CARES Act to the Rescue: The Education Stabilization Fund

COVID-19 has disrupted education nationwide, throwing students, faculty and staff into limbo—and often leaving institutions in the lurch financially. Some relief is on its way, however, thanks to the Education Stabilization Fund in the recently enacted CARES act.

The most significant CARES Act funding for higher education, the Education Stabilization Fund will provide $14 billion directly to higher education entities. Of this amount, 90% is to be allocated to institutions based off the Title IV distribution system. (The full distribution list can be found on the Department of Education’s website.)

At least 50% of this fund must be used to provide direct emergency aid to students. This includes “grants to students for food, housing, course materials, technology, healthcare and childcare.” Institutions may also use the funds for “costs associated with significant changes to the delivery of instruction due to coronavirus.”

While the Department of Education (DOE) has not offered additional guidance on allowable uses for these funds, institutions must agree to a number of specific provisions:

  • Emergency grant aid funds will not be used for any purpose other than the direct payment of grants to students for their expenses related to the disruption of campus operations due to coronavirus.
  • Schools will not use the emergency grant aid funds to reimburse themselves for any costs or expenses. This includes (but is not limited to) costs associated with significant changes to the delivery of instruction due to the coronavirus and/or any refunds or other benefits that schools previously issued to students.
  • Schools must report to the DOE 30 days from the date of the agreement (and every 45 days after) how grants were distributed to students, the amount awarded to each student, how the amount of each grant was calculated, and instructions given to students about the grants.
  • In these reports, schools must also document that they have continued to pay all employees and contractors during the period of disruptions or closures to the greatest extent practicable.

The remaining stabilization funds will go to minority-serving institutions (7.5%) and institutions that are particularly impacted by coronavirus (2.5%). These funds will be administered through the DOE’s Fund for the Improvement of Postsecondary Education (FIPSE).

The Education Stabilization Fund is a needed economic lifeline to institutions facing swift and unprecedented economic challenges. It is clear, however, that much more is needed to protect and stabilize the higher education industry.

Leading the way is the National Association of College and University Business Officers (NACUBO). The organization’s advocacy efforts are focusing on higher education funding, tax relief and student aid. For more information on NACUBO’s efforts visit their Coronavirus Relief Advocacy page.

James Moore’s Higher Education team is ready to help you with the opportunities provided by the Education Stabilization Fund. We’ll also monitor additional efforts from NACUBO and others to provide relief for students and institutions alike. Together, we can help your institution—and your students—weather these uncertain times.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.