March 30, 2020

What’s in the Latest Coronavirus Recovery Package for Students and Schools?

Policy and Advocacy


The third – and by far the largest – COVID-19 relief package approved by Congress was signed into law by President Donald Trump last Friday. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides $2 trillion to help blunt the economic impact of the coronavirus outbreak by loosening up regulatory constraints and delivering new funding for individuals, impacted industries and our healthcare system.

Education Funding

The legislation establishes a $30.75 billion Education Stabilization Fund to help schools, students and communities cope with the coronavirus outbreak. The pool of money is split between K-12 education, higher education, and state governors. These allocations are formulaic, with K-12 funding based on Title I shares, and higher education funds sent directly to institutions based on a Pell student enrollment ratio. Specifically, the funding package includes:

  • $14.25 billion, or 46 percent, for higher education emergency relief, and $13.5 billion, or 43 percent, slated for elementary and secondary education.
  • No less than fifty percent of the money provided to higher education institutions will be distributed directly to students. This aid must help pay for students’ daily necessities, like housing, food, health care, technology and childcare.
  • About $1 billion is marked for minority-serving institutions.
  • Almost $350 million is devoted to higher education institutions that are severely impacted by the coronavirus outbreak.
  • State governors are given $3 billion, based on a formula that factors in the population between the ages of 5-24 and the population of qualifying K-12 students, to distribute as they see fit.

Protections for Student Borrowers

The bill provides emergency relief to student borrowers for six months to provide protection during this period of economic hardship. These temporary policy changes will impact 95 percent of all student borrowers. Some of the provisions that remain in effect through September 30, 2020 include:

  • Pausing payments on all federally held student loans.
  • Freezing interest accrual on those loans.
  • Restricting involuntary collections (e.g., garnishment of wages, Social Security and tax refunds), as well as negative credit reporting of borrowers in default.
  • Counting suspended payments toward Public Service Loan Forgiveness and income-driven repayment plans.

The actions listed above are automatic, so eligible borrowers do not need to affirmatively request them from their loan servicer or the U.S. Department of Education (ED). Additionally, these actions do not apply to Perkins Loans or Federal Family Education Loans held by private lenders. However, congressional leaders have introduced several bills that would remedy this discrepancy if enacted.

Several requirements are placed on ED so that student borrowers remain fully informed of the new changes to their loan obligations. Within the next two weeks, ED must notify student borrowers about any applicable six-month freeze to their federally held payments, interest accrual, and debt collection, as well as borrower options to keep paying down loan principal during this period, if the borrower wishes to do so. On August 1, 2020, ED must start sending at least half a dozen notices – electronically, by telephone, or via mail – to student borrowers that list when their normal payment obligations will resume and that they have the option to enroll in an income-driven repayment plan.