Abstract
- On December 21, Congress passed the Consolidated Appropriations Act, 2021 (CAA), which provides additional economic relief related to COVID-19 and funds the government throughout the next fiscal year.
- Under the CAA, states will receive $ 54 billion in relief funds to be paid to school districts, in addition to the $ 13.2 billion in relief funds allocated under CARES.
- Colleges and universities will receive up to $ 22 billion in addition to the $ 14 billion allocated under CARES.
- The CAA does not have any provision for canceling or deferring student debt, meaning that student debt holders will have to resume payment in February 2021.
- The government-funded portion of CAA includes the FAFSA and Pell Grant simplification, which could make it easier to access financial aid for millions of students.
introduction
On December 21, Congress passed a new COVID-19 relief program as well as a broader government funding bill called the Consolidated Appropriations Act, 2021. This new legislation contains several provisions to aid COVID-education. 19 which extend to those of Coronavirus Aid, Relief, and the Economic Security Act (CARES). The new relief wrap allocates a total of $ 82 billion to education, including $ 54 billion for kindergarten to grade 12, $ 22 billion for higher education and an additional $ 4 billion for state governors. It does not contain provisions for student debt cancellation or extended deferral, as some expected.
Under the funding bill, the Department of Education has approximately $ 73.5 billion in discretionary spending for fiscal year 2021, an increase of $ 785 million from current levels. This increase is in line with the recent trend in Congress to increase education funding slightly from year to year. The most important developments in the funding bill are the simplifications of the Free Application for Federal Student Aid (FAFSA) applications and the eligibility requirements for Pell grants. These changes could give millions of students easier access to unconditional tuition assistance.
Additional emergency relief funding for elementary and secondary schools
The CAA provides an additional $ 54.3 billion to the Elementary and Secondary School Emergency Fund (ESSER). ESSER was originally created under the CARES Act to provide $ 13.2 billion in federal funds to states which then disbursed those funds to local education agencies. The funds were distributed according to the current Title I allocation formulas. These formulas allocated more federal funding to states with higher proportions of disadvantaged students.
Under the CARES Act, ESSER contributed an average of approximately $ 973,000 to a school district. Under the new law, ESSER will pay an additional $ 4.0 million on average to a school district. In total, the average amount a school district would receive from both CARES and the new law would be approximately $ 5.0 million in ESSER funding.
These data can be found here.
Additional emergency funding for higher education
The new bill provides an additional $ 22 billion for the Higher Education Emergency Assistance Fund (HEER). HEER was created under the CARES Act to provide $ 14 billion to colleges and universities. As in CARES, funds in the new bill will be allocated to higher education institutions based on the number of full-time Pell scholarship recipients they have. Pell Grants are federal funds given to students who demonstrate financial need for their tuition fees, and unlike loans, Pell Grants do not need to be repaid. Using the Pell Grant distribution formula will direct funds more strongly to schools with more low-income students.
Student debt provisions
Under the CARES Act, student debt holders could defer their monthly interest and principal payments until October 2020. Since then, the Trump administration has postponed that date twice and the postponement now lasts until October 2020. in January 2021. The initial drafts of the new COVID relief bill contained provisions to further extend the delay until spring 2021, but these provisions were ultimately not incorporated into the final version of the bill. This means that student debt holders will have to resume their payments in February 2021.
The CARES Act contained a provision that allowed employers to make tax-exempt payments, up to $ 5,250, on their employees’ student debt, and that provision was due to expire in December 2020. This deadline has now been passed. postponed to December 2025. Depending on the employer’s agreement, this provision could benefit holders of student debt who keep their jobs or who will soon be hired.
FAFSA and Pell Grant modifications
Arguably the most important educational developments in the $ 1.4 trillion omnibus bill are the simplification of FAFSA applications and the eligibility requirements for Pell grants. FAFSA is completed by prospective and current students each academic year to determine their eligibility for financial aid. Lawmakers specifically agreed to reduce the number of questions on FAFSA claims from 108 to 36.
The new legislation will ensure that all families who earn less than 175% of the federal poverty line will receive the maximum Pell Grant amount of $ 6,000. This change is expected to allow an additional 1.7 million students to receive the maximum reward from the Pell Grant and make another 555,000 newly eligible students. In the 2017-18 academic year, there were 7.1 million current Pell Grant recipients. Under these relaxed requirements, the number of millions of Pell Grant recipients in the 2020-2021 academic year could reach 7.5 to 8.0 million. According to the National Student Clearinghouse Research Center, however, freshman enrollments for fall 2020 were down 13.1% from the previous year and overall enrollments were down 2.4% from the previous year. compared to the previous year. Expanding access to the Pell Scholarships to an additional 555,000 students could offset some of these decreases in enrollment due to the COVID-19 pandemic.
