Senate Republicans Offer Their Opening Pitch for Latest Coronavirus Aid Package

By Hugh T. Ferguson, NASFAA Staff Reporter

Senate Republicans on Monday unveiled their opening marker for the next coronavirus aid package, which formally starts the negotiation process for what could be the final measure aimed at abating the novel virus’ impact before the presidential election.

The proposal — dubbed the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act — would provide an Education Stabilization Fund with $105 billion for programs housed under the Department of Education (ED), with just over $29 billion directed to the Higher Education Emergency Relief Fund (HEERF), which would provide grants directly to institutions of higher education, based largely on the enrollment of full-time equivalent Pell Grant recipients. 

The majority of those funds, 85%, would be distributed to institutions based 90% on the enrollment of full-time Pell Grant recipients who were not exclusively enrolled in distance education at the onset of the pandemic, and 10% on full-time non-Pell Grant recipients who were not exclusively enrolled in distance education. 

Unlike the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which required that institutions use at least half of their allocation on student emergency grants, the HEALS Act does not specify an amount that must be distributed directly to students. 

Another 10% of the HEERF funds would be distributed to Historically Black colleges and universities (HBCUs) and minority-serving institutions (MSIs) to address needs directly related to COVID-19, and the final 5% would be directed to institutions that the secretary of education determines to have “the greatest unmet needs related to coronavirus.”

The proposal would allow institutions to use the funds to defray costs they incurred due to the coronavirus, such as lost revenue, technology costs to transition to distance education, and payroll, and to provide emergency financial aid grants to students, including those exclusively enrolled in distance education. Unlike the CARES Act, which specified that student emergency grants be used for expenses related to the disruption of campus operations caused by the pandemic, the HEALS Act would allow emergency grants to be used for either emergency costs or for any component of the student’s cost of attendance. The bill does not include any restrictions on student eligibility, nor does it restrict ED from imposing student eligibility requirements, as was included in the House Democrats’ Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act. 

NASFAA President Justin Draeger in a statement applauded the HEALS Act “for providing additional, much-needed dollars for institutions of higher education and the students they serve in a direct, efficient manner,” but expressed concern that the proposal “does not provide nearly enough money to make up for higher education shortfalls and reopening costs, nor does it sufficiently address issues that have previously created implementation challenges for schools and withheld funds from qualified students.”

The package also includes language from a bill introduced by Senate education committee Chairman Lamar Alexander (R-Tenn.) last week, which would modify the current student loan repayment system, by consolidating all existing repayment plans into two options — one standard 10-year repayment plan and one income-driven repayment (IDR) plan for federal loans entering repayment on or after October 1. Borrowers already in repayment would have the option to opt in to either of the new repayment plans. This would allow, similar to how the income-driven repayment plans work now, borrowers who are earning no income after October 1 to have $0 monthly payments by enrolling in the income-based repayment plan.

Unlike Alexander’s bill introduced last week, the larger proposal would allow borrowers who want to enter into the IDR plan to self-certify by Dec. 31, 2020 that they are unemployed to get $0 monthly payment, would require random audits by ED to ensure the validity of claims from those who self-certified as unemployed, and would exempt the changes from going through a negotiated rulemaking process, meaning the changes could be implemented by October 1.

The Republican proposal would not, however, extend the broad student loan relief enacted through the CARES Act. And while NASFAA has long supported student loan repayment simplification as a part of Higher Education Act reauthorization, Draeger said NASFAA remains “concerned about operationalizing a major system-wide change in the student loan repayment process in the midst of a national crisis.” 

“Congress must instead continue to focus on what’s working and what provides the most widespread, immediate relief to borrowers — the temporary suspension of loan repayment,” he said.

Notably, the package would also codify language giving financial aid administrators the authority to establish a blanket policy to use professional judgment to consider unemployed independent students to have zero income earned from work, similar to authority that had been granted by ED following the 2008 financial crisis. The bill does not grant authority for schools to establish a blanket PJ policy to not include unemployment benefits as income, which was included in the earlier ED guidance. 

ED would be required to adjust program review criteria for institutions of higher education during this time to account for an unusually high number of professional judgements. A question would also be added on FAFSA applications for the 2020-21 and 2021-22 award years asking if the student or a family member had experienced a loss of income due to the COVID-19 national emergency. Applicants who answer yes to that question would be directed to contact their financial aid office to provide updated income information for the institution to use in exercising professional judgment.

While the spending plan’s introduction advances the negotiation process for the latest bicameral aid package to counter the novel coronavirus, the Democratic aligned House has touted their own recovery agenda, which will now need to be ironed out with Senate Republicans vision in order for another bout of aid to be implemented.

House Democrats’ HEROES Act passed the chamber back in May and contained a litany of policy proposals that are unlikely to garner appeal from Republicans. That $3 trillion package would, among other things, direct more than $37 billion to higher education institutions and prevents, retroactively, ED from imposing student eligibility restrictions on higher education emergency relief funds allocated in the CARES Act — a point for which Education Secretary Betsy DeVos has come under fire.

Congress has roughly two weeks until both chambers are scheduled to adjourn for the August recess and embark on their amended presidential conventions to formally kick off the campaign cycle. Leaders plan to wrap up negotiations before they adjourn but it is unclear whether the parties will be able to cobble together a compromise.

In addition to the aid package Congress will also need to work on their fiscal year 2021 spending bills in order to avert a government shutdown at the end of September. The appropriations process, which is likely to rely on a continuing resolution, could also incorporate some short-term funding priorities related to coronavirus recovery.

While the process unfolds the higher education community is hoping both lawmakers and ED learn from some of the obstacles that slowed implementation of the CARES Act.

 

Publication Date: 7/27/2020


G. Michael J | 7/27/2020 8:16:00 PM

I haven't been able to find the text of the bill. Do we know how much of the need analysis and FAFSA simplification language in Senator Alexander's bill was retained?

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