Third Federal Supplemental for COVID-19

On March 27, President Trump signed into law a $2 trillion emergency relief package, the largest economic relief package in American history. The package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (H.R. 748), includes direct payments to Americans, loan and grant assistance to corporations and small businesses, and supplemental appropriations for state and local governments, hospitals and health centers, and the education sector, among other items. While the law does not contain the $60 billion the higher education associations have estimated would be needed for the sector, the funding in this package is significantly more than the $5.8 billion in the original proposal that was rejected twice by the Senate. Details on the third package follow.

The Office of Federal Relations will continue to monitor and advocate for higher education funding in other supplemental packages related to COVID-19 that are expected to develop in Congress over the next few weeks and months.

THIRD SUPPLEMENENTAL PROVISIONS

For Individuals

The CARES Act provides direct payments of $1,200 for individuals making less than $75,000 per year and $2,400 to married couples earning less than $150,000 per year, as well as $500 for each child. Unemployment insurance is extended to four months, the benefits will be bolstered by $600 weekly and eligibility will be expanded to cover part-time, self-employed, and gig economy workers.

For Businesses

The law includes $500 billion that can be used to back loans and assistance to companies. Among this total, $50 billion is available for loans to U.S. airlines. Restrictions have been included in the bill on corporations that end up benefiting from loans or assistance from the Treasury Department. Any company receiving a government loan will be subject to a ban on stock buybacks through the term of the loan plus one additional year. They will also have to limit executive bonuses and take steps to protect workers. The Treasury Department will have to disclose the terms of loans or other aid to companies and a new Treasury inspector general will oversee the lending program. In addition, the bill will block companies owned by the President and his family, the Vice President, Members of Congress, and heads of executive departments from receiving aid.

The package also includes $350 billion in loan forgiveness for small businesses and non-profits. It will also grant $27 billion to the Small Business Administration to provide immediate aid to small businesses. In addition, the law provides a tax credit for companies who retain employees even if they’ve been mandated to close or seen a significant drop-off in business.

For Hospitals, Health Centers and Public Health

The law creates a new $100 billion Marshall Plan-like fund to ensure hospitals and healthcare providers continue to receive the support they need for COVID-19 related expenses and lost revenue. Grants will be given to hospitals, public entities, not-for-profit entities, and Medicare and Medicaid enrolled suppliers and institutional providers to cover unreimbursed health care related expenses or lost revenues attributable to the public health emergency resulting from the coronavirus. It will also provide more than $27 billion for the Biomedical Advanced Research and Development Authority (BARDA) to support research and development of vaccines and therapeutics for COVID-19. Included in this pot is $16 billion for the Strategic National Stockpile for critical medical supplies, personal protective equipment (PPE), and life-saving medicine and another $3.5 billion for manufacturing and purchasing vaccines and therapeutics to combat the virus.

There is also $4.3 billion for the Centers for Disease Control and Prevention (CDC) to support federal, state, and local public health agencies to prevent, prepare for, and respond to the coronavirus. The CDC will receive $1.5 billion in flexible funding to address COVID-19 pandemic. State and local governments will receive $1.5 billion for items ranging from purchasing PPE to laboratory testing. And there is $500 million for global disease detection, $500 million for public health data surveillance, and $300 million for rapid response during outbreaks. In addition, this package has nearly $1 billion for the National Institutes of Health to expand on prior COVID-19 research, including developing an improved understanding of the prevalence of COVID-19, its transmission and the natural history of infection as well as developing countermeasures for the prevention and treatment of its various stages.

For Education

The bill includes $30.75 billion for an Education Stabilization Fund for states, school districts and institutions of higher education for costs related to coronavirus. Among this total:

  • $14.25 billion will be available for institutions of higher education (IHE) to prevent, prepare for, and respond to COVID-19. Nearly $1 billion of this pot is reserved for historically black colleges and universities (HBCU) and minority-serving institutions (MSI), such as Rutgers-Newark. Funds may be used to defray expenses for IHEs, such as lost revenue, technology costs associated with a transition to distance education, and grants to students for food, housing, course materials, technology, health care, and childcare.

Institutions like Rutgers will receive funding via a formula that is based on 75 percent Pell enrollment (excluding those students who are exclusively online) and 25 percent non-Pell enrollment (excluding those students who are exclusively online). In addition, IHEs will be required to use at least 50 percent of their allocations to provide emergency financial aid to students. And there is a requirement that states not cut any previous support to IHEs or need-based grant programs for students unless the Department of Education issues the state a waiver for extraordinary economic loss.

  • $13.5 billion will be available for elementary and secondary education by way of formula-grants to states, which can then distribute funds to local educational agencies to use for coronavirus-response activities.
  • $3 billion is available for governors to allocate at their discretion emergency support grants to local educational agencies that the state educational agency deems to have been most significantly impacted by coronavirus.

For Students

The law allows borrowers to defer payments and interest on federal student loans for up to six months without penalty, but the package does not include any debt cancellation provisions that House Democrats have called for. Student loan borrowers who get assistance from their employers on paying loans back will not have to pay income tax on the aid. And the bill halts involuntary collection activities for defaulted loans such as wage garnishment, reduction of tax refunds, or Social Security benefits.

In addition, the bill will also let students keep their Pell grants and student loans if they leave a school. The Department of Education will be able to waive requirements that schools return Title IV funds for students who drop out. And universities will be allowed to use both Federal Work-Study funds to pay students who are unable to return to jobs and Supplemental Educational Opportunity Grant (SEOG) money to support students impacted by coronavirus.