CARES Act Higher Education Provisions (IF11497, Version 1)

Summary

In Focus IF11497 of the Congressional Research Service, Version 1, dated April 7, 2020, describing higher education provisions of the CARES Act, enacted March 27, 2020. For federal student loans, the law suspends payments while counting them toward loan forgiveness programs such as Public Service Loan Forgiveness and halts interest accrual. It lets semesters a student does not complete because of the emergency be excluded from the 150% limit on Direct Subsidized Loan use. It also modifies campus-based aid programs, such as allowing emergency aid under the Federal Supplemental Educational Opportunity Grant program.

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April 7, 2020
CARES Act Higher Education Provisions
President Donald J. Trump declared a U.S. national Federal Student Loan Modifications
emergency on March 13, 2020, in response to the COVID- Loans to support students’ postsecondary educational
19 pandemic. The Coronavirus Aid, Relief, and Economic pursuits are currently available under the William D. Ford
Security Act (CARES Act; P.L. 116-136) was enacted on Federal Direct Loan (Direct Loan) program and the Federal
March 27, 2020, to address income, health, and economic Perkins Loan program. Loans were previously available
security in response to the national emergency. This In through the Federal Family Education Loan (FFEL)
Focus provides brief descriptions of several higher program, and some of those loans remain outstanding.
education provisions included in the law.
Adjustment of Subsidized Loan Usage Limits. New
Student Aid Provisions borrowers on or after July 1, 2013, may only borrow Direct
To provide postsecondary education student relief, several Subsidized Loans for a period not to exceed 150% of the
provisions in the CARES Act temporarily modify the published length of the academic program in which they are
requirements of existing student aid programs, such as enrolled. If a borrower remains enrolled beyond this limit,
those authorized under Title IV of the Higher Education he or she will lose the interest subsidy on such loans. The
Act (HEA). CARES Act permits any semester (or equivalent) that the
student does not complete due to a qualifying emergency to
Modifications to Campus-Based Financial Aid be excluded from the 150% limits.
Programs
The Federal Supplemental Educational and Opportunity Temporary Relief for Student Loan Borrowers. For all
Grant (FSEOG) program and the Federal Work-Study Direct Loan program loans and for FFEL program loans
(FWS) program are two campus-based financial aid held by the Department of Education (ED), the CARES Act
programs authorized under the HEA. Under the programs, (1) suspends all payments due and counts such suspended
federal funds are awarded to institutions of higher education payments towards specified loan forgiveness programs
(IHEs) that administer the programs. (e.g., Public Service Loan Forgiveness) and loan
rehabilitation, (2) halts interest accrual, and (3) suspends
Use of FSEOG for Emergency Aid. Under the FSEOG involuntary collections on defaulted loans, through
program, IHEs provide grants to undergraduate students September 30, 2020.
who demonstrate exceptional financial need. The CARES
Act authorizes expansion of the FSEOG program to allow Institutional Refunds and Student Loan Flexibility. If a
IHEs to provide emergency grants to undergraduate and student withdraws from an IHE before the end of a period
graduate students for unexpected expenses and unmet of enrollment for which HEA Title IV federal student aid
financial need as a result of a qualifying emergency. funds were disbursed, the IHE and/or the student may be
required to return grants and student loans received for that
FWS During a Qualifying Emergency. Under the FWS period to ED. The CARES Act requires the Secretary of
program, IHEs provide part-time employment opportunities Education to waive the requirement that IHEs and students
for eligible undergraduate, graduate, and professional do so in the case of students who withdraw from the IHE as
students. The CARES Act permits IHEs to continue paying a result of a qualifying emergency.
students who participated in the FWS program but were
unable to fulfill their work-study obligation due to a Modifications to Teacher Loan Forgiveness
qualifying emergency. IHEs are permitted to make Requirements. The HEA authorizes loan forgiveness of up
payments as a one-time grant or as multiple payments. to $17,500 for borrowers who teach for five consecutive
complete years in eligible low-income schools. The CARES
Waivers of Campus-Based Aid Matching Requirements. Act permits the Secretary to waive requirements that
Under FSEOG and FWS, IHEs provide institutional funds qualifying teaching service be completed in consecutive
to match federal funds received. The CARES Act requires years under two conditions: (1) if a recipient’s teaching
that the Secretary of Education waive the matching service is temporarily interrupted due to a qualifying
requirement under the FSEOG and FWS programs for emergency, and (2) following such interruption, if the
funds made available for award years 2019-2020 and 2020- borrower resumes teaching and completes five years of
2021, except that private for-profit organizations that teaching service, including teaching performed before,
employ FWS students continue to be required to provide a during, and after the qualifying emergency.
match in funds. IHEs are also permitted to transfer up to
100% of their FWS allocation to the FSEOG program Continuing Education at Affected Foreign Institutions.
during a period of a qualifying emergency. Educational programs offered via distance education (e.g.,
online education) by foreign IHEs, and those offered in

