Answering 8 Common Questions About the CARES Act Related to Higher Education

Colleges have grown accustomed to constantly evolving their tactics ‒ it’s really a requirement in today’s higher education landscape. But the idea of rapid change took on an entirely new meaning when COVID-19 rapidly spread across the globe. The pandemic upended higher education in ways no one could have predicted, forcing schools to cancel events, pause programs and move to fully online courses.

None of these changes are easy to implement, so it’s no wonder colleges are struggling. The good news is lawmakers were quick to realize that these schools would need support. This is why they included $14 billion specifically for higher education in the Coronavirus, Aid, Relief and Economic Security (CARES) Act.

Though you’ve likely done some of your own research on the CARES Act, it can be difficult to identify what it means for your institution. To help you find the information you’re seeking, we’ve compiled answers to some of the most common questions institutions have been asking surrounding the CARES Act.

8 FAQs about the CARES Act for higher education

There’s a good chance that leaders at other institutions share your most pressing concerns. Take a look at the questions below to find the information most relevant to your situation.

1. Why was the Title IV distribution formula created?

While there are two additional categories in the Higher Education Emergency Relief Fund, one reserved for minority-serving institutions and one that can be distributed among schools in need on a case-by-case basis, most colleges and universities will receive the bulk of their financial assistance through the Title IV distribution system. The exact amount each Title IV school receives will vary according to a formula, which is based 75 percent on enrollment of full-time equivalent Pell Grant recipients and 25 percent on enrollment of full-time equivalent non-Pell Grant recipients.

It’s important to note that this methodology doesn’t count students who were exclusively completing their education online prior to the COVID-19 outbreak. We’ll go into further detail on that below.

So why was this formula identified as the best way to distribute roughly $12.5 billion to Title IV schools? Lawmakers really looked to the higher education community to identify the best solution. There was a consensus that the focus should be students with the greatest financial need.

2. Why are online students not counted in the formula?

Given that nearly all students are now online students, it might seem unusual that those enrolled in distance education-only programs prior to the outbreak were excluded from the Title IV formula. This decision was actually made for a good reason.

Take a moment to consider that the mega-universities taking up an ever larger share of the market are the biggest players in the online space. Those schools are feeling the effects of the current crisis far less than most other colleges. Factoring out distance education learners ensures that more money is freed up to support residential schools that desperately need financial support.

3. In what ways does this bill differ from the 2009 stimulus package?

As with the CARES Act, the American Recovery and Reinvestment Act of 2009 can be tricky to unpack. But they key difference is this most recent stimulus bill was designed to work much faster. The Title IV funding formula allows the Department of Education to simply run the numbers, then push out the funds.

4. Are there limitations on how schools can spend the funds they receive?

There are a few restrictions in how colleges and universities can spend their stimulus money, but fewer than you might expect. The most important stipulation is that at least 50 percent of the funds must be used to directly support students. That can include expenses related to course materials, technology needs and childcare.

As for the remaining 50 percent of funds schools receive, there’s quite a bit of freedom in how it’s spent. For many schools, some money will likely go toward training staff to work remotely. But your institution can allocate stimulus money in nearly any way, with a few exceptions. Those funds cannot be used for endowments, improvements to athletic facilities, religious worship or pre-enrollment activities. That final restriction is particularly important to make note of, because it includes efforts to recruit new students.

5. Aside from funding, what other relief does the CARES Act provide for institutions?

There are 13 additional provisions that apply to colleges and universities. They’re intended to provide schools with as much flexibility as possible. While some of them are quite specific, others are relevant to just about every institution. The most notable provisions are suspending required student loan payments through September 2020 and waiving matching requirements for Federal Work-Study (FWS) and Federal Supplemental Educational Opportunity Grants (FSEOGs)

6. Do schools need to do anything specific to receive their funds?

According to Secretary of Education Betsy DeVos, her team is working to distribute funds immediately. As far as what schools need to do, it’s pretty minimal. There’s no formal application process, but every institution does need to upload a completed Certificate of Agreement to the Grants.gov website. The Department of Education provides all the relevant information and documents.

7. Will there be more legislation that assists higher education?

Though the CARES Act just passed, discussions are already underway for additional legislation. This relief effort, which has garnered the nickname “Corona 4,” isn’t much more than an idea at this stage. This makes it hard to predict whether there would be additional funding for higher education. But evidence so far suggests that such a bill would focus mostly on assisting hospitals, small businesses and local governments.

8. Do colleges and universities have the ability to receive financial support in other ways?

The short answer is yes, but there are some caveats. Historically black colleges and universities (HBCUs) and other minority-serving institutions are eligible to seek assistance from a reserved $1 billion fund. And schools that are deemed to have extraordinary needs, which could include smaller schools that are primarily online institutions, can receive assistance through the Department of Education’s discretionary fund. The portion of colleges that qualifies for either of these funds is notably small.

It’s also important to keep in mind that $3 billion has been allocated to state governors to use toward education. That also includes K-12 schools, but colleges and universities that have a good relationship with their heads of state could potentially receive additional support through this fund.

Lastly, smaller colleges and universities may qualify for the Paycheck Protection Program through the Small Business Administration. This option is a loan that will ultimately be forgiven if all employees are kept on payroll for eight weeks. A key eligibility requirement is that your school have no more than 500 employees, which can get tricky. It’s not necessarily a matter of how many staff are full time that matters, but the status of all those staff members. A 1099 contractor, for instance, likely would not count as an employee. But a W-2 adjunct professor, even if they only work part time, would count toward that 500 maximum.

Find the support your institution needs

The fallout from COVID-19 has disrupted higher education in ways that were unimaginable. But you’re not alone in facing this new reality. Your fellow colleges and universities are dealing with the same challenges and asking the same questions.

Of course, it’s helpful to have a dedicated partner to assist with navigating the unknown. Collegis Education has years of experience supporting higher education institutions like yours through admissions training, technology optimizations and data-driven marketing strategy. You can find additional resources and learn more about what we’re doing to support schools in these uncertain times by visiting our regularly updated post, “How Collegis Is Responding to the Coronavirus (COVID-19) Pandemic.”