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COVID-19: CARES Act Impact on Student Financial Aid

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On March 27, 2020, the President signed the CARES Act into law. The CARES Act includes a number of provisions to assist in providing financial stability for individuals and higher education institutions through assistance payments expected to be made; however, the CARES Act also provides for some changes to compliance requirements for higher education institutions and students.
April 7, 2020

On March 27, 2020, the President signed the CARES Act into law. The CARES Act includes a number of provisions to assist in providing financial stability for individuals and higher education institutions through assistance payments expected to be made; however, the CARES Act also provides for some changes to compliance requirements for higher education institutions and students. The key changes have been summarized below impacting student financial aid.

The Act provides for certain relief for Campus-Based Aid which include the following:

  • Waiver of the matching requirements for the non-federal Share of funds to be provided for award years 2019-2020 and 2020-2021.
  • An institution can transfer 100% of its allotment of Federal Work Study funds to the Federal Supplemental Opportunity Grant (FSEOG) funds.
  • An amount may be awarded from the remaining FSEOG allocation to students for unexpected expenses or unmet financial need as a result of impacts from the coronavirus as emergency aid.
    • Institutions can waive the amount of need calculation in determining eligibility
    • The maximum amount of award per student is the maximum Pell grant for the applicable award year.
  • Institutions can pay out their federal work-study awards to students for an amount equal to or less than the amount of wages such students would have been paid had the student been able to complete their work obligation during the period affected by the coronavirus.
    • These funds can be provided as a one-time grant or as multiple payments.
    • The student must have been awarded and earned portions of their Federal work-study wages during the academic year impacted by the coronavirus.

The Act provides certain relief for students and the institution if the student fails to complete the enrollment period due to a qualifying emergency including the following:

  • The enrollment period does not count towards a student’s subsidized usage limit of 150% of the academic program.
  • The enrollment period does not count towards a student’s Pell Lifetime Eligibility Used.
  • The institution will not be required to return funds under the Return to Title IV regulations.
    • The institution must track any returns waived and will be required to report the number of recipients, the amount of grant and loan assistance associated with recipients, and the total amount of grant and loan assistance return that was not returned under the normal return requirements.
  • Students are also not required to repay the Pell grant or loan funds if the student withdrew due to the qualifying emergency.
  • Institutions may exclude the quantitative completion rate calculation in determining Satisfactory Academic Progress (SAP) for any students that withdrew during the enrollment period.


The Act also provides direct relief for student borrowers and TEACH grant recipients through the following:

  • All student loan payments on loans held by the Department of Education (FFEL and Federal Direct Loans) are suspended through September 30, 2020.
    • No interest shall accrue on these loans during this time.
    • For loan forgiveness programs each month the payment is suspended will count towards the loan forgiveness payment requirements.
  • TEACH grant recipients may receive a waiver from completing their teaching service obligation during the periods of the qualifying emergency.
    • TEACH grant recipients can also count part-time service for reduced hours as full-time service.
    • TEACH grant recipients can receive a waiver of the consecutive years requirements if their service was interrupted due to the qualifying emergency.

The Act also provides additional guidance on other topics such as education requirements for foreign institutions, HBCU capital financing, and waiver authority for regulations if requested by States during the qualifying emergency.

If you have additional questions regarding the CARE Act and how it impacts higher education institutions and students, please contact one of RubinBrown's Colleges & Universities Group professionals.

 

Readers should not act upon information presented without individual professional consultation.

Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.

 

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