This provides the key provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). AACS continues to urge you to follow all safety guidelines issued by the CDC and your local and state health agencies. Please also continue to monitor the U.S. Department of Education’s COVID-19 site,, as well as your accreditor and state education agency COVID-19 guidance.

Congress has responded to the massive social and economic impact of COVID-19 by providing critical financial relief direct to institutions of higher education, temporary regulatory flexibility, and waivers to assist students and institutions with COVID-19 interruptions. AACS aided in the successful inclusion of our students and institutions.

This bill was a massive $2.2 trillion package. As you can imagine, the bill is very lengthy and detailed. We have tried our best to break it down so it’s easier to understand the direct impact it will have on your students, your institution and your community. Remember this communication only includes the most relevant information for you and our best approximations of the amounts of available relief based on statutory language. We will continue to provide more detailed guidance on key provisions and additional implementing guidance as it becomes available.

Please note that the additional funding and flexibilities being provided come with heightened oversight by the Inspector General, enhanced recordkeeping and reporting requirements. Institutions should ensure that they monitor and stay compliant with all reporting and recordkeeping requirements set forth in the Act and by the Secretary through future implementing guidance.


The bill addresses the economic impacts of, and otherwise responds to, the COVID-19 (coronavirus) outbreak.

With respect to funding assistance, the bill:

  • Provides approximately $14 Billion through the Higher Education Relief Fund directly to institutions from the Secretary
  • Provides approximately $3 Billion to states through the Governor’s Emergency Education Relief Fund, some of which is authorized to go to institutions of higher education.

With respect to small businesses, the bill:

  • establishes, and provides funding for, forgivable bridge loans
  • provides additional funding for grants and technical assistance.

The bill also provides funding for $1,200 tax rebates to individuals, with an additional $500 payments per qualifying child. The rebate begins phasing out when incomes exceed $75,000 individually (or $150,000 for joint filers).

The bill establishes limits on requirements for employers to provide paid leave.

With respect to taxes, the bill:

  • establishes special rules for certain tax-favored withdrawals from retirement plans;
  • delays due dates for employer payroll taxes and estimated tax payments for corporations; and,
  • revises other provisions, including those related to losses, charitable deductions, and business interest

With respect to education, the bill provides regulatory flexibility and relief:

  • temporarily suspends payments for federal student loans
  • otherwise revises provisions related to campus-based aid, supplemental educational-opportunity grants, federal work-study, subsidized loans, Pell grants, and foreign institutions.
Summary of Key Provisions


  • The Education Stabilization Fund provides $30.75 Billion, available through September 30, 2021, to prevent, prepare for, and respond to COVID-19, domestically and internationally.

Sec. 18001 – Allocations

The $30.75 Billion in Education Stabilization Fund will be allocated by the Secretary of Education as follows:

  • Two Percent Set Aside: (1) Up to ½ of 1 percent for outlying areas; (2) up to ½ of 1 percent for Secretary of Interior, Bureau of Indian Affairs funded schools, and (3) up to 1 percent for grants to States with the highest COVID-19 burden, distributed via applications received from states.
  • Remaining 98%: The remaining approximately $30 Billion of the Fund is to be allocated as follows: (1) 9.8 percent (approximately $3 Billion) for the Governor’s Emergency Education Relief Fund under Section 18002; (2) 43.9 percent (approximately $13.1 Billion) for the Elementary and Secondary School Relief Fund under Section 18003; and (3) 46.3 percent (approximately $13.9 Billion) for the Higher Education Relief Fund under Section 18004.

Institutions of higher education are eligible for funds through both a state grant awarded via the Governor’s Emergency Education Relief Fund and directly from the Secretary via the Higher Education Relief Fund.

Sec. 18002 – Governor’s Emergency Education Relief Fund

  • Approximately $3 Billion in Emergency Education Relief grants will be made available by the Secretary to the Governor of each State with an approved application. The Secretary will issue a notice inviting applications not later than 30 days after enactment of the Act and must approve or deny the application no later than 30 days after receipt.
  • The amount of each state grant will be determined: (1) 60 percent on the basis of their relative 23 population of individuals aged 5 through 24 and (2) 40 percent on the basis of their relative number of children counted under section 1124(c) of the Elementary and Secondary Education Act of 1965 (referred to under this heading as ‘‘ESEA’’).
  • The funds can be used to provide emergency grant support to local educational agencies and institutions of higher education most significantly impacted by coronavirus or that are needed to provide emergency educational services.

Institutions of higher education in high impact states (like New York) should be working with state education agencies and the Governor’s office to ensure that applications for education relief funds in highly impacted states are submitted within the deadlines provided by the Secretary.

Sec. 18004 – Higher Education Relief Fund

Provides approximately $14 Billion in funding directly from the Secretary to institutions of higher education based on the following allocation:

  • 90% (approximately $12.5 Billion), 75% of which would be apportioned “according to the relative share of full-time equivalent enrollment of Federal Pell Grant recipients who are not exclusively enrolled in distance education” and 25% “according to the relative share of full-time equivalent enrollment of students who were not Federal Pell Grant recipients.”
  • The remaining 10% is allocated to Hispanic serving, HBCU, Native and other special category institutions. All funds are to be made available directly from the Secretary to the institution via the existing Title IV fund distribution system.
  • Institutions must allocate at least 50% of the funds for emergency financial aid grants to students and may use remaining funds “to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus, so long as such costs do not include payment to contractors for the provision of pre-enrollment recruitment activities; endowments; or capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship.”

