Federal Judge Strikes Down ED Policy Restricting CARES Act Grant Eligibility for California Community Colleges

By Hugh T. Ferguson, NASFAA Staff Reporter

A California district court judge has blocked the Department of Education’s (ED) guidance and interim final rule on distributing emergency grant funds through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, serving as the latest rebuke to the agency’s rulemaking process.

This latest decision from the West Coast comes on the heels of another ruling from a federal judge who sided with Washington state's attorney general Bob Ferguson and blocked ED’s CARES Act guidance restricting emergency grant eligibility to Title IV students from being carried out in Washington state.

While Wednesday’s ruling only applies to community colleges in the state of California, it notably goes a step further than the Washington case in that it blocks the portion of ED’s policy that would prevent international students, those in the Deferred Action for Childhood Arrivals (DACA) program, and those living in the country illegally from accessing the funds.

“Two federal judges in the same circuit are split on this issue, and we fully expect to prevail on appeal,” said ED Press Secretary Angela Morabito.

U.S. District Court Judge Yvonne Gonzalez Rogers argued that the emergency grants do not fit the description of a federal public benefit in a 1996 federal welfare law that would prevent those students from receiving the aid. Institutions of higher education “are given broad discretion as to how the funds may be used, including covering students’ costs for food, housing, technology, [health] care and childcare occasioned by this national emergency,” she wrote. “[Higher Education Emergency Relief Fund] relief is targeted toward [institutions] to provide aid to their students, not directed to individual eligibility units. These characteristics suggest that HEERF does not meet the definition of ‘Federal public benefit.’”

Just last Thursday ED issued a preview of its interim final rule, doubling down on its position that only Title IV-eligible students can receive the funding, and had urged the court to toss out the legal challenge due to ongoing rulemaking. But the new ruling out of California prevents ED from "imposing or enforcing any eligibility requirement" of both the April 21 guidance and the interim final rule at community colleges in California. It also prevents ED from penalizing any community colleges in the state, “including by withholding, terminating, or taking any action to recover” the funds “on the basis of any alleged failure to comply with the eligibility restrictions” set forth in the guidance and interim final rule.

Additionally the court found that it would be contrary to “common sense, and logic” to find that individuals included in the formula used to allocate HEERF aid should be excluded from receipt of such funds.

Funding allocations for schools were set by a formula mandated in the CARES Act, which significantly weighted the number of full-time equivalent (FTE) students who are Pell Grant-eligible, but also took into account the total population of the school, excluding students who were enrolled exclusively in online, distance education courses.

Further, the court found that California students faced significant harm from ED’s guidance, which would exclude hundreds of thousands of students, particularly those in low-income communities and communities of color, who have been disproportionately affected by COVID-19.

“[ED’s] interpretation also excludes students who are the lifeblood of the state’s economy and are on the frontlines of the pandemic,” the court document read.

The judge further broke down the number of students who were excluded from the aid, which the court said Congress intended to deliver, citing: 150,000 students who likely qualify as economically disadvantaged; 100,000 students training for essential work in health services; 80,000 students training to be first responders; 26,000 students with disabilities; 12,000 veterans; 1,700 active duty service members; and further touted that many more first-generation college attendees, single mothers, formerly incarcerated individuals, at-risk foster youth, hourly-wage workers, and students facing job loss and severe food and housing insecurity were in need of aid.

With these two successful state-based challenges, more states could file their own lawsuits in an attempt to expand blocking ED’s guidance on a further case-by-case basis.


Publication Date: 6/17/2020

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