On Friday, the Department of Education (ED) issued a Federal Register (FR) notice extending the end dates of COVID-19-related waivers and modifications, and also introduced several new flexibilities using its authority granted by the Higher Education Relief Opportunities for Students (HEROES) Act of 2003.
The HEROES Act of 2003 permits ED to offer relief for federal student aid recipients who are performing military service, or are otherwise impacted by a war, national emergency, or disaster. It also allows ED to extend relief to other entities involved in the administration of the Title IV student aid programs, such as institutions of higher education and loan servicers, under certain emergency conditions.
Many flexibilities that were granted over the course of the spring and summer of this year had previously been extended by ED on Aug. 21, 2020 to apply through the later of either the end of the payment period that includes Dec. 31, 2020 or the end of the payment period that includes the end date for the federally-declared emergency related to COVID-19.
The extensions granted on August 21 were necessary and welcomed by institutions, as the pandemic continued without an end in sight. But it also raised concerns because of the possibility that the national emergency could be rescinded very close to the end of a payment period, or even fall between two payment periods, giving institutions inadequate lead time to adapt to expired flexibilities and waivers. Institutions also reported challenges with planning for future terms given the uncertainty of when waivers would expire.
Friday's FR notice extends many deadlines through the end of the payment period that begins after the date on which the federally-declared national emergency related to COVID-19 is rescinded. Allowing this extra payment period beyond the national emergency end date for flexibilities and waivers to remain active will ensure smooth transitions to pre-pandemic compliance following the end of the national emergency.
Previously granted waivers and flexibilities that, as of Friday's FR notice, have been extended through the end of the payment period that begins after the date the COVID-19 national emergency is rescinded include:
Waiver of the requirement for institutions to obtain accreditor approval to offer distance education.
Waiver of the requirement for institutions to obtain state authorization to offer distance education.
Note that this applies only to ED's requirements for participation in the Title IV student aid programs; ED cannot waive individual state requirements, with which institutions should continue to comply.
Waiver of the prohibition on granting a leave of absence (LOA) for COVID-19-related suspensions in coursework, clinicals, and internships/externships.
Note that the waiver on the 180-days-in-a-12-month-period cap for LOAs continues to apply only for LOAs ending on or before Dec. 31, 2020. LOAs ending after Dec. 31, 2020, would be subject to the 180-day cap.
Waiver of the requirement for institutions to notify loan servicers when borrowers fail to begin attendance so servicers can issue final demand letters for payment.
Waiver of the parental signature requirement and flexibility to accept photographed signed documents by email or text message as acceptable verification documentation.
Other changes and clarifications to previously-granted flexibilities and waivers are included in Friday's notice.
This most recent FR extends the Federal Work Study (FWS) 7% community service spending requirement through at least the end of the 2021-22 award year, waiving the requirement until the end of the award year that begins after the date the national emergency is rescinded. ED's April 23 Electronic Announcement (EA) had extended the waiver only through the end of the 2020-21 award year.
Friday's notice extends the timeframe that foreign medical schools may accept applicants without an MCAT score. This waiver had previously applied for admission years in which the MCAT was unavailable due to the COVID-19 emergency; it has now been extended to cover the duration of admission years in which the COVID-19 emergency is in effect.
A new condition has been added to the assurance granted in the April 3 EA that institutions that temporarily ceased operations as a result of the pandemic would not automatically lose eligibility to participate in the Title IV programs. ED added in Friday's FR notice that the institution must resume instruction by the start of the institution's scheduled payment period, as published in the institution's academic calendar, one payment period after the payment period in which the COVID-19 national emergency is lifted.
Income-driven repayment (IDR) plan recertification of eligibility is now not required until one calendar year from the date borrowers would have been required to provide recertification documentation in 2020, per Friday's announcement. Previously ED had only indicated that, as part of the pandemic-related administrative forbearance, borrowers would not have to recertify until they received notification to do so. While Friday's notice provides borrowers with a clear date by which they must recertify, it is problematic in light of ED's December 4 announcement of a one-month extension of the forbearance into the new year, and the likelihood that the Biden administration will continue the administrative forbearance beyond January 31.
Finally, new waivers and flexibilities are introduced in the FR notice, including:
Waiver of the requirement that Title IV disbursements by EFT be a direct deposit transaction, which would permit institutions to issue Title IV disbursements via person-to-person payment apps like PayPal or Zelle. This waiver expires at the end of the payment period that begins after the national emergency ends.
Institutions placed on Heightened Cash Monitoring 1 (HCM1) will be allowed to request funds prior to paying credit balances to those students for whom funds are being requested. This waiver expires at the end of the payment period that begins after the national emergency ends.
Borrower defense (BD) to repayment applications for Direct Consolidation Loans that include FFEL or Perkins loans originally included in BD applications received by the department for review of eligibility upon the condition that the loans be consolidated prior to July 1, 2020, will be adjudicated under the standards for loans disbursed between July 1, 2017 and July 1, 2020, instead of under the new standards that became effective July 1, 2020, regardless of whether the consolidation loan was made after July 1, 2020. ED indicated as the reason behind this flexibility that these borrowers had not been notified prior to July 1 of the need to consolidate by that date in order for the pre-July 1 regulations to apply.
Waiver of the requirement that short-term programs have completion rates and job placement rates of 70% (known as the “70/70 qualifying requirements”) to qualify to participate in the Direct Loan program. This waiver applies for any award year in which the COVID-19 national emergency declaration was in place for at least one day during the award year.
Several flexibilities related to accreditation have also been extended to apply for the duration of the national emergency and 180 days following its end, including flexibilities related to in-person site visits.
The FR notice makes reference to the COVID-19-related federal student loan interest and payment suspension as effective until Dec. 31, 2020. This suspension was, in fact, extended on December 4 until Jan. 31, 2021. The discrepancy between the FR notice and the new end date for federal student loan borrower relief is likely due to timing delays as a result of the federal approval and clearance process.
Existing flexibilities not addressed in this FR are presumed to be subject to the date extensions offered in ED's August 21 EA — that is, through the end of the payment period that includes Dec. 31, 2020, or the end of the payment period that includes the end date for the federally-declared emergency related to COVID-19, whichever occurs later, with exceptions as noted in that EA.
While this FR notice resolves many outstanding questions and concerns related to the impacts of the COVID-19 pandemic on students and institutions, the diversity of institutions and educational programs is such that unresolved issues will likely remain and new ones will arise. NASFAA continues to maintain contact with ED to resolve outstanding questions with respect to the COVID-19 pandemic's impacts on students and schools. Watch Today's News for the latest information.
Publication Date: 12/14/2020