By Carrie Warick, Director of Policy and Advocacy, and Raymond AlQaisi, Policy and Advocacy Manager
As our nation faces an unprecedented public health crisis, students from low-income backgrounds, students of color, and students who are first in their family go to college are facing unique challenges above and beyond those facing every American. NCAN
is advocating for protections that will specifically support our student populations. In addition, NCAN is committed to sharing the updates on actions from Congress, the White House, and the Department of Education that specifically affect our students.
We will update this blog regularly as our government works to respond.
Be sure to also check out NCAN’s roundup of COVID-19 resources, which includes lists of helpful articles, webinars, member-submitted examples of communications to students, and more.
The U.S. Department of Education (ED) released new guidance concerning the Higher Education Emergency Relief Fund (HEERF), funding most recently provided through the American Rescue Plan. In
this latest guidance, ED provided clarification as to the ways institutions can use the most recent allotment of $36 billion in emergency funds. Of note, the guidance makes clear, in a new final rule on student eligibility, that institutions may provide
emergency aid to undocumented students, those enrolled in the Deferred Action for Childhood Arrivals (DACA) program, and international students. The final rule defines student eligibility for emergency aid as "any individual who is or was enrolled
at an eligible institution on or after March 13, 2020, the date of declaration of the national emergency due to the coronavirus." This clarifies that it is no longer required that a student had completed a FAFSA or were specifically eligible for Title
IV, as was the case previously. Please see the guidance document for more information.
The U.S. Department of Education (ED) announced an expansion of the pause on federal student loan interest and collections to all defaulted loans in the Federal Family Education Loan (FFEL) Program. ED says this will help more than one million additional
borrowers burdened by debt during the COVID-19 emergency. Please read more via this release.
The U.S. Department of Education released new guidance to support
ongoing relief for the COVID-19 emergency and implementation of the American Rescue Plan. This guidance discusses benefits, outreach, flexibilities, and guidance to assist students, federal student aid applicants, and institutions of higher educations.
Regarding use of COVID-19 relief funds under the Higher Education Emergency Relief Fund (HEERF) grant program, the guidance issued here reflects a change that previously only allowed funds received under the Coronavirus Response and Relief Supplemental
Appropriations Act, 2021 (CRRSAA), to be used for costs incurred on or after Dec. 27, 2020. Colleges can now use HEERF grant funds to reimburse themselves for institutional lost revenue and expenses incurred as far back as Mar. 13, 2020, the start
of the national emergency.
The updated guidance clarifies that colleges can make financial aid grants to dual enrollment, continuing education, non-degree seeking, or non-credit students, as well as to a broad range of students with exceptional needs, such as certain refugees or
persons granted asylum. Also, institutions can use funds to discharge student debts and support student services. Lastly, the new guidance provides colleges with greater flexibility on the use of funds. Please see the updated FAQs here for more information.
The bill provides $122.7 billion for the Elementary and Secondary School Emergency Relief (ESSER) Fund.
The bill would provide $39.5 billion to institutions of higher education (IHEs), through the Higher Education Emergency Relief (HEER) Fund. Public and private nonprofit IHEs receiving funds must use not less than 50 percent of funds to provide emergency
financial aid grants to students. For-profit IHEs must use 100 percent of funds to provide emergency financial aid grants to students.
Institutions receiving aid from the HEER Fund are required to dedicate funds to conduct direct outreach to financial aid applicants about Professional Judgement - the opportunity to receive a financial aid adjustment due to factors such as recent
unemployment. The provision follows guidance from the Department of Education (ED) earlier this year encouraging the use of professional judgement (PJ) and reminding institutions of their ability to use documentation of unemployment to reduce
or adjust to zero an unemployed individual’s income earned from work and adjusted gross income in the federal methodology formula.
The bill would eliminate taxation on portions of postsecondary education loans that are discharged, that are typically treated as income and therefore taxable. The provision covers loans for postsecondary educational expenses, including Federal student
loans and certain private education loans. This applies within the following timeframe: after December 31, 2020 through January 1, 2027.
