Special Coronavirus Bulletin #6: The CARES Act May Provide Temporary Breaks on Your Federal Student Aid

Yesterday the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law. The Act makes temporary changes to federal student aid programs that take the place of any similar measures announced by the President or ED. Here are these changes affecting federal aid recipients:

Federal Direct Loan Program (FDLP)

  • Loan Payments and Interest Accumulation Suspended: The Act suspends all FDLP loan payments due and interest accumulation that would take place through September 30, 2020. Nevertheless, these months must count as if borrowers made payments when adding up the months required to qualify for all FDLP loan forgiveness and default rehabilitation programs.
  • Garnishments Suspended: To reduce their debts, ED normally garnishes (seizes) money defaulted borrowers would otherwise receive from federal benefit programs, federal tax refunds, and wages. The Act suspends all these garnishments through September 30. ED has reportedly confirmed that garnished tax refunds in process on March 13 will soon be sent to borrowers.
  • Notices to Borrowers: The Act gives ED 15 days to notify borrowers of these suspensions, and that they may still make payments if they wish. Beginning August 1, ED must provide borrowers at least 6 notices describing when their normal payments will resume, the FDLP’s income-driven repayment plans, and borrowers’ rights for switching to those plans.

Federally Funded Emergency Grants

  • Washington allocates money for Federal Supplemental Educational Opportunity Grants (FSEOGs) to postsecondary schools every year to help exceptionally-needy undergraduates. Through September 2021, the Act allows schools to redirect some or all of these allocations to emergency grants for undergraduate and graduate students suffering unexpected expenses or unmet financial need due to qualifying emergencies*. FSEOG allocations are fairly small and, at this point in the aid process, most FSEOG money has already been committed, so this may not add huge amounts to emergency grant programs.

Federal Pell Grants

  • Pell Grant eligibility is limited to 150% of the normal length of recipients’ undergraduate programs — e.g. students in 8-semester programs may get Pell for up to 12 semesters. The Act authorizes ED to exclude academic terms for which Pell Grants are received from this “150% rule” if students don’t finish them due to qualifying emergencies*.

Federal Work-Study (FWS)

  • If FWS jobs for an academic year get disrupted due to qualifying emergencies*, the Act allows postsecondary schools to pay for all or part of what students awarded FWS would have earned during that year, provided the students already began work in their FWS jobs. The Act doesn’t require schools to do this — and doing it may generate some extra costs for schools — so check with your financial aid office if your FWS job’s been disrupted.

Withdrawing Due to Coronavirus

  • Accelerated Federal Aid Repayment: Students withdrawing from school before the 60% point of the terms for which they got federal aid are immediately liable for repaying at least part of that aid. The Act exempts students from such liabilities if they withdraw due to qualifying emergencies*.
  • Satisfactory Academic Progress (SAP): Students must maintain SAP, in part by completing a certain percentage of the credits they attempt, to continue receiving federal aid. The Act allows schools to exempt credits not completed due to qualifying emergencies* when determining SAP.

* Qualifying Emergencies are coronavirus-related emergencies declared by the President or Secretary of Health and Human Services. This includes the current Presidentially-declared coronavirus national emergency.

Follow this website to receive future Special Coronavirus Bulletins as additional information becomes available to College Affordability Solutions.

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