Institutions will be required to submit reports to the Secretary regarding the expenditure of all funds, and careful accounting records should be maintained regarding the expenditure of all such funds.

Sec. 18006. Continued Payment to Employees

  • The Act requires any entity receiving funds to continue to pay its employees and contractors during any disruption related to COVID-19 “to the greatest extent practicable”

Sec. 1102. Paycheck protection program.

This section includes a summary of the covered loan program that will go in effect for small businesses, sole proprietors and independent contractors under Title I ─ Keeping American Workers Paid and Employed Act.

The Senate has instructed that $349 billion be made available under this program.
A single loan can be an amount of up to $10 million.

Eligible entities include: A small business concern (defined in section 3 of the Small Business Act (15 U.S.C. 636)) will be eligible to receive a covered loan if the business employs either (1) fewer than 500 employees or (2) if applicable, the size standard in number of employees established by the administration for the industry in which the business concern operates. A business with fewer than 500 employees that has more than one location, including franchise businesses.

Any business that employs not more than 500 employees per physical location of the business concern and at the time of disbursal of the loan has a NAICS Sector 72 code, which includes restaurants, food services and the hospitality industry.

Borrower requirements: In making the determination of a borrower’s eligibility for a loan, the borrower has to have been in business since at least February 15, 2020, and have had employees for which it was paying salaries or payroll taxes, or paid independent contractors.

Eligible recipients must certify: (1) the uncertainty of current economic conditions make the loan necessary to support the ongoing operations of the business; (2) funds will be used to maintain workers and payroll, and make mortgage, lease and utility payments; (3) the loan request is not duplicative of other amounts applied for through the SBA; and (4) during the period between February 15, 2020, and December 31, 2020, the eligible recipient has not received amounts from the SBA for a duplicative purpose.

Eligible recipients do not have to demonstrate that they are unable to obtain credit elsewhere. The loans will be nonrecourse and will not require collateral. Covered loan period begins on February 15, 2020, and ends on June 30, 2020. The application must be submitted during this period. Lenders decide eligibility, not the SBA. Lenders must waive borrower and lender fees.

Loans can be used for payroll costs, costs related to the continuation of group healthcare benefits and insurance premiums, employee salaries (not in excess of $100,000 annually per employee), payment of interest on any mortgage obligations, rent, utilities and interest on any other debt obligations. Principal on loans cannot be paid or prepaid with the loan proceeds.

Eligible payroll costs for an independent contractor or a sole proprietor include the sum of payments of any compensation received that is a wage, commission, income, net earnings or similar compensation that is not more than $100,000 in one year (prorated for the covered period).

Maturity: The covered loan will have a maximum of 10 years to maturity. However, there is a provision for reduction of the amount due (see loan forgiveness below).

Interest Rate: The interest rate cannot exceed 4%.

Sec. 1106. Loan forgiveness.

A compelling part of the program is loan forgiveness, which provides that a recipient of a covered loan may seek forgiveness for a covered loan, a covered mortgage obligation (any liability of the borrower for a mortgage on real or personal property) or a covered utility payment. The amount to be forgiven is the amount that a borrower would expend during the covered period (an eight-week period beginning on the date of origination of the loan) on the sum of any payroll costs, payments of interest on a mortgage, rent and utility costs. Any amounts forgiven will not be included in an individual’s gross income.

Deferral of payment obligations for impacted borrowers: An eligible recipient that started operations on or before February 15, 2020, and submitted an application for a covered loan through the existing SBA program or a 7(a) loan that has been approved or pending approval after the enactment of the CARES Act is presumed to be impacted by COVID-19, and thus an “impacted borrower.” During the covered period, the administrator of the SBA must consider each applicant to be an impacted borrower and will require lenders to provide complete payment deferral for impacted borrowers with covered 7(a) loans for a period of not less than six months and not more than one year, including payment of principal, interest and fees.


Sec. 3503. Campus-Based Aid Waivers

For higher education institutions participating in campus based (Federal Work Study) aid programs, for Award Years 2019-2020 and 2020-2021, this provision instructs the Secretary of Education to waive the requirement for a non-federal matching share of federal funds provided, except that such non-federal share is not waived where an institution is operating a program of part-time employment of its students in work for a private for-profit organization and that organization is required to pay such non-federal share pursuant to Section 443(c)(3) of the HEA.

Sec. 3504. Educational Opportunity Grants

This provision provides flexibility for use by institutions of their allocation of federal funds for the distribution of Supplemental Educational Opportunity Grants (SEOG) to help meet unexpected and expenses for undergraduate and graduate students as a result of COVID-19 (qualifying emergency). The amount of the funds awarded cannot exceed the maximum Federal Pell Grant amount for the applicable award year. The funds can be distributed via a scholarship granting organization. The provision further provides that such funds are not to be treated in the Title IV financial need calculation.