The bill provides for payments of up to $1,400 for individuals, $2,800 for couples and an additional $1,400 for dependents. This means that, unlike previous payments in other COVID-19 relief bills, taxpayers will get payments for dependents of any
age, including college students or adult parent dependents. Payments will be administered by the IRS and based on taxpayers’ 2019 or 2020 tax returns. The benefit is refundable (so an individual does not need to have to had income to receive the
payment) and eligible individuals with an adjusted gross income of $75,000 per year ($150,000 for couples filing jointly) are eligible for the full $1,400. Individuals earning more than $80,000 and couples earning more than $160,000 are ineligible
for the payments.
The U.S. Department of Education released a letter reminding institutional financial aid offices of their ability to make it easier for those who are unemployed or have received unemployment assistance to access federal student aid. This release reminds
financial aid administrators of their authority under the Higher Education Act to engage in "professional judgment", the process that allows them to adjust factors related to a student's eligibility for federal financial aid. For more information,
please see the Department's official release.
At the request of President Biden, the U.S. Department of Education has further extended the current relief of payment, interest-accrual, and defaulted-loan collections for federal student loan borrowers. Please read the Education Department's press release.
Congress enacted, and the president has signed into law, FAFSA simplification and expanded Pell eligibility in the federal fiscal year 2021 omnibus/pandemic stimulus
bill. Review our blog on the top-line details of this new higher education agreement – such as the reducing of the
number of questions on the FAFSA from 108 to a maximum of 36 questions (anticipated for the Oct. 1, 2022 FAFSA launch, award year 2023-24) and the expansion of Pell Grant eligibility, as lawmakers estimate that an additional 555,000 students will
be eligible for an award and 1.7 million students should receive the maximum award. Review our blog on the most important funding aspects of the federal appropriations and COVID stimulus package – such as the $150 increase to the maximum Pell Grant award for the academic year 2021-22, information about a change to SNAP eligibility, the economic stimulus payments, the Paycheck Protection Program, and more.
The U.S. Department of Education (Federal Student Aid) has extended the verification document relief currently available to students as well as several other provisions governing Title IV financial aid. The new cutoff, rather than a specific date, is
the last day of the financial aid payment period that follows the end of the national emergency declaration for the coronavirus pandemic. This new timeline will give institutions the ability to respond to the end of the waivers rather than having
to change course mid-term or continually wait for new extensions. The most critical provision for NCAN members is that institutions will continue to have the ability to waive a parental signature if it cannot be obtained or accept photographs
of documentation for FAFSA verification. Other provisions to note: •Institutions can provide aid disbursements via person-to-person payment apps such as PayPal or Zelle. •Student
loan borrowers in income-driven repayment plans do not need to recertify until one year after they would have needed to recertify in 2020. This gives a clear date for those borrowers for the first time during the pandemic, but this could change if
the government extends the student loan repayment/interest freeze past January.
The U.S. Department of Education extends the current relief of payment, interest-accrual, and defaulted-loan collections for federal student loan borrowers through January 31, 2021. Please read the Education Department's press release.
The White House issued an executive order focused on providing relief for federal student loan borrowers. Student loan borrowers
who have federal direct loans will not not accrue interest or be required to make a payment until 2021. This benefit was originally provided through the CARES Act and was set to expire after Sept. 30. Borrowers with older Ford Federal Education Loan
(FFEL) program loans are still required to pay and must contact their loan servicer for relief support.
The Department released guidance on the use of "professional judgement" to explain that, for the 2019-20 and
2020-21 award years, it will make appropriate adjustments to its risk-based model. ED will not negatively view increased use of professional judgment or use it as a selection criterion for a program compliance review.
The U.S. Centers for Disease Control and Prevention (CDC)
Today, the CDC released a document of considerations for higher education institutions, in anticipation that schools pursue re-openings. This public
release intends to offer institutions, based on what is currently known about COVID-19, ideas to help protect students, faculty, and staff and slow the spread of the coronavirus. The document primarily deals with the appropriate use of testing on
college campuses. The CDC stresses that these considerations are meant to supplement—not replace—any governmental health and safety laws, rules, and regulations to which institutions are legally required to abide by.
On June 17, the Department of Education (ED) published an interim final rule regarding the eligibility of students for the emergency grant aid provided under the Coronavirus Aid, Relief and Economic Security Act. In this rule, ED is reaffirming its position that only Title IV-eligible students should receive the funding.
