes of calculating the subsidized loan limit and the federal Pell Grant duration limit

Return of Title IV funds

  • Allows education department the flexibility to waive requirements to perform a refund calculation for grant or loan assistance provided to a student if the student left the institution due to a qualifying emergency
  • If a student withdrew due to a qualifying emergency, the Direct Loan balance relating to the payment period the student did not complete would be canceled
  • Reminder: An institution is not permitted to hold a Title IV credit balance beyond the end of a payment period (e.g., if a student refunds room and board for Spring 2020, they cannot hold the credit balance to be applied to their Fall 2020 balance)

Satisfactory Academic Progress (SAP)

  • Institutions are provided the option to exclude, from a quantitative perspective, attempted credits that were not completed due to a qualifying emergency, from calculation of SAP without the student filing a formal appeal

Temporary relief for federal student loan borrowers

  • Requires the Secretary to defer student loan payments, principal and interest for six (6) months, through Sept. 30, 2020, without penalty to the borrower, for all federally owned loans. This provides relief for over 95% of student loan borrowers

In addition to the above, institutions may be eligible to apply for business interruption loans for expenses covering the period beginning Feb. 15, 2020, through June 30, 2020, under the CARES act. Further detail can be found here.

Baker Tilly COVID-19 support

During this uncertain time, Baker Tilly is ready to help you with practical advice on informing and supporting your faculty, staff and students.

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