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CARES Act Higher Education Provisions

whole or in part in the United States by foreign IHEs, are disinfecting affected schools, and assisting in counseling
ineligible to participate in the Direct Loan program. The and distance learning.
CARES Act authorizes ED to permit both types of
programs offered by foreign IHEs to be eligible for Direct Historically Black Colleges and Universities
Loans for the duration of a qualifying emergency. (HBCU) Capital Financing Program Modifications
The HBCU Capital Financing Program, authorized under
Exclusion from Federal Pell Grant Duration Limit the HEA, assists HBCUs in obtaining low-cost capital
Pell Grants provide grant aid to financially needy financing for campus maintenance and construction
undergraduate students. Students are generally limited to projects. The CARES Act authorizes the Secretary of
the equivalent of no more than 12 full-time semesters of Education to grant a deferment during a qualifying
Pell Grant awards. The CARES Act permits any semester emergency to an institution that has a loan under the
(or equivalent) that the student does not complete due to a program. During the period of the deferment, the Secretary
qualifying emergency to be excluded from such limit. is required to pay the required principal and interest due. At
the end of the deferment, the IHE is required to repay the
Service Obligations for TEACH Grant Program Secretary for payments made on its behalf.
The Teacher Education Assistance for College and Higher
Education (TEACH) Grant program provides recipients Direct Appropriations to Certain IHEs
with grants to pursue coursework that leads to a Some colleges receive annual direct appropriations for
certification in teaching in exchange for a four-year ongoing support. The CARES Act provides $78,000 to the
teaching service obligation in a high-need field and low- Institute of American Indian and Alaska Native Culture and
income school. The CARES Act permits the Secretary of Arts Development to prevent, prepare for, and respond to
Education to excuse TEACH Grant recipients from coronavirus. In addition, the CARES Act appropriates $7
fulfilling any part of their teaching service obligation that million to Gallaudet University and $13 million to Howard
they are unable to complete during a qualifying emergency. University to prevent, prepare for, and respond to
Additionally, any teaching service that is part-time or coronavirus, and to enable grants to students for expenses
temporarily interrupted due to a qualifying emergency shall directly related to coronavirus and the disruption of
count toward fulfilling the service obligation. university operations. The funds are available through
September 30, 2021.
Modifications to Satisfactory Academic Progress
To be eligible for federal student aid as authorized under Waiver Authority for Minority Serving Institutions
Title IV of the Higher Education Act (HEA), a student must HEA Title III-A, Title III-B, Title V, and Title VII-A-4
make satisfactory academic progress as measured through authorize what are collectively referred to as the Minority-
qualitative and quantitative standards. The CARES Act Serving Institutions (MSIs) programs to equalize
excludes attempted credits that were not completed due to a educational opportunity. The CARES Act authorizes the
qualifying emergency from the quantitative component. Secretary of Education to waive several of the eligibility
and reporting requirements that are generally applicable to
Institutional Aid Provisions IHEs participating in the MSI programs.
Several CARES Act provisions provide support to IHEs to
maintain operations and continue supporting students. Modifications for Certain HEA Grant Programs
The CARES Act authorizes the Secretary of Education,
Higher Education Emergency Relief Fund upon request by an affected institutional grantee, to modify
The CARES Act establishes a $30.750 billion Education the required and allowable uses of funds under the MSI
Stabilization Fund that is composed of a Governor’s programs, TRIO programs, and Gaining Early Awareness
Emergency Relief Fund, an Elementary and Secondary and Readiness for Undergraduate Programs (GEAR UP).
School Emergency Relief Fund, and a Higher Education The CARES Act further authorizes the Secretary to modify
Emergency Relief Fund. The Higher Education Emergency the financial matching requirement for the MSI programs
Relief Fund provides for the distribution of approximately and any HEA competitive grant program as a result of a
$14 billion to IHEs to address needs directly related to qualifying emergency at the request of the grant recipient.
coronavirus, including, but not limited to, transitioning Such modification will be in effect through September 30,
courses to distance education and grant aid to students for 2021.
their educational costs such as food, housing, course
materials, health care, and child care.

Safe Schools and Citizenship Education Cassandria Dortch, Coordinator, Specialist in Education
Safe Schools and Citizenship Education is a program Policy
authorized under the Elementary and Secondary Education
Joselynn H. Fountain, Analyst in Education Policy
Act (ESEA), as amended, that, among other things,
provides funds to IHEs. The CARES Act authorizes $100 Alexandra Hegji, Analyst in Social Policy
million for Safe Schools and Citizenship Education to Rita R. Zota, Analyst in Education Policy
prevent, prepare for, and respond to coronavirus, including IF11497

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CARES Act Higher Education Provisions

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