Today, the Senate Health, Labor, Education, and Pensions (HELP) Committee held a hearing entitled “COVID-19: Going Back to College Safely.” During the hearing college
presidents and public health experts discussed their plans to re-open campus or provide virtual learning, the safest way to do so, offering students options, and the financial support less wealthy colleges need to be able to deliver the necessary
changes. Additionally, two witnesses supported the recommendation to double the maximum Pell Grant for students.
The Department of Education (ED) released additional COVID-19 guidance on regulatory flexibility, on federal student aid issues such as return
of Title IV (R2T4) funds and satisfactory academic progress (SAP). This guidance does not provide institutions with more information as to the student emergency aid grants from the CARES Act funding, if a student does not have a FAFSA on file — thus
clearly meeting the requirement of being Title IV-eligible.
Verification of High School (or Equivalent) Completion Status ED is allowing institutions to verify a student’s high school completion status (for V4 or V5 verification groups) through a signed statement
to attest to secondary school completion, given current challenges in obtaining official completion documentation. This flexibility is granted through Dec. 31, 2020, and is now applicable to the 2019-20 and 2020-21 award years.
Return of Title IV Funds On R2T4 provisions in the CARES Act, ED clarified effective dates and COVID-19 related student withdrawals. Towards waiving the R2T4 requirement to return unearned Title IV grants
and loans, this applies to students who began attendance in a payment period/period of enrollment that includes March 13, 2020 and who subsequently withdrew; including those for an institution already ran a R2T4 calculation and returned funds, in
which case institutions are instructed to re-disburse funds to those students. This guidance also explains that institutions can consider all withdrawals of ground-based students during the stated period to be COVID-19 related; whereas, students enrolled
in distance education (or in cases where institutions did not change operations) would have to provide a written explanation of how a withdrawal was COVID-19 related.
Satisfactory Academic Progress As for SAP, institutions are allowed to exclude attempted credits that were not completed by a student. ED states that a student doesn’t need to appeal, as long as an institution
“reasonably determines” that the failure to complete the credits was a result of COVID-19. The guidance details a list of allowable circumstances and states that if an institution temporarily ceases operations for COVID-19 related reasons, attempted
credits for all impacted students may be excluded.
Today, the IRS announced that the emergency aid grants to students, as provided for in the CARES Act, will not
be taxable; as these grants will be considered official federal disaster assistance. As a result, institutions will not need to provide students who receive emergency grants with related tax documents.
The Department announced today that nearly $1.4 billion in additional funding will be directed to Minority Serving Institutions (MSIs), Historically Black Colleges and Universities (HBCUs) and Tribally Controlled Colleges and Universities (TCCUs), as
well as institutions serving low-income students during the COVID-19 crisis. This funding is part of the Higher Education Emergency Relief (HEER) Fund authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Institutions may use
the funding to cover the cost of technology associated with a transition to distance education, emergency grants for eligible students, and faculty and staff trainings. More information is available on the Office of Postsecondary Education’s CARES Act website.
Today, the president signed into law the Paycheck Protection Program and Health Care Enhancement Act (Public Law No: 116-139). Overall, the law provides nearly $500 billion in funding
for small-businesses, hospitals and for COVID-19 testing. As established by the CARES Act, the Paycheck Protection Program will see an additional $310 billion in funding for loans to small businesses and nonprofits (which can
be forgiven if businesses maintain payroll). There were no education-related provisions in this response package.
Today, the U.S. Department of Education (ED) released new information regarding the Higher Education Emergency Relief Fund, as provided by the Coronavirus Aid, Relief, and Economic
Security (CARES) Act (P.L.116-136). First, ED released a list of answers to frequently asked questions (FAQ) regarding the emergency aid grants that institutions can provide to students. Notably, in this document, ED advises institutions to provide these funds only to students who qualify for federal financial aid, i.e. U.S. citizens and some legal
permanent residents. Additionally, ED released the Certification of Agreement form and guidance for
the institutional portion of the Higher Education Emergency Relief Fund.
Emergency Student Grant Aid
In the student aid FAQ, ED stresses that institutions must provide the emergency aid grants directly to students and that these funds are available for the
specific purpose of students' expenses who experienced disruption of campus operations.
