Review How the CARES Act Impacts Operations at Higher Ed Institutions

  • 4/10/2020
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Has your institution taken steps to understand how the CARES Act provisions affect operations? Read on for details.

Key insights

  • Higher education institutions are making major adjustments in response to the coronavirus pandemic.
  • With this shift, many have questions about how the CARES Act provisions impact operations at higher education institutions.
  • Learn about how you can move forward with regulatory changes and other disruptions in overall operations.

College students across the country left campus early amid COVID-19 changes, and many have questions about the status of their financial aid packages and future eligibility requirements. Higher education institutions need to be prepared to answer those questions.

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The Coronavirus Aid, Relief, and Economic Security (CARES) Act became law on Friday March 27, 2020, and provides relief to students and schools, but will also require additional administrative time to manage. Administrators need to understand the details and how these changes impact financial aid, business, student services, and other key departments.

Campus-based aid waivers, reallocations, and emergency grants

Institutions that receive federal funding for their campus-based programs in the 2019 – 2020 and 2020 – 2021 academic years, such as Federal Supplemental Education Opportunity Grants (FSEOG) and Federal Work Study (FWS), are not and will not be required to match the funds with institutional dollars. This applies to funds disbursed to students beginning the day the law was enacted. In addition, any unused work-study funding from the 2019 – 2020 award year can be transferred to FSEOG and used for additional emergency grants, with no limits on the amount transferred.

You can provide these additional FSEOG grants as emergency aid to undergraduate and graduate students for unexpected expenses and unmet financial need as a result of the pandemic. Amounts can be awarded in excess of a student’s previously determined need; however, a student cannot receive FSEOG funds greater than the maximum Federal Pell Grant for the award year, in aggregate.

If a student receives emergency grant money, the funds are not considered other financial assistance. As such, you do not need to repackage the student’s financial aid offer.

Fiscal Operations Report and Application to Participate (FISAP) reporting

If a student is provided emergency funds, report all amounts paid to the student, whether disaster related or not, in Part IV Section F – Information About FSEOG Disaster-Affected Students.

Federal work study disaster payments

Students whose work study programs are no longer available due to the pandemic are eligible to be paid their unearned funds. You can continue to pay the student in the manner previously established, or you can make a one-time payment to the student. However, you can only provide funds up to what the student was scheduled to receive during the academic year. Institutions are able to apply for a waiver for applicable community service and tutoring requirements if the requirements could cause hardship for students in those positions.

FISAP reporting

If a student is paid during the disaster while not performing their job, report only the amounts paid to the student during the disaster, in Part V Section K – Information About FWS Disaster-Affected Students.

Student withdrawals and applicable provisions

Any student who withdraws from an institution as a result of the pandemic will be granted the following waivers for the payment period in which the student was enrolled:

  • Any direct loans and Pell Grant received will not count toward the student’s current annual or lifetime eligibility limits.
  • Subsidized usage limits will be excluded for the affected payment period.
  • All direct loan payments will be canceled and, in effect, forgiven by the federal government; no repayment will be required by the student. This includes Plus Loans to both graduates and parents.
  • No Pell Grant will be required to be returned by the student as part of the withdrawal.

In addition, any classes the student could not complete due to the pandemic will not factor into the satisfactory academic progress requirement for future federal funding.

As relief for institutions, you are not required to return any Pell Grant funds or loan funds as part of the return to Title IV (R2T4) calculation. However, you must track what you would have returned, along with the number of students affected, for reporting to the Department of Education. Guidance will be provided as to how and when to report these items.

If a student opts to take a leave of absence instead of a withdrawal due to the pandemic, they are not required to return to the same point of the academic program when they return.

Foreign institutions

Effective March 1, 2020, foreign institutions that had U.S. students enrolled who were receiving Title IV aid and had an interruption due to a COVID-19 declaration of disaster by the respective government can offer distance learning to those U.S. students during the interruption period. The foreign schools must report the distance education programs to the Department of Education by June 30, 2020, and every 180 days thereafter as the pandemic continues. Written arrangement with the institutions within the United States that participate in the Title IV program are allowed, if desired.

Historically black colleges and university capital financing

The Department of Education may grant a deferment of principal and interest payments to historically black colleges and universities that have capital financing. The deferment would be effective for the duration of the pandemic and one year after the pandemic concludes, to allow the institutions to devote resources to pandemic operations.

Student loan relief

All payments on direct loans and Federal Family Education Loans (FFEL) held by the Department of Education will be deferred until after September 30, 2020, and interest will not accrue until after that date. All involuntary collections will be suspended, including garnishment of wages, reduction of tax refunds, and reduction of other federal benefits for borrowers in default. Perkins Loans and private student loans are not included in this payment and interest suspension and collection suspension.

Any student in a loan forgiveness period will get credit for all payments during the deferral period, as if they had made payments.

All teacher service obligations and consecutive-year requirements will be waived for teachers who are not able to complete their year of service. In addition, those teachers will receive credit for the entire year, as if they had completed the service. This same provision is inclusive of Federal TEACH Grants.

Other grant funding

The Department of Education is authorized to waive or modify current allowable uses of funds for institutional grant programs (TRIO/GEARUP/Title III/Title V/and sections of Title VII), so institutions can redeploy resources and services to pandemic efforts. You must report how these funds are used to the Department of Education.

How we can help

During these challenging times, CLA’s team is here to help higher education institutions navigate the new set of regulations and make the best decisions to move forward and guide their students. Our assistance could be as simple as reviewing an operational change in FWS or FSEOG funding or as complicated as assisting in calculating student withdrawals and the related communications to the Department of Education.

Check out our COVID-19 resource hub, as well as additional FAQs and articles specifically geared to higher education.

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