CARES Act Interim Final Rule and the Courts: Where Do We Stand?

On June 17, the Department of Education (ED) released an interim final rule (IFR) on the Higher Education Emergency Relief Fund (HEERF) student emergency grants in the Federal Register. There are two main eligibility restrictions in the rule: 1) students must be (or could be) Title IV-eligible, and 2) international students, those in the Deferred Action for Childhood Arrivals (DACA) program, and those living in the country illegally are not eligible.

Since the issuance of the rule, federal judges in both California and Washington state have issued preliminary injunctions on all or part of the rule. Both the Washington decision, issued June 12, and the California decision, issued June 17, became effective immediately.

Here's where things stand now.

Q: What is a preliminary injunction? 

A: A preliminary injunction is a legal action that has the effect of temporarily halting an act or behavior while a case moves forward in the court system. Preliminary injunctions are issued when the judge finds that, absent forcing the action to stop, the plaintiff would likely face harm while awaiting the final decision of the court. Injunctions are not a final decision or ruling.

Q: Do the preliminary injunctions from California and Washington apply to both restrictions found in the rule (students must be Title-IV eligible and cannot be international students, those in the Deferred Action for Childhood Arrivals (DACA) program, and those living in the country illegally)?

A: The preliminary injunction in Washington state applies only to Title-IV eligibility requirements. The ruling in California applies to both eligibility requirements.

Q: Do the rulings apply to all schools in California and Washington?

A: No. In Washington state, the preliminary injunction applies to all schools as the case was brought forward by the state's attorney general. In California, the case was brought by the California Community Colleges system, so the ruling only applies to those schools. 

Q: Does this apply to out-of-state students enrolled at a Washington college or California community college? What about distance education students?

A: Both of the preliminary injunctions are based at the institutional level, making the rule temporarily blocked for all institutions in Washington and all of the California community colleges. Therefore, the institutions have discretion over what that means for their students, regardless of residence. The preliminary injunction would also cover distance education students who are attending schools in Washington state or the California Community Colleges system.

Q: Does this apply to students who are Washington or California residents but are attending school in a different state?

A: No. Both preliminary injunctions block the institution from having to follow the rule, but do not apply to the residents of the state should they go out-of-state for their education.

Q: My school is in Washington state. Our policy has been to award CARES Act emergency grants only to Title IV-eligible students. We still have some HEERF funds to award. Given the court decision, are we required to change our policy and award to students who are not Title IV-eligible?

A: No. Initial guidance from ED on April 9 gave institutions flexibility in choosing how to distribute the grants, but encouraged them to prioritize students with financial need.

Q: My school is not located in Washington state and is not a community college in California. Do the court decisions affect me? From June 17 forward, am I required to comply with the June 17 interim final rule?

A: Yes. Institutions that are not located in Washington state or a community college in California are required to comply with the interim final rules that became effective June 17. 

Q: What are the next steps for the Washington and California court cases?

A: ED Press Secretary Angela Morabito has said the department "fully expect[s] to prevail" on appeals to both decisions. It is likely that final decisions will not be handed down for at least a few months.

Q: Is it "safe" to award CARES Act emergency grants to students who are not Title IV-eligible if my school is affected by one of these court decisions? What if the decision is later overturned?

A: Given that injunctions are temporary in nature, NASFAA encourages institutions to check with their legal counsel to assess the risk of choosing to disburse to non-Title-IV-eligible students prior to a final court ruling. 

Q: What if more states bring cases and win? 

A: Given the rulings on the first two cases, it is likely that we'll see more states bring forward similar cases. The impact of these cases on the overall policy will depend on both the content and the timing of the rulings.

Q: How will I find out if my state brings a case against ED?

A: You can check with your state attorney general's office, and stay tuned for updates from NASFAA in Today's News.


Publication Date: 6/22/2020

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