Student Eligibility
The Department clarified that students must be Higher Education Act (HEA) Title IV eligible to receive emergency grant aid. Students must have filed a Free Application for Federal Student Aid (FAFSA) in the past, or demonstrate their
eligibility to file a FAFSA, to receive emergency financial aid grants; such criteria include (but are not limited to the following): U.S. citizenship or eligible noncitizen; a valid Social Security number; registration with selective service (if
the student is male); and a high school diploma, GED, or completion of high school in an approved home-school setting. Lastly, students enrolled in an exclusively online program (as of March 13, 2020) are not eligible to receive emergency grant aid.
Distribution
ED clarified that institutions cannot automatically apply emergency aid funds to a student’s overdue bill or outstanding balance; institutions must provide emergency grant aid directly to students; and this should be through the process
used to pay credit balances to students. This provision can be by checks, electronic transfer payments, debit cards, and payment apps, as long as the process adheres to ED’s requirements for paying credit balances to students. Again, institutions
cannot deduct, from the emergency financial aid grant, a student's debts, fees, or any amounts owed to the institution.
Institutional Portion of Higher Education Relief Fund
ED released full details of, and application for, the funds that institutions
can use for their internal costs. In a letter from the Department, ED provides an overview of the release of funds and encourages institutions to direct funds
to bolster remote learning and student supports. Institutions must first complete the agreement process for the emergency student aid grants before applying for this portion of the relief fund.
Overall, in guidance, ED indicates that institutions should use this funding to cover costs related to "significant changes to the delivery of instruction due to the coronavirus."
Institutions can use funds to: make additional emergency student aid grants; provide refunds for room and board, tuition, and fees; reimburse themselves for refunds made to students on or after March 13, 2020; purchase laptops and other technology
for students; and lastly, reimburse themselves for technology purchased for students on or after March, 13, 2020.
Today, the U.S. Department of Education (ED) announced $3 billion in Governor's Emergency Education Relief
as part of the Education Stabilization Fund in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In
a letter from Secretary Betsy DeVos, she told governors that this is an "extraordinarily flexible emergency block grant" to states and that the
U.S. Department of Education "will not micromanage" how states use these funds. The Secretary also encouraged governors "to focus these resources on ensuring that all students continue to learn." California will receive the largest sum at $355 million,
followed by Texas at $307 million. Vermont receives the smallest portion at $4.5 million in the formula set by both population and poverty rate. The complete state list is available here.
Today, the U.S. Department of Education (ED) announced that it will move to immediately distribute the $6.28 billion in funding for emergency aid grants to postsecondary students, provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed on March 27. The Department prioritized this portion of the funding for institutions, due to the urgency in its distribution to students for emergency cash assistance.
Institutions will receive the funding and be able to immediately begin awarding funds to students, upon completion of a certification and agreement form to ensure the compliance of institutions to federal law. Institutions who quickly complete the form should have access to funds mid-next week, according to information provided in an ED stakeholder call. The Department provides more details on its
Higher Education Relief Fund webpage, and in a document detailing the allocations to institutions.
The breakdown of the Higher Education Relief Fund allocations by state (linked here) and by institutional sector (see table below) are also available,
courtesy of data provided to NCAN by Ben Miller, vice president for Postsecondary Education at the Center for American Progress.
Emergency Aid Distribution By Institutions
Institutions, in compliance with the agreement to receive the funding, are advised to promptly make available emergency financial aid grants directly to students for their expenses related to the disruption of campus operations due to coronavirus (COVID-19)
outbreak. Such expenses include food, housing, course materials, technology, health care, and child-care costs.
Institutions assume significant discretion in awarding the emergency aid to students and can set up their own process for deciding which students receive aid and how much a student is awarded. Students’ eligibility for aid will based on the criteria set
by their individual institution. Institutions can award these funds to any enrolled student and Title IV eligibility is not an explicit requirement. Despite this, ED has not clarified if students who are undocumented, among other students, will have
access through their institution for this emergency aid. The Department is encouraging institutions to distribute aid to students in a way that "first prioritizes the most disadvantaged students with the greatest needs and second supports continued
learning.”
