The Department of Education (ED) updated its guidance for institutions coping with the impact of the Coronavirus pandemic on May 15, extending the timeframe for relaxed rules on utilizing distance education, and providing more detail on matching funds for the campus based programs, Return of Title IV Funds (R2T4), leaves of absence, Satisfactory Academic Progress (SAP), and treatment of Paycheck Protection Program loans, among other items. Most of the guidance stems from provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted at the end of March.
Switching to Distance Education. Institutions across the country are wrestling with decisions about when to reopen their campuses and how to continue to serve their students amid the global pandemic. Some have announced plans to return to their normal calendar and in-person classes in the fall. A number will start and end the fall semester earlier, or transition to online instruction for the end of the term. The intent is to move students off campus before the start of the usual flu season and a feared second wave of Coronavirus infections. Others have already announced a continued reliance on distance education for the rest of 2020. And many have yet to announce firm plans.
ED is providing institutions with the flexibility to continue to utilize distance education in response to COVID-19 for any payment periods that include March 5, 2020 or that begin on or between March 5 and December 31, 2020. The requirement for special accreditation for distance education if at least 50% of a program is online will also be waived for the same period.
Campus-Based Programs. The CARES Act waives the institutional share requirement for the Federal Work-Study (FWS) and Federal Supplemental Educational Opportunity Grant (FSEOG) programs for the 2019-20 and 2020-21 award years. ED is, however, only allowing institutions to reimburse themselves for the nonfederal match associated with FWS wages paid or FSEOG grants disbursed since March 13.
Leaves of Absence. The CARES Act provided additional flexibility for federally approved leaves of absence (LOAs) for students at term-based programs so that students returning from an LOA do not have to resume their education at the same point that they left. Institutions that do not have a written LOA policy may adopt one now (which may be temporary). Students must be required to request an LOA in writing, stating their reason. For COVID-19 related circumstances, institutions may approve LOAs first and ask students for written requests afterwards.
Return of Title IV Funds. Normally, if a student with Title IV aid withdraws before completing a term, the institution is required to calculate how much aid the student has "earned" and return any unearned funds to ED, following complex regulations known as return of Title IV aid or R2T4. For the term including March 13, the CARES Act waives the requirement to return funds to ED for students who withdraw due to COVID-19, but still requires schools to make the R2T4 calculations and report results. As usual, the R2T4 calculations are not affected by the institution's refund policy.
ED's new guidance clarifies that if institutions had already returned funds to ED under existing rules for students who were impacted by the pandemic, they should re-disburse Title IV funds to the students, make adjustments in COD, credit the students' ledger accounts, and request any necessary funds from G5. Further, since repayment of student grant overpayments is also waived by the CARES Act, if an institution has already returned funds on behalf of a student, it should re-request those funds as well.
For COVID-19 related withdrawals where no returns have been made, the institution should perform the usual R2T4 calculation, but make no adjustments to COD or to the amount of Title IV aid credited to the student's ledger account. Any post-withdrawal disbursements to which a student is entitled should be made.
Reporting Requirements. While the guidance lists four reporting requirements, ED is still developing the process. Under the CARES Act, the information on withdrawals will also be used by ED to cancel any Direct Loan disbursements for the payment period, exclude the payment period from subsidized loan and Pell grant lifetime eligibility calculations, and cancel any TEACH grant disbursements.
Qualifying for R2T4 Relief. Any student enrolled in in-person instruction at an institution that transitioned to distance education, closed campus facilities, or experienced other interruptions during the covered period may be considered to have withdrawn due to the pandemic. If the institution did not suffer changes in instruction or campus operations, however, a student must provide the school with a written statement explaining why the withdrawal was due to COVID-19 to benefit from the waiver of R2T4 returns. Students who were participating in distance education also need a written attestation. The guidance lists examples of acceptable reasons such as loss of childcare, economic hardship, or increased work demands in addition to illness.
Satisfactory Academic Progress (SAP). Under the CARES Act, credits that a student fails to complete due to circumstances related to COVID-19 may be excluded from the quantitative component of the SAP calculation. The student does not need to submit a SAP appeal, but the institution needs to determine that the failure to complete was connected to the pandemic. If the institution temporarily ceases operations, it may exclude attempted credits for all affected students.
ED also added to its FAQs on Title IV and COVID-19 when it issued this guidance, including one discussing pass/fail grading and SAP, noting that institutions may temporarily modify their policies limiting how many classes a student may take on a pass/fail basis due to the Coronavirus national emergency.
