By NASFAA Communications and Policy Staff

A bipartisan group of lawmakers has announced an agreement on additional federal relief to combat the coronavirus pandemic. The $748 billion package, the Emergency Coronavirus Relief Act of 2020, contains a number of provisions related to the higher education sector and includes $20 billion for postsecondary institutions and students.

The monthslong debate over providing additional aid in response to the ongoing pandemic has been fraught with disagreements on a number of contentious policy debates, but the record-breaking increase in the number of viral cases and the end of the calendar year may have finally yielded a compromise — though it remains unclear if congressional leadership will sign off on the deal.

“We’re pleased to see Congress set aside political differences to provide much-needed, long-overdue funding for higher education,” said NASFAA President Justin Draeger, “We urge Congress to act quickly, but to also consider this a down payment for future action. Unfortunately, the depths of this pandemic, and the impacts on students and institutions, will require much more.”

The measure, similar to previously floated plans, would set aside $82 billion for an Education Stabilization Fund, about 25% of which (or $20 billion) will go to institutions of higher education through the existing Higher Education Emergency Relief Fund (HEERF) established in the Coronavirus Aid, Relief and Economic Securities (CARES) Act. Another 66% of the education funds would go to K-12 education, and the final 9% would go to a governor’s emergency education relief fund.

Of the $20 billion included for higher education, 85%, or roughly $17 billion, would be allocated to public and private non-profit institutions, based 37.5% on full-time equivalent (FTE) enrollment of Pell Grant recipients, 37.5% on headcount enrollment of Pell recipients, 12.5% on FTE enrollment of non-Pell recipients, and 12.5% on headcount enrollment of non-Pell recipients. 

This allocation formula is a change from the CARES Act, which used only FTE enrollment in its allocation formula, and is a legislative nod to schools with larger percentages of part-time students. Students who were enrolled exclusively in distance education prior to the qualifying emergency would continue to be excluded from being counted in the fund’s allocation formula, but not necessarily excluded from receiving grants.

Similar to the CARES Act, institutions would be required to use at least 50% of these funds to provide emergency grants to students. The bill specifies that students enrolled exclusively in online education would be eligible to receive emergency grants, and that the grants could be used to cover any element of a student's cost of attendance or emergency costs that arise due to the pandemic, including food, housing, course materials, technology, health care, or child care. This is broader than the CARES Act, which required that student emergency grants be used only to cover expenses related to the disruption of campus operations due to coronavirus.

Whether grant recipients would need to be Title IV-eligible remains unclear. The bill states that students receiving emergency grants would be “determined solely by the institution,” but does not go as far as House Democrats’ HEROES Act, which prohibited the Secretary of Education from imposing any student eligibility restrictions on HEERF emergency grants. As a reminder, after a confusing and inconsistent implementation, Education Secretary Betsy DeVos issued an Interim Final Rule (IFR) on June 17, 2020 limiting eligibility for CARES Act emergency financial aid grants to students who met the eligibility criteria for Title IV student aid, such as being a U.S. citizen or eligible noncitizen, among other requirements. The IFR referred specifically to the CARES Act, so it is unclear whether the Trump administration would attempt to tie student eligibility requirements detailed there to the new HEERF funds established in this bill. Separately, NASFAA included rescission of the June 17 IFR as a priority for the incoming presidential administration. 

The new proposal expands, as compared to the CARES Act, the allowable uses for the institutional portion, permitting schools to use their 50% to defray expenses associated with the pandemic, including lost revenue, reimbursement for expenses already incurred, technology costs, faculty and staff training, and payroll. The expanded allowable uses for both the student and institutional portions would apply to both new HEERF funds and unspent CARES Act funds.

Institutions subject to the endowment excise tax would have their allocations reduced by 50% and would be required to spend those funds only on student emergency grants.

In addition to the $17 billion allocated through the above formula, the bill provides another $2 billion, or 10% of the overall higher education funding, to minority-serving institutions and an additional $1 billion for institutions with the greatest unmet need related to the pandemic. While the larger $17 billion would only be allocated to public and private non-profit schools, all institutions would be eligible for the pot of funds earmarked for schools with unmet need, which would run through the Fund for the Improvement of Postsecondary Education (FIPSE). The bill suggests that the Department of Education (ED) would have 90 days to establish an application process to determine which institutions have the greatest “unmet need.” The fact that this 90 days would span two administrations adds an additional layer of political complexity. 

The bill also adds that Supplemental Nutrition Assistance Program (SNAP) eligibility will not be limited for postsecondary students who are enrolled at least half-time and who are either eligible to participate in work-study or have a zero EFC. Further, it requires the Secretary of Education to inform federal student aid applicants and postsecondary students of the temporary SNAP eligibility requirements contained in the bill.

While ED recently announced that the moratorium on federally-held student loans — slated to expire December 31 — would be extended for an additional month, the bill would continue the forbearance period, the pause in interest accrual, and the suspension of collections activity through April 1, 2021. The bill does not, however, include relief for borrowers who have Federal Family Education Loans (FFEL) or Perkins Loans that are not federally held, which NASFAA had called for in a letter penned to ED in early November.

The higher education community, including NASFAA, sent a letter to Congressional leadership requesting that any supplemental funding bill include at least $120 billion for higher education in order to partially mitigate the challenges that students and institutions are facing amid the COVID-19 pandemic.

As the congressional calendar rapidly wanes on the 116th session of Congress, members still need to wrap up a wide range of spending decisions to keep the government operational during the presidential transition. While this bipartisan proposal signifies that a deal is within reach, the plan has not yet been endorsed by members of congressional leadership, which will be needed for the proposal to see any movement.

Stay tuned to Today’s News for coverage of spending negotiations as they continue to unfold.

Publication Date: 12/14/2020

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