In a letter to college and university presidents, the Department recommends that the maximum amount for a student’s emergency financial aid
grant not exceed the maximum Federal Pell Grant for the applicable award year, currently $6,195. Institutions are strongly encouraged to make any adjustments on a case-by-case basis to exclude individual emergency financial aid grants from the calculation
of a student’s expected family contribution (EFC) for either academic year 2019-20 or 2020-21. These emergency funds do not constitute federal financial aid for determination of EFC.
Moreover, institutions are encouraged to offer their allocations to other schools in their state or region, if their students do not have a large need. The funding must distributed by institutions within one year of its agreement, which means funds received
could be used for AY 20-21 financial aid packages. Lastly, institutions may not use the funding to reimburse itself for any costs or expenses, such as those associated with the delivery of instruction or refunds previously issued to students.
In efforts to address the urgent circumstances facing students and their institutions, the Department released updated guidance on interruptions of study as a result of the coronavirus (COVID-19) outbreak. The guidance covers many areas of federal student aid, such as need analysis and verification. Additionally, on April 3, NCAN requested flexibility with regards to the completion
of the verification process in a letter to the Department.
While some of NCAN's concerns have been addressed, there are still several outstanding questions to be answered. The Department acknowledges in its latest guidance that it is still reviewing the recently passed CARES Act, which became public law on March
27, and intends to provide additional guidance on the areas that require implementation soon. NCAN will continue to update members, as more information becomes available.
Leave of Absence
For the purposes of Title IV fund eligibility, the Department will allow students to take an approved leave of absence, even if the student notifies the institution of this request after the date that the leave began. Additionally, the institution may
retain a student’s Title IV funds for when the student resumes enrollment.
Return of Title IV Funds (R2T4) - Institutional Charges, Refunds, and R2T4 Calculations
Due to the recent passing of the CARES Act, the Department is still reviewing the significant changes to R2T4 requirements and says that it will provide more guidance soon.
Need Analysis
Emergency financial relief assistance received by individuals, whether grants or low-interest loans, from federal or state entities will not count as income for the purposes of the Free Application for Federal Student Aid (i.e. Federal Methodology and
Expected Family Contribution).
Professional Judgment
The Department advises that, where necessary, financial aid administrators use professional judgment authority to more accurately reflect the financial need of currently affected students and families, such as adjustments to the cost of attendance or
in EFC calculations. Institutions must still make and document professional judgment determinations on a case-by-case basis, and follow the Federal Student Aid Handbook.
Satisfactory Academic Progress
Institutions may exclude any attempted credits that were not completed by a student from the calculation of SAP, as a result of a qualifying emergency, without requiring a student appeal. The Department says it will provide more implementation guidance
on this matter soon.
Verification
The Department is easing some requirements of students and institutions regarding the completion of verification. Students, those flagged for verification groups V4 or V5, will not be held to the requirements of notarized documents and in-person submission
to the financial aid office; instead, for example, required documents may be submitted electronically. Also, institutions can accept copies of forms of identification that expired after March 1, 2020. Lastly, the requirements that a dependent student
submit a signed statement by a parent can be waived, if neither parent is available to provide one; institutions will retain these explanations.
Student Loans
Student loans held by the federal government will have a zero percent interest rate and automatic cessation of payments until September 30, 2020. Students with Federal Direct Loans will remain with an “in school” status until the institution reports otherwise.
For federal student loans not held by the federal government, such as some loans under the phased-out Federal Family Education Loan (FFEL) Program and institutionally held Perkins loans, may voluntarily choose to provide these same benefits to borrowers.
Borrowers should contact their servicer or loan-holding entity for more information. Borrowers can find answers to frequently asked questions on this Federal Student Aid webpage.
Lastly, the Department will cease collection activities, such as wage garnishment, on all defaulted federal student loans until September 30, 2020.
Federal Work Study (FWS)
For students who begun FWS employment prior to March 13, institutions may continue to pay a student who: received an FWS award for the award period during which a COVID-19 related interruption occurred on the campus; earned FWS wages from the institution
for that award period; and was prevented from fulfilling the FWS obligation for all or part of the award period due to a COVID-19 related interruption.
Congress: The Coronavirus Aid, Relief, and Economic Security (CARES) Act Becomes Law
The Coronavirus Aid, Relief, and Economic Security Act or CARES Act became public law on March 27 (Public Law No: 116-136). The major higher
education related provisions are detailed below and discussed in a blog post published prior to the enactment.