Paycheck Protection Program. Some colleges and universities have obtained loans through the Paycheck Protection Program (PPP) from the Small Business Administration which may be forgiven if the school meets employment standards laid out in the CARES Act. ED clarifies that it will treat the portion of the loan that has been, or is expected to be, forgiven as a net asset rather than a liability when calculating the institution's composite score for purposes of determining whether it meets the financial responsibility standard. The amount must be identified on the audited financial statements and attested to by the auditor.
ED also notes that colleges and universities should not, under relevant regulations issued by the Department of Treasury, count FWS students or the associated payroll costs when determining their eligibility for PPP loans.
Audits. ED has extended the deadline for financial statement and compliance audits by six months. Most public and independent nonprofit colleges and universities follow the Single Audit Act rules promulgated by the Office of Management and Budget. OMB issued a similar extension on March 19.
Documentation of Student Eligibility. ED recognizes that schools may face difficulties currently obtaining official documentation from students or other entities that is usually routine and has offered alternatives. An institution may use a transcript on file in another office or accept a signed and dated statement from an applicant attesting to secondary school completion or equivalent in place of official documentation or transcripts from high schools. This alternative is available through December 31, 2020. ED is also waiving the requirement for MCAT scores for foreign medical school admissions since the exams are not being offered at this time due to the COVID-19 emergency. A new question in ED's FAQs also discusses alternatives to Status Information Letters from the Selective Service System.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted on March 27, provides $2 trillion in relief for multiple sectors of the economy coping with the coronavirus pandemic. Higher education institutions, students, and student loan borrowers benefit from a number of provisions, including those outlined below. While Congress clearly intended to relieve burdens on institutions, some provisions will require additional effort to administer.
Educational Stabilization Fund
Higher education institutions will receive almost $14 billion in additional support this year from the federal government to help mitigate the impact of the COVID-19 emergency. The CARES Act directs the Department of Education (ED) to allocate most of the funds (90% or $12.6 billion) to institutions based on their relative share of full-time equivalent (FTE) students, excluding those solely enrolled in distance education courses, prior to the emergency. Three-quarters of the funds will be based on Federal Pell Grant recipients and one-quarter on FTE students who did not receive Pell grants. Minority-serving institutions (MSIs) will receive an additional 7.5% or $1 billion of the funds. The remaining 2.5% is reserved for those institutions that the ED Secretary determines have the greatest unmet needs, with priority given to those that receive less than $500,000 under the other provisions.
These funds are provided to institutions to help them "prevent, prepare for, and respond to coronavirus" and costs associated with changes to modes of instruction. Each college or university must, however, use at least 50% of the funds it receives to provide emergency financial aid grants to students for expenses related to the disruption of campus operations. Funds cannot be used to pay for contracted recruitment services, endowments, or capital construction related to athletics, sectarian instruction, or worship. The law calls for any institution receiving support from this fund to continue to pay its employees and contractors during disruptions or closures "to the maximum extent practicable."
MSIs and Historically Black Colleges and Universities (HBCUs) may also repurpose prior awards under Titles III, V, and VII of the Higher Education Act (HEA) to help their coronavirus response efforts. A separate section of the CARES Act allows the Secretary of Education to grant deferments to HBCUs with capital financing loans under Title III of the HEA.
The CARES Act directs ED to use the same systems it uses to disburse Title IV aid to distribute these supplemental funds to institutions. Except for the 2.5% reserved for institutions with greatest need, award amounts are determined by formula so institutions should not have to apply for funds. ED sent a letter to presidents of all eligible institutions of higher education on April 9 and a certificate of funding and agreement for institutions to submit in order to receive the 50% of funds earmarked for emergency student grants. The department also posted a list of the amount of money allocated to each institution under the statutory formula.
The CARES Act also waives several existing requirements or provides other relief relating to the federal student aid programs to help students and increase institutional flexibility. The various provisions are outlined below.
Nonfederal Share of Campus-Based Aid. Institutions will not be required to provide a nonfederal share (generally 25% of their federal funds) for the Federal Supplemental Educational Grant (FSEOG) and Federal Work-Study (FWS) programs for either the 2019-20 or the 2020-21 award years. For-profit entities that employ FWS students will still be required to provide matching funds.
Transfers from FWS to FSEOG. Institutions may transfer up to 100% of their unexpended allotment of FWS funds to their allotment for FSEOG during a qualifying emergency (but not the other way, from FSEOG to FWS).
