Congress and the president quickly approved the CARES Act in March to provide $14 billion in emergency funding to colleges and students to help them with challenges resulting from the coronavirus pandemic. The U.S. Education Department (ED) then issued a series of guidance on how colleges can use the funds, but there have been plenty of questions around those recommendations.
To help us better understand the legislation and guidance, Megan Coval, vice president of policy and federal relations at the National Association of Student Financial Aid Administrators (NASFAA), provides some insight into the legislation and ED’s guidance in the Q&A below.
Q: The CARES Act was a $2 trillion dollar stimulus bill. How much of those funds were for higher education, and how were they allocated?
Coval: The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided nearly $14 billion in funding for higher education through the creation of the Higher Education Emergency Relief Fund (HEERF). The amount was divided into three buckets:
- $1 billion was set aside specifically for Minority Serving Institutions (MSIs)
- $350 million was set aside for institutions with the greatest unmet financial need related to COVID-19
- $12.5 billion was set aside to be given to institutions of higher education based on an allocation formula, of which they are required to spend no less than half of their amount directly on students in the form of emergency financial aid grants
The allocation formula for the $12.5 billion pot of HEERF funds was based 75 percent on an institution’s enrollment of full-time equivalent (FTE) Pell Grant recipients and 25 percent on enrollment of FTE non-Pell Grant recipients. Students who were enrolled exclusively in online, distance education courses prior to the COVID-19 emergency were excluded from this calculation. The weight given to Pell Grant recipients in the allocation formula is a clear signal of Congress’ intent to ensure that institutions have ample funds to serve their neediest students. The language in the CARES Act provided no restrictions on which students could receive these funds.
Q: Many institutions have had challenges in determining how to distribute the funds among students. Why has it been so complicated?
Coval: For many schools, the process of actually getting the CARES Act HEERF funding into the hands of students has been a frustrating — if not maddening — experience. An important piece to remember is that institutions received both “student” and “institutional” funds through the CARES Act, although the pain points in implementation have been primarily around the student portion.
The U.S. Education Department (ED) first released guidance on how institutions should distribute the HEERF student funds on April 9. At that time, institutions were given instructions on how to draw down their funds and were asked to sign a certification agreement. That initial guidance contained no student eligibility restrictions — nor did the CARES Act legislative language — and many schools submitted their agreements and began working immediately to determine the best plan to disburse funds to their students. Ten days later, on April 21, ED surprised the higher education community with an about-face by releasing new guidance that stated that students must (or could be) Title IV-eligible in order to receive HEERF student funds.
Not only did this mark a major shift in policy (and one without any tie to statute), it also upended the plans many institutions had already made to get these dollars out the door to students. For example, if a school had planned to give a piece of the pie to all students or to support undocumented, Deferred Action for Childhood Arrivals (DACA), or international students, they could no longer do so and had to start from scratch. In this case, that meant figuring out which students “could” be Title IV eligible if they did not have a Free Application for Federal Student Aid (FAFSA) on file.
All the while, ED was publicly pushing schools to get the money out to students as soon as possible, and in some cases even publicly critiquing them for not doing so. And, we have reason to believe ED is still not done with their guidance and rulemaking on the issue.
While ED’s implementation of the CARES Act played a major role in complicating and delaying the distribution of funds, there were also some underlying provisions in the law that proved challenging for institutions as they sought to quickly distribute funds. Namely, the bill required that HEERF grant funds were to be used only to cover expenses related to the disruption of campus operations due to the novel coronavirus. As such, the emergency grants could not be used to cover financial need due to COVID-19. Consequently, a student who lost their job amid the pandemic would not have been able to receive a HEERF emergency grant to cover their lost wages, because that is a financial need rather than an expense created by the disruption of campus operations. On the other hand, if a student had to purchase a laptop due to coursework moving online, that would have been a covered expense.
In many respects need is easier to identify than expense, and some institutions reported having a difficult time determining which students experienced unexpected costs related to campus disruption and the specific nature of those expenses. Some schools chose to have the student submit an application identifying their need, others pre-determined that certain students were likely to have certain expenses, and others did a combination of both. To help address the somewhat limited scope of allowable uses, the higher education community has asked Congress to clarify that HEERF emergency grants can be awarded to help students cover increased financial need resulting from the pandemic.
Q: Is it possible that the federal government will provide more funds for institutions in future COVID-19 relief bills?
Coval: It is possible that Congress will provide additional funds for higher education in future supplemental packages. The higher education community, including NASFAA and the American Association of Community Colleges (AACC), sent a letter asking Congress to provide $46.6 billion in additional assistance for students and institutions in the next COVID-19 bill. The request comes from estimates that the COVID-19 crisis will require an additional $12 billion in need-based financial aid for students due to its economic impact, and will result in $23 billion in revenue losses due to enrollment declines and $11.6 billion in revenue losses due to closures of campus facilities that provide auxiliary services.
Q: If institutions are given additional funds through future legislation, will we be able to give money to all students, included undocumented students?
Coval: The higher education community has advocated for future funds to have more flexibility, both with regard to student eligibility restrictions and allowable uses. The community has also asked Congress to clarify, retroactively, in statutory language that the CARES Act student grant funds are not limited to Title IV-eligible students and may be awarded to students to help them with increased financial need resulting from the pandemic.
It’s up to Congress to determine whether future funds will be subject to student eligibility restrictions. Congress did not include restrictions to the CARES Act funds, but also did not prohibit Secretary of Education Betsy DeVos from doing so. Congress could include provisions in future legislation prohibiting ED from imposing additional eligibility requirements and allow schools to give money to all students, including international students. A prohibition of this nature was included in the House-passed Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act.
We also hope that future legislation will clarify that a 1996 welfare reform law, the Personal Responsibility and Work Opportunity Reconciliation Act, does not apply to emergency grants under the CARES Act. The 1996 law prohibits certain students, including undocumented and international students, from receiving federal public benefits. To ensure funds from both the CARES Act and future legislation go to students most in need of additional support, Congress should clarify that the provisions in the relief legislation take precedence over the prohibition. Fortunately, the HEROES Act does just that.
Q: Given the massive unemployment rate, institutions can expect that many students will experience a change in their financial situation, and likely request more funds from the financial aid office. What can institutions do to prepare for this?
Coval: The financial aid community is preparing for increased requests for additional student aid funds due to the current unemployment rate and job loss experienced by millions of Americans amid the pandemic. There is an existing process already in place called Professional Judgment (PJ), which allows financial aid administrators to go in and make changes to the data elements on a student’s FAFSA, such as income earned from work, to more accurately reflect the student’s current financial situation. Financial aid administrators make adjustments on a case-by-case basis for very specific, individualized situations, such as job or income loss.
Given the economic impact of COVID-19, and because students and families were asked to fill out the 2020-21 FAFSA using their 2018 tax data, we do expect that more students than usual will submit requests for reconsideration of their financial aid packages. To prepare, institutions can examine their existing processes for handling PJ reviews and make necessary adjustments to ensure they are prepared to handle the inevitable increase in volume. This may include training additional staff on the PJ process or taking steps to limit the burden on students, such as adjusting request deadlines and amending documentation requirements. NASFAA is working with its members to take these steps so they can be better prepared to serve students facing financial hardships related to the pandemic.
