Recently, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136 (H.R. 748)) in response to the COVID-19 pandemic. The CARES Act is intended to provide economic relief to individuals and businesses facing economic hardship because of the outbreak. Along with other assistance, the CARES Act provides regulatory and financial relief for students, schools, educational agencies and higher education institutions. This bulletin focus on higher education institutions.

For colleges and universities, the CARES Act temporarily eliminates some and loosens other restrictions implemented by the Higher Education Act of 1965 (HEA), and it grants discretionary authority on other HEA provisions to the U.S. Department of Education.

The CARES Act also includes nearly $31 billion in relief funding through the Education Stabilization Fund. Of that amount, $14 billion will be for post-secondary institutions through the Higher Education Emergency Relief Fund. Ninety percent of those funds will be disbursed through Title IV distributions, calculated by the Department of Education; 7.5 percent for HEA’s Historically Black Colleges and Universities and Minority-Serving Institution programs; and 2.5 percent will be used at the Department of Education’s discretion to the greatest unmet needs related to coronavirus.

For the Title IV disbursed funds, institutions must use at least 50 percent of what they receive for emergency financial aid grants to students to alleviate expenses caused by campus disruptions emanating from the coronavirus. These expenses include food, housing, technology, health care, course materials and childcare.

The balance of the funds may be used by institutions to help cover the costs incurred because of changes to the delivery of instruction caused by the coronavirus — the move to distance and online learning. The funds can go towards lost revenue, reimbursement for expenses already incurred, technology, faculty and staff training, and payroll. They may not be used for endowments, capital improvements to athletic facilities, sectarian instruction or religious worship, or to pay contractors for performing pre-enrollment recruitment activities.

Along with the amount set aside to higher education institutions, there is another fund that will be provided to state governors. The governors will then distribute those funds for education purposes related to unmet needs arising from the coronavirus. There is a chance some amounts could go to higher education institutions.

Under the CARES Act, higher education institutions have also had some restrictions lifted, including the ability to use Supplemental Educational Opportunity Grant funds as emergency aid for students. Institutions do not have to match funds for certain aid. Work study payments can also be made to students unable to work due to a COVID-19 related qualifying closure.

While there are many other protections in the CARES Act for students, in particular student loan payments, two that higher education institutions should be aware relate to financial aid limits and Satisfactory Academic Progress (SAP). If a student had to leave school because of effects of the coronavirus, that will not count toward financial aid limits, and the incomplete credits will be excluded from SAP requirements.  

This article is for informational purposes only, and should not be construed as legal advice. If you have any questions about how to comply with your legal obligations under the CARES Act, please contact a member of Taft’s Higher Education group. 

Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.