The Congressional Research Service also published a summary of the CARES Act's higher ed provisions.
Additionally, NCAN hosted a Member Forum on April 2 to provide members with most recent information about how the CARES Act will impact our students, families, and NCAN member organizations. The recording and slide deck for the Member Forum can be
accessed through NCAN's Webinar Archives.
Congress: Senate 'Phase 3' Deal for COVID-19 Includes Aid to Higher Education
At 1 a.m. on March 25, Congress reached a deal on the Coronavirus Aid, Relief, and Economic Security (CARES) Act (S. 3548), the behemoth legislative package that
will provide for emergency support and economic stimulus due to the COVID-19 crisis. The CARES Act is Phase 3 of Congress’ coronavirus response. Senate Majority Leader Mitch McConnell (R-KY) called this a “wartime level of investment into our nation.”
The bill has not yet been voted on or signed into law, but it is expected to move through Congress quickly this week with President Trump already agreeing to sign the bill.
This bill provides higher education institutions with additional funds to provide emergency aid resources to students. It allows institutions to pay Federal Work-Study (FWS) recipients even if they aren’t able to work. The legislation also puts a pause
on student loan interest and payments through Sept. 30, and removes this semester from Pell Grant Lifetime Eligibility Used (LEU) and Satisfactory Academic Progress (SAP) calculations for students unable to complete. Additionally, it provides flexibility
for AmeriCorps service requirements.
NCAN advocated in particular for the LEU, SAP, and emergency aid elements of the bill. A bulleted summary of top-line items is below. Stay tuned for a separate blog post that will dig deeper into the student supports contained in the CARES Act.
Emergency Aid and Financial Support for Students
Emergency Aid from Education Stabilization Fund: Institutions must use 50% of their state stabilization fund dollars for emergency aid for students.
Emergency Aid from SEOG: Institutions of Higher Education (IHEs) may use Supplementary Education Opportunity Grant (SEOG) funds to provide emergency aid to students. Further, IHEs are able to transfer unused Federal Work-Study (FWS)
funds into their SEOG for use as emergency aid. Students seeking emergency aid should contact their financial aid offices.
Federal Work-Study: IHEs are able to continue paying FWS recipients their wages through the end of the academic year if they are unable to continue their work.
Relief of Return to Title IV (R2T4): If a student withdraws due to the COVID-19 emergency, they are not required to return federal student aid to the institution, and the institution is not required to return funding to the federal
government. Students who need to withdraw should talk with their financial aid office to confirm any paperwork the institution needs is filed.
Student Loan Borrowers
Student loan payments: Student loan payments are suspended through Sept. 30, 2020, and those months will still count toward loan forgiveness (both income-driven repayment programs and Public Service Loan Forgiveness (PSLF)).
Cancelled loan obligation: The Department of Education is required to cancel a borrower’s loan obligation if a borrower withdraws from an IHE as a result of a qualifying emergency. This applies to the portion of the loan attributable
to the payment period.
Lifetime Eligibility Used (LEU) and Satisfactory Academic Progress (SAP)
LEU: Students unable to complete the semester due to the COVID-19 emergency will not have that semester count in their total for Pell or federal student loans.
SAP relief: IHEs may exclude any attempted credits not completed by a student from the student’s satisfactory academic progress calculation due to a qualifying emergency.
Leave of Absence: IHEs may provide a student with an approved leave of absence due to a qualifying emergency under certain conditions.
Education Stabilization Fund
How Much: $30 billion fund to provide aid to both PK-12 and higher education.
IHEs are required to use at least 50% of the funds for emergency grants to students related to COVID-19 issues.
Corporation for National and Community Service (CNCS) (oversees AmeriCorps)
AmeriCorps Volunteers: If service is interrupted due to COVID-19, CNCS can deem them to have met their requirements and still award their full education award.
Time and Age Extension: CNCS is also allowed to expand the time frame and age limit for participation after the COVID-19 emergency has ended.
Department of Education
Additional Funding: $40 million for Federal Student Aid, $8 million for program administration, and $7 million for the ED Inspector General.
Modifications for ED: ED is permitted to modify required and allowable uses of funds under certain HEA programs as a result of the COVID-19 emergency.
