Government Issues Rule to Restrict Eligibility for Emergency Aid

June 11, 2020

The U.S. Department of Education has issued an interim final rule blocking some students from qualifying for the emergency financial aid grants to students that were authorized by the CARES Act.

This regulation will have the force and effect of law.

The Interim Final Rule

The interim final rule is titled “Eligibility of Students at Institutions of Higher Education for Funds under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.”

This regulation limits eligibility for emergency financial aid grants to students who are, or could be, eligible for Title IV federal student aid.

In effect, this limits eligibility for emergency financial aid grants to a student who:

Files the Free Application for Federal Student Aid (FAFSA).
Is enrolled in an eligible institution and pursuing a degree, certificate or other recognized educational credential.
Is not concurrently enrolled in elementary or secondary school.
Is a high school graduate or has a G.E.D. or the equivalent or has completed a secondary school education in a home school setting that satisfies state requirements.
Maintains Satisfactory Academic Progress (SAP), including having at least a 2.0 GPA on a 4.0 scale.
Does not owe a refund on a grant or student loan.
Is a U.S. Citizen, Permanent Resident or an eligible non-citizen. International students and undocumented students are not eligible.
Is not in default on a federal student loan.
Has a Social Security Number (SSN).
Has registered with Selective Service, if born male.
Has not had a federal or state conviction for the sale or possession of a controlled substance during a period of enrollment for which the student received federal student aid.
Signs a statement of educational purpose stating that federal student aid funds will be used “solely for expenses related to attendance or continued attendance” at the college or university.

Many veterans with G.I. Bill funding do not file the FAFSA and so would be ineligible for the emergency financial aid grants to students.

The U.S. Department of Education acknowledges in the final rule that barriers to FAFSA completion “are particularly challenging for low-income, minority, and first-generation students.” The requirement to file a FAFSA may also affect foster youth, students who are single parents and disabled students.

The interim final rule allows an alternative to the FAFSA that may not be entirely adequate in determining eligibility.

Students who choose not to fill out a FAFSA but otherwise meet the title IV eligibility criteria may verify their eligibility by completing an application designed by the institution in which the student attests under the penalty of perjury to meeting the requirements of section 484 of the HEA.

The interim final rule includes a footnote that says that the U.S. Department of Education will not enforce the Title IV eligibility requirement against distribution of emergency financial aid grants to students that occurred prior to publication of the interim final rule.

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Regulatory Whiplash

Let’s review the timeline of developments involving the emergency financial aid grants to students.

March 27, 2020. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is signed into law. The CARES Act includes two emergency financial aid grant programs for students.
April 9, 2020. The U.S. Department of Education issues guidance concerning the emergency financial aid grants to students, saying that the CARES Act provides colleges and universities with significant discretion on how to award emergency financial aid grants to students, subject to the only statutory restriction is that the money must be used to cover expenses related to the disruption of campus operations due to the pandemic.
April 21, 2020. The U.S. Department of Education issues new guidance that limits the emergency financial aid grants to students who are eligible for federal student aid. This blocks emergency grants not just to international students and undocumented students, but also to veterans and students with less than a 2.0 GPA.
May 7, 2020. The IRS confirms that the emergency financial aid grants to students are tax-free.
May 11, 2020. The California Community College System files a lawsuit against the U.S. Department of Education concerning the restrictions on eligibility for the emergency financial aid grants to students. They argue that the U.S. Department of Education’s guidance is arbitrary and capricious.
May 19, 2020. Washington State files a lawsuit against the U.S. Department of Education to block the restrictions on eligibility for emergency financial aid grants to students.
May 21, 2020. The U.S. Department of Education says that it will not enforce its previous guidance that required students to be eligible for federal student aid.
May 25, 2020. In a court filing in response to the California lawsuit, the U.S. Department of Justice asserts that the previous guidance was “preliminary” and will not be enforced.
June 5, 2020. In a court filing, the U.S. Department of Justice says that the U.S. Department of Education is going to issue a regulation that will limit eligibility.
June 9, 2020. The U.S. Department of Education publishes a public comment request on the new regulation, but does not publish the text of the regulation. Later that day, the U.S. Department of Education says that the soonest it could issue the new rule is June 15, 2020.
June 9, 2020. During a hearing relating to the California lawsuit, U.S. District Judge Yvonne Gonzalez Rogers criticized the Department for “putting roadblocks” in the way of swift distribution of the emergency financial aid grants.
June 11, 2020. The U.S. Department of Education released the text of an interim final rule to be published in the Federal Register that limits the emergency financial aid grants to students who are eligible for federal student aid. The rule will go into effect immediately upon publication of the regulation in the Federal Register. [Update: The interim final rule was published in the Federal Register on June 17, 2020.]

This will not be the end of the story. Regulations can be overturned by the courts for being arbitrary, capricious and vague.

U.S. District Judge Yvonne Gonzalez Rogers is likely to rule against the U.S. Department of Education. After all, this timeline demonstrates that the U.S. Department of Education’s actions are arbitrary and capricious. The term “capricious” is defined by the OED as “given to sudden and unaccountable changes of mood or behavior.”

Congress can also block a regulation using the Congressional Review Act or by passing new legislation that reverses the regulations.