On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) into law. The CARES Act is a roughly $2 trillion package that includes significant expansions in small business lending, unemployment insurance, tax relief to individuals and employers, health care measures, $500 billion in economic stabilization funds and other measures aimed at combating the COVID-19 health care and economic crisis. Below is a general summary of select provisions of the CARES Act relating to education.
Waivers. The CARES Act allows the Education Department to waive certain requirements related to institutions’ eligibility for and allotment of federal financial aid, as well as certain reporting requirements. The Education Department also has broad authority during the Coronavirus emergency to waive obligations at the request of state or local governments, school systems, or the Bureau of Indian Education. These waivers would generally be limited to the current academic year. Civil rights laws cannot be waived.
Campus-Based Aid Waivers. The institutional matching requirement for campus-based aid programs is waived, and institutions are allowed to transfer unused work-study funds to be used for supplemental grants.
Supplemental Educational Opportunity Grants. The CARES Act allows institutions to award additional Supplemental Educational Opportunity Grant funds to students impacted by COVID-19.
Federal Work-Study. Institutions may issue work-study payments to students who are unable to work due to work-place closures as a lump sum or in payments similar to paychecks.
Institutional Refund and Federal Student Loan Flexibility. For students who dropped out of school as a result of COVID-19, the student is not required to return Pell grants or federal student loans. The CARES Act also waives the requirement that institutions calculate the amount of grant or loan assistance that the institution must return to the government in the case of students who dropped out of school as a result of COVID-19.
Student Loans. The CARES Act provides for deferral of student loan payments, principal, and interest for six months, through September 30, 2020, without penalty to the borrower for all federally owned loans.
Authorized Uses and Other Modifications for Grants. The CARES Act authorizes the Secretary of Education to waive or modify current allowable uses of funds for institutional grant programs so colleges can re-deploy resources and services to COVID-19 efforts. It also permits institutions to request waivers from the Secretary of Education for financial matching requirements in competitive grant and other MSI grant programs in the Higher Education CARES Act so colleges can devote institutional resources to COVID-19 efforts.
This client alert is for informational purposes and is not legal advice. The COVID-19 crisis has created a very fluid situation, in which changes to the law or related guidance can occur on a daily basis. Please contact your legal advisor for assistance before acting in relation to the subject of this client alert.
For additional COVID-19 resources, please see COVID-19 Updates.
Gallagher Evelius & Jones COVID-19 Response Team members: Aaron Pinegar, Kevin Davidson, Steve Metzger, Kathy Hoskins, Sydney Fortmann, David Kinkopf, and Saul Gilstein.