June 17, 2020

Interim Final Rule Issued for CARES Act’s Higher Education Emergency Student Grant Eligibility

On June 17, 2020, the U.S. Department of Education (ED) promulgated an interim final rule concerning the eligibility of postsecondary students for emergency student grants under the Higher Education Emergency Relief Fund (HEERF) provisions of the Coronavirus Aid, Relief and Economic Security (CARES) Act. The rule largely restates and codifies ED’s April 21, 2020 sub-regulatory guidance regarding student eligibility for HEERF grant aid, namely that only students who are eligible to receive federal student financial aid under Title IV of the Higher Education Act may receive such HEERF grants. In a press release accompanying the rule, Secretary DeVos characterizes the rule as preventing “waste, fraud and abuse” and “eras[ing] any uncertainty some institutions have expressed” regarding student eligibility. As an interim final rule, it is immediately effective as of its June 17, 2020 publication. ED will accept public comments on the rule for 30 days, or until July 17, 2020.

As under ED’s previous sub-regulatory guidance, the rule excludes from HEERF emergency grant eligibility any student who is not eligible for Title IV federal student aid under Section 484 of the Higher Education Act (HEA). This exclusion covers most non-citizen students, as well as students who are ineligible due to lack of a valid Social Security Number, dual secondary school enrollment, failure to possess a high school diploma or recognized equivalent, failure to meet satisfactory academic progress requirements (if a currently enrolled student), prior federal student loan defaults, failure to register with Selective Service (if the student is male), prior fraudulent receipt of Title IV loans in excess of annual or aggregate limits, a federal or state conviction for drug possession or sale (subject to certain time limitations), or enrollment in an educational program that itself is not eligible for Title IV participation.

An institution may verify that a student is eligible under Section 484 of the HEA, and therefore eligible for HEERF emergency aid, through a student’s current-year Free Application for Federal Student Aid (FAFSA). For students who do not wish to complete a FAFSA but indicate that they are otherwise eligible for Title IV assistance, an institution may design an application in which the student attests, under penalty of perjury, that the student meets the eligibility criteria required by Section 484 of the HEA. Additionally, ED’s earlier sub-regulatory guidance held that students enrolled in exclusively online educational programs on or before March 13, 2020 are not eligible for HEERF emergency grants, and this rule does not change that exclusion.

Importantly, ED has indicated that it will only enforce the eligibility restrictions established by the rule for HEERF emergency grants disbursed by institutions to students after the rule’s effective date (June 17, 2020)*. We are continuing to closely monitor developments from ED and other education regulatory authorities related to the coronavirus pandemic and other matters. Should you have questions regarding this or other educational regulatory matters, please do not hesitate to contact any member of our Education team, or your usual contact at Faegre Drinker.

* Note that ED’s eligibility limitations for HEERF emergency student grants, as reflected in both its April 21, 2020 sub-regulatory guidance and this interim final rule, has been challenged in federal court by both the State of Washington and the California Community College system. On Friday, June 12, the U.S. District Court for the Eastern District of Washington preliminarily enjoined ED from implementing or enforcing the provisions in the April 21, 2020 guidance and the interim final rule. The injunction applies only to students in Washington State. Similarly, on June 17, 2020, the U.S. District Court for the Northern District of California also preliminarily enjoined ED from implementing or enforcing these provisions. That injunction applies only to students of the California Community College system. The interim final rule described above will therefore take effect for all other students nationwide.

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