FSEOG for Emergency Aid. Schools may use all or any amount of their FSEOG allocation for the fiscal year to provide emergency grants to students to help meet unexpected expenses and unmet need as a result of a qualifying emergency. In doing this, the institution may waive the usual need calculation. The emergency aid grant cannot exceed the Pell grant maximum. These emergency grants will not be counted as other financial assistance under section 471 of the HEA. The school may contract with a scholarship-granting organization to accept applications from or disburse funds to its students, if the full allocated amount is disbursed to the students.
Continued FWS Pay. Institutions may continue to pay FWS wages to students even if they are unable to continue working during the emergency. The payment may be equal to or less than the amount of wages the student was expected to earn and may be paid as a one-time grant or in multiple payments. The student must have already been working in an FWS job before the emergency prevented them from completing the obligation. Note that ED had earlier issued similar guidance based on the Robert T. Stafford Disaster Relief and Emergency Assistance Act before passage of the CARES Act.
Withdrawals. Institutions are not required to return unearned Title IV funds to ED when a student withdraws during a term due to the emergency. FAS's Compliance Alert (April 8) provided more detail on these provisions.
Satisfactory Academic Progress (SAP). Schools may exclude credits that were attempted but not completed by a student due to the COVID-19 emergency from the quantitative component of their SAP calculations.
Relief for Borrowers. Student loan borrowers whose loans are held by ED will not have to make payments on their loans through September 30, 2020, and interest will not accrue during that time. ED will also suspend involuntary payments (wage garnishments, tax refund reductions, etc.) during that time.
ED has issued guidance to institutions over the last few weeks. The most recent was released April 9 with accompanying documents. Their COVID-19 resource page gathers information from a variety of sources.
On March 27, the President signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act (HR 748). Section 3508 of the Act addresses the requirements for return of Title IV funds (R2T4) when a federal aid recipient withdraws from a term or payment period as a result of an event related to the Coronavirus. This alert summarizes those provisions and related guidance provided by the U.S. Department of Education (ED).
CARES Act Waivers
R2T4 Waivers. Effective immediately the statutory requirement that an institution return unearned Title IV funds (both grants and loans) is waived when a federal student aid recipient withdraws from the institution during a term or payment period due to the national COVID-19 emergency. The requirement that a student return unearned Pell Grant and other grant assistance is also waived.
While these waivers provide welcome financial relief to students and institutions, the CARES Act does not relieve institutions of the administrative burden of performing R2T4 calculations in accordance with federally defined timelines. An institution that uses the waiver must still document its calculations by reporting the number of students affected, the amount of grant and/or loan aid each received, and the amount of unearned assistance that was not returned by the institution. The waiver is not applicable to R2T4 calculations performed prior to the declaration of the COVID-19 emergency.
Cancellation of Loan Obligation. If a student who borrowed a Federal Direct Loan withdraws as a result of events related to COVID-19, the entire portion of the loan associated with the payment period will be cancelled. The U.S. Department of Education will provide further guidance on the loan cancellation process.
Approved Leave of Absence. The CARES Act allows an institution more flexibility to permit a student to take an approved leave of absence (as federally defined), rather than withdraw, and return from the leave within the same term (or equivalent) to complete the coursework.
Earlier Guidance from ED
Prior to the March 27 enactment of the CARES Act, ED provided guidance for interruptions of study related to the Coronavirus emergency on March 5. This was updated with Frequently Asked Questions (FAQs) on March 20.
This guidance addresses the procedures for completing R2T4 calculations when an institution temporarily interrupts or ceases operations as a result of the COVID-19 emergency. If any of the following occur, a federal aid recipient must be treated as having withdrawn and a R2T4 calculation performed:
- an institution ceases operation and does not reopen before the end of the respective payment period
- an institution ceases operation and reopens before the end of the respective payment period, but a student that began attendance does not return
- an institution does not cease operation, and a student stops attending having not completed the days scheduled to complete the term (i.e., withdraws)
ED's guidance describes what to use as the withdrawal date, date of determination, and how to count the days in the payment period (excluding closures and scheduled breaks that are five or more consecutive days) in the R2T4 calculation. A more detailed explanation of how to count number of days in the payment period is provided in the FAQs.
More to Come
ED is expected to issue new guidance soon to clarify provisions of the CARES Act. Updated guidance issued by ED on April 3 covered some of the areas impacted by the CARES Act but not the R2T4 provisions.
ED has established a page on its website to provide information to educational institutions, which currently includes this guidance and a document from the Centers for Disease Control specific to higher education. Most recently, a Q&A for students, parents, and borrowers was added on April 1 that schools may want to bring to the attention of their students.
March 24, 2020 - COVID-19 Emergency Measures Impact on Special Populations
As many colleges and universities institute drastic measures to combat the spread of COVID-19, administrators need to be mindful of the impact of schedule changes on foreign students and veterans utilizing GI Bill benefits.
