Your blum education professionals are dedicated to monitoring further legislation and will continue to share our observations as it develops.
Your blum education professionals are dedicated to monitoring further legislation and will continue to share our observations as it develops.
On March 27, 2020, Congress passed, and the President signed into law, The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)—a roughly $2 trillion stimulus intended to aid struggling businesses, boost unemployment benefits and provide direct payments to individuals. In addition to certain guidance provided by the Department of Education earlier in March to ease certain compliance requirements, the CARES Act includes a number of provisions that provide for budgetary, compliance and tax relief for institutions of higher education, as well as allocations for state, local and tribal institutions. The Education Provisions in the law are categorized and discussed below:
The law includes approximately $31 billion of funding for educational institutions to prevent, prepare for, and respond to coronavirus, domestically and internationally. The funding is allocated as follows:
Higher Education Emergency Relief Fund
Approximately $13.9 billion is available for colleges and universities to directly assist students with urgent needs and support the institutions’ needs directly related to coronavirus.
The law stipulates that no less than 50% of the awarded funds shall be used to provide emergency financial aid grants to students for expenses incurred as a result of the coronavirus. Eligible expenses include food, housing, course materials, technology, health care and childcare. Institutions may use funds received under this provision to cover any costs associated with changes to the delivery of instruction resulting from the coronavirus. However, funds may not be used for expenses related to pre-enrollment recruiting, endowments, or capital outlays for athletic, sectarian instruction or religious worship facilities. Lastly, a final provision in this section of the law requires that the institution “shall to the greatest extent practicable, continue to pay its employees and contractors….”.
Elementary and Secondary School Emergency Relief Fund
Roughly $13.2 billion has been reserved for elementary and secondary school emergency relief grants to each State educational agency.
Governor’s Emergency Education Relief Fund
Approximately $2.9 billion of funding shall be made available to Governors of each state for emergency support grants. Distribution of funds will be based on their determination of those public and private institutions (elementary and secondary schools, colleges and universities) most significantly impacted by the coronavirus and those deemed to be essential for carrying out emergency educational services to students, including childcare, early childhood education, social and emotional support, and the protection of education-related jobs. The appropriations will be made using a formula that prorates the funding on the basis of the population aged 5 through 24 and the number of primary and secondary school-age children in the state. The Governors may exercise flexibility and discretion in the manner of allocation.
Campus-Based Aid Waivers
Use of FSEOG for Emergency Aid
FWS During a Qualifying Emergency
Federal Student Loan Borrower Relief
Provisions Related to Semesters or Equivalent Not Completed Due to COVID-19
Service Obligations for Teachers:
The CARES Act contains a number of important business and individual tax provisions. A summary of the provisions applicable to educational institutions follows and are explained in more detail in our article “President Signs CARES Act – Including Paycheck Protection Program”.
Business Provisions
Individual Provisions
Your blum education professionals are dedicated to monitoring further legislation and will continue to share our observations as it develops.
Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statutes, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.
Disclaimer: The contents of this resource are for general informational purposes only. While every effort has been made to ensure its accuracy, the information is provided “as is” and no representations are made that the content is error-free. We have no obligation to update any content, comments or other information for retroactive or prospective interpretations or guidance provided by regulators, financial institutions or others. The information is not intended to constitute legal advice or replace the advice of a qualified professional. There are areas of the CARES Act where additional clarification from the Treasury Department and the SBA is needed. Your judgment and interpretation of the act may be needed. Users should consult with their legal counsel and representatives of the lending institution regarding the proper completion of their application and supporting documentation