Title III – Supporting America’s Health Care System in the Fight Against Coronavirus Subtitle B – Education Provisions

Early in the morning on Thursday, March 26, 2020, the Senate passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).  On Friday, March 27, 2020, the House of Representatives also passed the CARES Act and President Trump quickly signed it into law the same day.

In this continuing series of blogs by lawyers at Forrest Firm, P.C., we will examine the most important, relevant, and impactful provisions of the CARES Act.  Our goal is not to provide you with a granular level examination of each provision of the CARES Act, but rather to provide a macro view of the CARES Act in clear, concise, and understandable language that will enable readers to move forward with their businesses and lives with confidence.  These are trying times, and here at Forrest Firm we want these articles to support our clients, positively impact our communities, and be available to help you with questions and concerns raised by the CARES Act.

Subtitle B of Title III of the CARES Act is separately titled as the COVID-19 Pandemic Education Relief Act of 2020 (the “Act”). These provisions provide relief to accredited public and other nonprofit higher education institutions (“Higher Education Institutions”). Unless specifically provided for, the provisions do not include for-profit educational institutions. 

Aid Waivers.  Section 3503 of the CARES Act waives the requirement that Higher Education Institutions match Federal funding for 2019-2020 and 2020-2021.  In addition, Higher Education Institutions may transfer unexpended Federal Work Study Programs funds to the Federal Supplemental Educational Opportunity Grants (“FSEOG”) program.

Supplemental Educational Opportunity Grants.  Section 3504 of the CARES Act permits  Higher Education Institutions to utilize FSEOG funds for emergency financial aid grants to students (both undergraduate and graduate) who have unexpected expenses and unmet financial need as the result of the coronavirus emergency.

Payment of Work Study Compensation to Students.  Section 3505 of the CARES Act allows Higher Education Institutions to pay students participating in a work study program even if the students are unable to fulfill the students’ work-study obligation for part of the academic year  due to the coronavirus emergency.

Institutional Refunds of Education Loans.  While a Higher Education Institution normally must return to the Federal government grants or funds if a student withdraws from the Higher Education Institutions during the student’s payment period or period of enrollment, Section 3508 of the CARES Act allows for a waiver of this requirement if the withdrawal is a result of the coronavirus emergency and the student returns at the end of the emergency.

Foreign Institutions. Section 3510 of the Cares Act allows foreign Higher Education Institutions which are eligible to offer or participate in Federal loan programs to utilize distance learning to fulfill their obligations under the loan programs. 

Educational Waivers.  Section 3511 of the Cares Act allows the Department of Education to waive certain eligibility requirements, wait periods, and allotment requirements under the Higher Education Act for a period of time, including those applicable to elementary and secondary education institutions, and particularly those identified for “comprehensive support and improvement, targeted support and improvement, or additional targeted support and improvement.”

HBCU Capital financing.  Section 3512 of the CARES Act allows the Department of Education to grant deferments for any loan payments due from historically Black colleges and universities during the coronavirus emergency.

Student Loan Relief.  Section 3513 of the CARES Act provides relief for certain student loan borrowers. Specifically, until September 30, 2020, on all Stafford, PLUS, Consolidated Loans, and loans made under the Federal Family Education Loan Program, all loan payments are suspended and no interest on the loans will accrue.  Notably, this payment suspension does not apply to Perkins Loans, Pell Grants, FSEOGs and some other loans under Part A of title IV of the Higher Education Act of 1965, and it does not apply to private student loans.

In addition, the Federal loan forgiveness program, Federal loan rehabilitation programs, and all consumer credit reporting agencies are required to treat each month for which a loan payment was suspended as if the borrower of the loan had made a payment (without treating the corresponding principal or interest paid).

Also, through September 30, 2020, the Department of Education will not engage in any loan collection efforts, such as wage garnishments, tax refund garnishments, collection lawsuits, and other involuntary collection activity. 

Assistance for Individuals Receiving Education Award from the Corporation for National and Community Service.  Section 3514 of the CARES Act allows the Department of Education to provide individuals receiving an education award from the Corporation for National and Community Service (Americorps, Learn and Serve America, etc.,) for whom service is reduced or suspended due to the coronavirus emergency to accrue “other service hours” towards the hours they need for their education award.  In addition, terms of service may be extended, although the 26 year age-limit remains in effect.

Workforce Response Activities.  Section 3515 of the CARES Act addresses Workforce Innovation Opportunity Act funds. For program year 2019, up to 20% of the total amount of Workforce Innovation Opportunity Act funds allocated to a local area may be used for the administrative costs of carrying out local workforce investment activities if the portion of the total amount that exceeds 10% of the total amount is used to respond to the coronavirus emergency. In addition, State Governors may redirect certain unobligated funds under the Workforce Innovation and Opportunity Act for use in statewide rapid response activities or, under certain circumstances, released to local boards impacted by the coronavirus.

Waiver Authority.  Section 3517 of the CARES Act gives the Department of Education authority to waive certain eligibility, time periods, and allotment requirements related to federal assistance to Higher Education Institutions.

Modification for Grant Funding.  Section 3518 of the CARES Act allows the Department of Education to modify the required and allowable uses of grant funding, and to modify financial matching requirements for grants awarded under certain provisions of the Higher Education Act to a Higher Education Institution as a result of the coronavirus emergency.

Service Obligations for Teachers Section 3519 of the CARES Act allows the Department of Education to modify when certain Higher Education Act grant recipients who are unable to fulfill all or part of their service obligations may be excused from fulfilling those service obligations.  It also requires the Department of Education to consider teaching service that, as a result of coronavirus, is part-time or temporarily interrupted, to be full-time service. In addition this provision allows for the Department of Education to waive or suspend certain loan forgiveness requirements.

If you have any questions, please do not hesitate to contact Brian Bernhardt for more information.