Student and Exchange Visitor Program (SEVP). SEVP-certified schools with nonimmigrant students studying under F or M visas must notify SEVP within 10 days of changes in either the location or means of providing instruction. In a March 9 message, Immigration and Customs Enforcement (ICE) promised to be flexible with temporary adaptations but did not address temporary closures of educational institutions. Subsequent guidance issued on March 13 more clearly delineates three scenarios—temporary school closure; temporary switch to online instruction with student remaining in U.S.; or student participates in online instruction from outside the U.S. temporarily—where nonimmigrant students would be allowed to maintain their status if the institution provides notice to SEVP.
9/11 GI Bill. The Department of Veterans Affairs (VA) has provided several recent updates on the impact of school closures or temporary changes in the means of instruction. A Facebook posting on March 12 warned that VA did not have statutory authority to allow veterans to continue to receive GI Bill benefits for an educational program that switches to online instruction temporarily due to COVID-19 if the student’s program has not been approved by the state approving agency (SAA) for online instruction. In that case, all education benefits including housing allowance would have stopped when online training began. Congress acted quickly to remedy the situation, however, and on March 21 President Trump signed S. 3503 which gives VA new authority to continue GI Bill payments in national emergencies.
Under existing rules, a veteran’s benefits would continue for up to 4 weeks in a 12-month period if their institution temporarily closes. If the school moves to online instruction and the veteran’s program is approved for online modality by the SAA, benefits including the housing allowance would continue through the end of the term.
March 5, 2020 - ED’s Guidance on Interruptions of Study Related to COVID-19
The Department of Education (ED) issued guidance to institutions on interruptions of study due to COVID-19 that provides welcome flexibility to schools in several areas.
1. Switch to Distance Education. Institutions may temporarily move to online instruction or other technology supported instruction for the current term or the following one without seeking approval from ED. Accrediting agencies are also being permitted to waive their distance education review requirements for programs developed to serve current students whose attendance is interrupted by COVID-19.
ED cautions institutions that, under its rules, instructors utilizing distance education technology must initiate substantive communication with students on a regular basis. Complicated technology is not required; email, chats, conference calls, and other easily accessible tools can be used effectively.
2. Consortiums. Institutions may enter into temporary consortium agreements in order to enable students to complete courses at other schools but be awarded credit at their home institution. Accrediting agencies are permitted to waive related residence requirements for affected students.
3. Leaves of Absence. ED is easing rules on leaves of absence for aided students, allowing a leave of absence for COVID-19 related reasons to be approved even if the student notifies the institution after the fact. This will be helpful for students whose planned study-abroad program was cancelled or had to stop out due to illness or quarantine, for instance. If a student takes a leave of absence from a term-based program, they must be permitted to complete the coursework that was interrupted when they return. If the student does not return within 180 days, the school must calculate a return of Title IV funds.
4. Nonstandard Terms and Shortened Year. ED is giving colleges the flexibility to provide alternative courses to students whose study-abroad or experiential learning programs were curtailed, or if the institution, other locations, or programs need to temporarily close due to COVID-19, even if the class schedule would not fit into the school's defined academic term. An institution must, however, request approval from ED for a temporary reduction in the length of its academic year if necessary due to emergency closure.
5. Federal Work Study (FWS). Students who rely on FWS wages as an important component of their aid package will be financially stressed if they can't work when their institution or other employer closes temporarily. Under its authority to provide relief to disaster-affected students, ED is allowing institutions to continue paying FWS wages to students during a closure that began after the beginning of the term, if the institution (1) is continuing to pay its other employees (including faculty and staff), and (2) continues to pay its institutional share of wages.
For several other regulatory compliance issues, ED does not have authority to waive existing requirements but provided guidance to institutions on how to comply under these circumstances. These include:
- using professional judgement to adjust federal aid to reflect special circumstances on a case-by-case basis;
- allowing circumstances related to the COVID-19 outbreak as a basis for satisfactory academic progress reviews;
- returning federal aid to the respective federal aid program(s) for students who did not begin attendance;
- confirming changes to student enrollment status (full-time, at least half-time) on aid;
- calculating return of Title IV funds if the school closes during the payment period and fails to reopen by the end of the period, or if the school reopens before the end of the period but some students fail to return; and,
- reporting enrollment to the National Student Loan Data System (NSLDS).
ED has established a page on its website to provide information to educational institutions which currently includes this guidance and a document from the Centers for Disease Control specific to higher education. More information will likely be added.