Sec. 3505. Federal Work-Study During Qualifying Emergency

Provides that institutions may continue to pay FWS funds to students enrolled at an institution who received a work-study award for the academic year during which the qualifying emergency occurred, where the student earned FWS wages from such eligible institution for such academic year; and the student was prevented from fulfilling the student’s work-study obligation for all or part of such academic year due to COVID-19. The non-federal matching share is required except for the award year 2019-20 and 2020-21 waiver in Section 3503.

Sec. 3506. Adjustment of Subsidized Loan Usage Limits

This provision instructs the Secretary to exclude from the period of enrollment for federal loan purposes that semester (or equivalent payment period) that the student does not complete due to the qualifying emergency. This essentially re-sets the subsidized loan usage period for students who withdraw during the payment period in which the qualifying emergency occurred.

Sec. 3507. Exclusion from Federal Pell Grant Duration Limit

This provision instructs the Secretary to exclude from a student’s Pell Grant duration limit the semester (or equivalent payment period) that the student does not complete due to the qualifying emergency. This essentially re-sets the Pell Grant duration availability to hold the student harmless from withdrawal due to a qualifying emergency.

Sec. 3508. Institutional Refunds and Federal Student Loan Flexibility

This provision directs the Secretary to waive Return to Title IV (R2T4) institutional refund requirements for Title IV loans and grants for students who withdraw during the payment period or period of enrollment as a result of the qualifying emergency. The provision also relieves students of any obligation to return unrefunded Pell or grant amounts that are subject to the R2T4 waiver. The practical effect is to avoid financial impacts to institutions and students from reduced availability of loan and grant aid caused by COVID 19 interruptions.

Schools will be required to report to the Secretary the number of Title IV recipients subject to the waiver, the amount of grant or loan assistance, and the amount not returned via an R2T4 calculation. Institutions should be aware that state, accreditor or institutional refund policies may still apply, as this applies only to Title IV funds returns.

Sec. 3508(d). Leave of Absence

This provision provides authority for institutions of higher education to provide a student with an approved Leave of Absence (LOA) that does not require the student to return to the same point in the program at which the student began the leave of absence if the student returns within the same semester (or equivalent). This provision provides flexibility as to resumption of course work for students whose attendance is impacted by COVID-19.

Institutions must have a formal written policy regarding leaves of absence requiring that all requests for LOA be submitted in writing. Institutions should carefully document LOA circumstances for each impacted student for purposes of annual Title IV compliance audits or program reviews.

Sec. 3509. Satisfactory Progress

This provision permits institutions to exclude from the quantitative (attendance) component of the Title IV Satisfactory Academic Progress (SAP) student eligibility requirement any attempted but not completed credits, without requiring an appeal, for students whose attendance is impacted by COVID-19. This provision ensures that students whose attendance is impacted by COVID-19 are not put at risk of losing Title IV eligibility based on interrupted attendance due to COVID-19.

Sec. 3513. Temporary Relief for Federal Student Loan Borrowers

This provision directs the Secretary to suspend all federal student loan payments through September 30, 2020 without interest accrual and treats nonpayment during the suspended period as if the payment was made for purposes of any loan forgiveness or rehabilitation program and ensures that there is no negative credit report impact from non-payment during the suspension period. The provision also directs the Secretary to suspend collection related activity on loans including wage garnishment and tax refund reductions. The practical impact of this provision is to ensure that individuals in current repayment for federal student loans are not burdened by loan repayment obligations through September 30, 2020.


Sec. 3517. Waiver Authority and Reporting Requirement for Institutional Aid

This provision allows the Secretary to waive eligibility data requirements, allotment requirements, and references to the previous academic year in several sections of the Higher Education Act (HEA) for institutions of higher education receiving assistance under Title III (HBCU), V (Hispanic serving), or VII(A)(4) (HBCU Masters) of the HEA at the time of the emergency starting from the first day of the emergency through September 30, 2021 (the fiscal year following the end of the emergency). The Secretary can also waive or modify any statutory or regulatory provision to ensure that the same institutions are not adversely affected by formula calculation for the fiscal year 2020, for the period through the emergency and September 30 of the following year. Any funds paid to the institution not expended or used for their approved purposes within 5 years can be carried over to the next 5-year period.
Note that Congress scaled back the Secretary’s waiver authority for institutions other than those covered by the foregoing Titles. The Secretary’s curtailed authority in statute to grant waivers of certain Title IV institutional eligibility requirements related to financial responsibility composite scores, annual audit deadlines, and 90/10 rule compliance, among other areas, may present significant compliance concerns for many institutions. Efforts are already underway to try to expand the Secretary’s authorities in these areas in a Phase IV stimulus/relief package.

As always, remember that the AACS team is here to support you and your institution in any way we can. Our Coronavirus Resource Center is continuously updated with the most relevant information from the Federal Government and on a State-by-State basis. We are also tracking relevant news articles and commentary on the education sector overall so remember to use this valuable tool as a resource.


This analysis summary was provided by Duane Morris. If you have additional questions please email