Democrats Pan Senate GOP Coronavirus Aid Proposal, Which Addresses Liability, Campus-Based Aid, Foreign Institutions

By NASFAA Communications and Policy Staff

Democrats, following Senate Republicans' unveiling of their latest coronavirus aid proposal that aims to build on the Coronavirus Aid, Relief, and Economic Security (CARES) Act, are urging their colleagues to come to the negotiating table and increase aid for higher education as the novel coronavirus pandemic continues.

The Republican plan — 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. 

“When it comes to our schools, the Republican proposal does not provide enough resources for them to re-open safely,” said Senate Minority Leader Chuck Schumer (D-N.Y.). “It’s unacceptable that, AFTER MONTHS, Senate Republicans have presented us with a half-hearted, half-baked legislative proposal.”

In addition to the provisions initially reported on, the HEALS Act would extend the CARES Act Federal Work-Study (FWS) matching funds waiver to non-profit organizations that provide opportunities for students to work in community service positions, and would extend institutional authority to reallocate unexpended FWS funds to the Federal Supplemental Educational Opportunity Grant (FSEOG) program through the later of the end of the 2020-21 award year or the end of the qualifying emergency. It would also extend the CARES Act provision to continue paying FWS to affected students who are unable to work in FWS positions as a result of COVID-19 into the 2020-21 award year, and would remove the CARES Act provision that the student must have been completing their work obligation prior to the qualifying emergency in order to receive continued FWS payments. This would permit students who were awarded FWS but were prevented from beginning work at their FWS jobs to still receive FWS wages. 

CARES Act waivers for foreign institutions to offer distance education would be extended under this proposal through the end of the 2020-2021 award year or the end of the qualifying emergency, whichever is later.

The proposal also clarifies that federally-held student loans in an in-school deferment status would qualify for the interest accrual pause provision of the CARES Act through Sept. 30, 2020 when that provision expires. Because the CARES Act language for the interest accrual suspension referred only to loans with payments due, it did not appear that in-school loans would qualify for the 0% interest that loans in repayment statuses could receive. 

Under the CARES Act, existing Teacher Education Assistance for College and Higher Education (TEACH) Grant provisions were amended to allow for treatment of service that was interrupted due to COVID-19-related circumstances to count as full-time service to fulfill that portion of the service obligation. It also extended relief to Stafford Loan borrowers seeking teacher loan forgiveness, waiving the requirement that years of teaching service be consecutive in cases where service was interrupted due to a qualifying emergency. The Senate GOP proposal extends similar relief to Perkins Loan borrowers seeking cancellation for qualifying service, such as teaching, nursing, and law enforcement, allowing COVID-19-related interruptions in employment to count as full-time service for cancellation purposes.

The GOP proposal also states that any funds received by a student or family under the CARES Act will not be treated as taxed or untaxed income in the expected family contribution formula.

Related to the Higher Education Emergency Relief Fund (HEERF), the proposal contains a provision that would reduce by 50% the allocation that any institution that was subject to the higher education “endowment tax” would receive. These institutions would also be required to spend their reduced funds on aid to students. The endowment tax went into effect with the Tax Cuts and Jobs Act of 2017 and places a 1.4% excise tax on institutions with at least 500 students that have endowments worth at least $500,000 per student.

The proposal also provides liability protections for K-12 schools, colleges and universities, health care workers, and employers to protect them from potential litigation related to the coronavirus. Liability protections have been a point of contention between Republican and Democrats and will likely become a central issue during negotiations.

It was uncertain whether Republicans would formally unveil their proposal on Monday, prompting House Speaker Nancy Pelosi (D-Calif.) to call on Republican leadership to bring their proposal to her office so they could sort through their policy priorities, which occurred shortly after the proposal’s unveiling. 

Now that both parties have unveiled their follow-up to the CARES Act, Congress can begin the process of reconciling those differences. However, the process is unlikely to be speedy with Senate Majority Leader Mitch McConnell (R-Ky.) saying the package could take “a few weeks” to enact.

If negotiations fall apart, or should Senate Republicans want to pressure Democrats, they could choose to hold votes on a number of the stand-alone proposals housed under the HEALS Act, but no measure will garner the necessary votes to pass the chamber until there is a consensus with bipartisan buy-in.

 

Publication Date: 7/29/2020


Joel T | 8/3/2020 9:47:25 AM

While I appreciate NASFAA's desire to advocate for more funding, please know that several colleges and universities are still trying to spend the original amounts we were allocated from the CARES Act. If they are going to advocate for more funds the only thing that is needed right now is funding to support colleges that are seeing a drastic loss of revenue - but even that is a stretch for some when you start looking at our soaring national deficit.

Fitch Ratings revised the outlook on the United States' triple-A rating to negative from stable on Friday, citing eroding credit strength, including a growing deficit to finance stimulus to combat fallout from the coronavirus pandemic. The U.S. has the the highest debt among any AAA-rated sovereign nations heading into the crisis, was expected to exceed 130% of gross domestic product by 2021.

The spending is unsustainable.

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