Late on March 24, the White House announced that it would stop seizing the wages, tax refunds, and Social
Security benefits from federal student loan borrowers whose loans are in default. A defaulted loan is one that has been delinquent for more than
270 days.
Private collection agencies were told to cease collection retroactively from March 13 and to continue the halt "until further notice." In addition, the Department of Education will not refer newly defaulted accounts to the Department of Treasury, which
manages the seizure of tax refunds and Social Security benefits.
The U.S. Department of Education (ED) released a statement today,
affirming President Trump's earlier announcement on March 13 that interest accruing on all federal student loans will be automatically waived by setting the current rates to 0%. The release details that this period of waiving interest accrual will
extend for at least 60 days (from March 13).
Additionally, federal student loan borrowers have the option to suspend payments during this period, as servicers are able to grant an administrative forbearance to those who request one; however, borrowers seeking forgiveness through federal programs
may still want to continue making qualifying payments. Lastly, payments have been automatically suspended for borrowers who are, or become, delinquent by more than 31 days.
To date, the White House has used executive authority to waive interest rates on student loans, Congress has passed two laws (referred to in the media as “phases”) in response to the Coronavirus (COVID-19), and the Department of Education (ED) has announced guidance on interruptions of study related to the coronavirus and federal financial aid.
White House
On March 13, the White House announced that the Secretary of Education will be waiving
interest accruing on all federally held student loans. More information is needed to explain how this would work conclusively, but major news outlets have reported that ED is considering instructing federal loan servicers to lower interest rates to 0%. This would likely not change the amounts of borrowers’ monthly payments but could potentially allow for a greater share of payments to apply to
principal loan balances. This policy change is said to be effective immediately.
Federal student loan borrowers may also request that their servicer put their loan(s) into forbearance, which would mean borrowers would
temporarily not be obligated to make payments. In normal circumstances, interest would still accrue in forbearance and borrowers would pay back more over the life of the loan. However, if the loan is not accruing interest, borrowers using this option
would simply delay the end of their student loan repayment and not increase the total amount to be repaid.
Congress' Three-Phase Plan
Congressional leadership is working to quickly pass a three-phase plan to address immediate needs related to the coronavirus. President Trump has already signed the first two phases into law. Phase 3, which will likely direct payments to all Americans
as well as cover several other areas, such as financial aid flexibility, is expected soon.
Phase 1: The Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (H.R. 6074) was signed into law on Friday, March 6. The bill
provides $8.3 billion in emergency funding for federal agencies to respond to the coronavirus (COVID-19) outbreak; it prioritizes issues such as vaccine development, medical supply production, and grants for state, local, and tribal public health
agencies and organizations. The bill did not contain any provisions pertaining to education.
Phase 2: The second phase, the Families First Coronavirus Response Act (H.R. 6201), was enacted on Wednesday, March 18. The second law in response to the coronavirus outbreak provides for paid sick leave, free coronavirus testing, an expansion of food assistance and unemployment benefits, and requires employers of
health care workers to ensure additional protections.
The provisions that may be most relevant to NCAN members are as follows:
Eligible workers who are caring for a child whose school has closed can expect to receive sick pay through their employer.
Emergency Supplemental Nutrition Assistant Program (SNAP) benefits will be available for families with at least one child who would be receiving free and reduced-price meals and whose school has been closed for at least five consecutive days.
School meal availability will be expanded, with waivers and flexibility for meal distribution outside of schools.
Department of Education
On March 5, the U.S. Department of Education issued guidance on interruptions of study as a result of the coronavirus. The
guidance informed institutions and their financial aid administrators on the authority of professional judgment (still requiring that decisions be made and documented on a case-by-case basis) as it relates to adjusting cost of attendance for students
who are impacted by the coronavirus outbreak. Additionally, the guidance addresses the circumstances in which institutions can continue to provide Federal Work-Study payments to affected students who are no longer able to work.
Additional updates are expected from ED soon.
April 17, 2020: This post has been updated to reflect that ED has not clarified if students who are undocumented, among other students, will have access to the emergency aid to be distributed by institutions, as provided for in the CARES Act.
March 25, 2020: This post has been updated to reflect correct amount of funding for the ED Inspector General.
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