NAICU Washington Update

Education Department Takes Two Unusual Steps on CARES Act Guidance

May 29, 2020

The Department of Education posted two unusual updates on its higher education CARES Act guidance webpage that indicate changes in direction on the bill’s implementation. The first was an update to the formula allocation and methodology for the Fund for the Improvement of Post-Secondary Education (FIPSE) grants and the second dealt with guidance on eligibility for the student emergency funds.

In response to concern and confusion about the $350 million provided in the CARES Act through FIPSE Grants (), the department removed the list of colleges and formula allocations it had originally posted on its CARES Act website. In place of the list, the department posted: “Revisions are being made in the formula allocation table and methodology for this program.” 

According to the CARES Act, these funds are intended to provide additional funding for institutions that “demonstrate significant unmet needs related to expenses associate with coronavirus,” with particular consideration given to smaller institutions that did not receive at least $500,000 under the Higher Education Emergency Relief Fund (HEERF).

In an attempt to get funds out quickly to struggling schools, the department initially decided to distribute the money by a formula, rather than run a grant competition, which would traditionally be done through FIPSE. In doing so, the Trump Administration had announced it was simply going to take all institutional allocations that fell below $500,000 and bump them up to $500,000.

The department has been criticized for interpreting the law in this manner. For example, some schools were surprised to be eligible for any additional funds while others decided not to request the additional funding. As a result, the department is reconsidering how to distribute the resources going forward. 

The department also clarified that its guidance is not fully binding, stating “guidance documents lack the force and effect of law.” In particular, the department cited issues surrounding the question of student eligibility for CARES emergency grants. Previously, the department warned that students must otherwise be eligible for federal student aid to receive CARES emergency student grants. This ruling has been controversial because it effectively excludes international and DACA students, male students who had not registered for the draft, those who had been convicted of certain drug offences, and others. However the recent notice specifically cited the guidance limiting CARES grants to these students as an example of where guidance did not trump the law.  

The unusual statement adds to the confusion of what standards institutions will be held to by the department when it assesses the appropriateness of CARES expenditures. The department has been facing increasing scrutiny from Congress over its implementation of the CARES Act in general, and the student eligibility issue in particular.  

Adding to the pressure is a new analysis by the non-partisan Congressional Research Service that strongly questions the department’s authority to limit student eligibility as well as a suit by the California Community Colleges challenging the department on this issue. The department’s new disclaimer could have been a proactive legal move.  In either case, NAICU will continue to monitor the implementation of the CARES Act and advise its member institutions on best practices in expending CARES funding.

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