The CARES Act and What it Means for Higher Education

President Donald Trump on Friday signed the CARES Act—the largest economic stimulus package in U.S. history—to aid individuals and organizations during the COVID-19 pandemic.

The package provides benefits to a wide swath of individuals, businesses and organizations hurting most from the coronavirus emergency. We’ve detailed the provisions that are most likely to directly affect higher education institutions, their students and their employees.

Individual Benefits

Perhaps the most anticipated portion of the CARES Act, the individual stimulus benefits take front and center on our coverage. Here are the basics:

• Individuals earning $75,000 or less in adjusted gross income will receive a $1,200 one-time payment. Married couples filing jointly will receive $2,400 if their income is $150,000 or less.
• These amounts will begin phasing out above those income levels. Those making $99,000 (individuals) and $198,000 (married couples) will not qualify for these payments.
• Parents will receive an additional $500 payment per dependent child (under the age of 17).
• Student loan payments will be suspended by the Department of Education without penalty through September 30, 2020. Under certain circumstances, the 10% withdrawal penalty for IRA distributions has been waived.

Students will only receive stimulus checks if they file an individual income tax return and are not being claimed as a dependent on the return of another (for example, parents or guardian).

Institutional Benefits

In addition to the individual stimulus benefits noted above, the act contains some higher education specific benefits, most notably the following:

• $14.25 billion in funding for higher education institutions to prevent, prepare for and respond to coronavirus. These funds can be used by higher education institutions to defray expenses such as lost revenue, technology costs associated with transition to distance education, and grants to students for food, housing, course materials, technology, health care and child care.
• $3 billion for governors in each state to allocate, at their discretion, emergency support to school districts and higher education institutions most significantly impacted by coronavirus.
• $100 million in funding for schools, including institutions of higher education, to respond to the immediate needs of coronavirus and the effect on students (Project SERV).
• $425 million to increase access to mental health services in communities.
• $76 million for the National Science Foundation (NSF), which supports research activities at more than 2,000 research institutions, to better understand science related to coronavirus.

While the $14.25 billion of higher education funding is certainly welcome, it falls well short of the $50 billion in federal funding that nearly a dozen higher education associations said was needed to keep colleges and students afloat. “While this legislation is an improvement from where the Senate started, the amount of money it provides to students and higher-education institutions remains woefully inadequate,” Ted Mitchell, president of the American Council on Education, said in a written statement.

Stay tuned for more articles regarding this historic legislation. James Moore’s higher education and collegiate athletic CPAs will be tracking every development that affects your industry and keeping you informed.

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