Senate, House Leaders Negotiate Toward Third COVID-19 Package

By NASFAA Policy & Federal Relations Team

As states and cities across the country implement measures to slow the spread of the novel coronavirus, lawmakers on Capitol Hill are scrambling to come to a compromise on their latest stimulus package to alleviate some financial burden being placed on businesses and individuals, including colleges and universities, students, and those with student loan debt.

Senate Republicans, led by Majority Leader Mitch McConnell (R-Ky.), on Thursday introduced their proposal for the third COVID-19 relief package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. After a weekend of negotiations, the Senate held votes on Sunday and Monday to proceed to the consideration of the bill, both of which failed. Had the procedural motion passed, it would have set up the possibility for a final vote on Tuesday, although lawmakers would still have had to negotiate the bill’s final text.

With the failed cloture vote, Senate leaders will have to continue working toward a deal for the third COVID-19 relief package. While both sides have expressed their desire to move COVID-19 legislation quickly, negotiations have broken down over key issues such as funding for hospitals and health care workers, and worker protections built into bailouts for corporations.

As lawmakers on both sides of the aisle expressed frustration over having not yet reached a deal, tensions on the Senate floor grew increasingly high as Monday progressed.

With Senate negotiations stalling, Speaker of the House Nancy Pelosi (D-Calif.) announced that she has directed her caucus to develop its own COVID-19 stimulus bill, the Take Responsibility for Workers and Families Act, which will be introduced early this week.

House Democrats have said they will continue negotiating with their Senate counterparts, but introduced their own more than 1,400-page bill late Monday in the case that Senate leaders fail to strike a deal that gains sufficient support. The House bill goes a step further than previous proposals from lawmakers by requiring the government to pay students’ private loans, for the duration of the national emergency and the six months following, prevent interest capitalization, halt involuntary collection, and guarantee a minimum relief of $10,000. The bill would also require the government to make payments on federal student loans for the duration of the emergency, halt interest capitalization, ensure the payments count toward loan forgiveness, suspend involuntary collection, and guarantee minimum relief of $10,000. NASFAA will review the bill in the coming days.

The past several weeks have brought various proposals targeting relief to students and borrowers during the COVID-19 crisis, some of which may be included in the third package currently being negotiated. Sen. Patty Murray (D-Wash.) and Rep. Bobby Scott (D-Va.), lead Democrats on the education committees in their respective chambers, introduced the Supporting Students in Response to Coronavirus Act earlier this month. Last week, Senate Democrats led by Sens. Chuck Schumer (D-N.Y.), Murray, Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio), proposed canceling the payments of all federal student loan borrowers for the duration of the national emergency brought on by the coronavirus, and ensuring each borrower receives total debt relief of no less than $10,000 following a 90-day grace period at the program's conclusion. 

NASFAA has analyzed the CARES Act, the COVID-19 relief package proposed by Senate Republicans. Below are the major provisions related to higher education.

Campus-Based and Emergency Aid

The bill will provide $6 billion in funding specifically for institutions of higher education, of which $5.4 billion will be distributed from the Department of Education (ED) directly to institutions by formula. The distribution formula will be weighted toward the number of Pell Grant students enrolled at a given institution, and 50% of funding must be used for direct student aid/support.

Under the CARES Act, the non-federal share requirements of the Federal Work-Study (FWS) and Federal Supplemental Educational Opportunity Grant (FSEOG) programs would be waived for the 2019-20 and 2020-21 award years in cases where the non-federal share is paid by the institution. The bill would also allow institutions to transfer up to 100% of FWS funds into FSEOG during a period of a qualifying emergency.

Institutions would also be allowed to use any portion of their FSEOG allocation to award emergency financial aid grants to assist undergraduate or graduate students for unexpected expenses and unmet financial need as the result of a qualifying emergency. Standard FSEOG awarding rules would be waived, and institutions would determine eligibility for this new emergency grant. The maximum award amount under the “emergency FSEOG” would be the maximum Pell Grant for the award year ($6,195 for the 2019-20 award year) and any FSEOG awarded under this emergency provision would not be treated as estimated financial assistance (EFA).

The GOP proposal also codifies the current flexibility offered by ED  allowing FWS students unable to work to continue to be paid during a qualifying emergency, either in installments or a lump sum payment.

Increased Flexibility for Institutions

The bill grants ED authority to exclude from subsidized loan usage calculations any portions of the Direct Loan period that the student is unable to complete due to a qualifying emergency, in this case the COVID-19 outbreak. It also allows the Secretary to exclude from a student’s Pell Grant Lifetime Eligibility Used (LEU) any Pell Grant amounts received during a period that the student is unable to complete due to this qualifying emergency. Both exclusions would apply only if they could be administered by ED in a manner that limits complexity and burden on students. 

The CARES Act also allows ED to waive the return of Title IV funds (R2T4) requirements for schools or students to return unearned grant or loan assistance for students who withdrew because of a qualifying emergency. The bill would provide loan cancelation for the portion of a Direct Loan associated with a payment period which the student did not complete due to a qualifying emergency.

The GOP proposal allows institutions to exclude from Satisfactory Academic Progress (SAP) calculations any attempted credits that were not completed due to a qualifying emergency, without requiring an appeal from the student. It also broadens authority for schools to give students an approved Leave of Absence (LOA) that does not require the student to return at the same point in the academic program that they began the LOA, if the student returns within the same semester (or the equivalent).

The bill also allows Title IV-participating foreign institutions, which are currently excluded from providing distance education to U.S. students not enrolled in a study abroad program, to offer distance education for the duration of a declared emergency and the following payment period. ED is also granted authority to permit a Title IV-participating foreign institution to enter into a written arrangement with a U.S. institution that participates in the Direct Loan program, for purposes of allowing a borrower at a foreign institution to take courses from the U.S. institution, for the duration of a qualifying emergency and the following payment period.

Relief for Federal Student Loan Borrowers

The GOP proposal would suspend payments and interest accrual on federal direct loans for up to six months. The bill would also count each month of suspended loan payments as if the borrower had made a payment for the purpose of income-driven repayment plan loan forgiveness or Public Service Loan Forgiveness.

NASFAA will continue to follow COVID-19 bills impacting student aid as they move forward in the legislative process.

For more information and resources on how the spread of the novel coronavirus is impacting student financial aid, please refer to NASFAA's COVID-19 Web Center.

 

Publication Date: 3/24/2020


Audrey W | 4/24/2020 4:47:07 PM

Under the Cares Act: Campus-Based Provisions was it signed into law where a school can use transfer up to 100% of unexpended FWS funds to SEOG during the qualifying emergency?

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