Abstract

• The HEALS Act on Health, Economic Aid, Liability Protection and Schools contains several education provisions that extend over those of the Coronavirus Aid, Relief and Economic Security Act (CARES).
• Under HEALS, states would receive an additional $ 70 billion to pay to school districts, two-thirds of which would only be available to school districts that have in-person classes.
• HEALS would overhaul the federal student loan system by reducing the number of repayment options from nine to two.

introduction

On July 27, Senate Republicans introduced the Health, Economic Assistance, Liability Protection and Schools Act (HEALS) for the next phase of the federal response to the COVID-19 pandemic. The HEALS law contains several provisions relating to education in addition to those of the CARES law (Coronavirus Aid, Relief, and Economic Security). HEALS allocates a total of $ 105 billion to education budgets, including $ 70 billion for elementary and secondary schools, $ 29 billion for higher education and an additional $ 5 billion for state governors. It should be noted that the bill conditional some of this money on schools running in-person classes. The bill also provides for a limited deferral for student debt holders and would revamp student loan repayment options, reducing them from nine currently to two.

Additional emergency relief funding for elementary and secondary schools

The HEALS Act provides $ 70 billion for the Elementary and Secondary School Emergency Relief 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 (LEAs). 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 HEALS Act, approximately one-third of the $ 70 billion allocated to states would be distributed immediately to LEAs as part of the original Title I formula allocations also used in CARES. The other two-thirds, however, would only be distributed to LEAs who have an in-person presence during the 2020-2021 academic year. The bill states that school districts that conduct in-person classes for at least half of their students for at least half of the weeks of the year will receive the full amount to which they are entitled. School districts that do not conduct in-person classes will not receive any of these conditional funds. School districts that host in-person classes but do not meet the above criteria will receive these conditional funds on a pro rata basis. This provision would require school districts to weigh the potential health costs of organizing in-person classes against the benefits students receive from attending in-person classes and the budgetary benefits of additional federal government funding.

Under the CARES Act, ESSER contributed an average of approximately $ 973,000 to a school district. Under the current provisions of the HEALS Act, the unconditional part of ESSER would pay an additional $ 1.4 million on average to a school district. The portion of ESSER that depends on a school district conducting in-person classes is said to average about $ 2.7 billion. In total, the average amount a school district would receive from CARES and HEALS would range from $ 2.3 million to $ 5.0 million.

These data can be found here.

Additional emergency funding for higher education

The HEALS law provides an additional $ 29 billion for the Higher Education Emergency Assistance Fund (HEER). HEER was established under the CARES Act to initially provide $ 14 billion to colleges and universities. As in CARES, HEALS funds 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.

The challenge with allocating funds by the number of full-time Pell Grant recipients is that community colleges lose funding because about 65 percent of community college students are enrolled part-time. The Pell Grant program also tends to under-serve many eligible students. In California, for example, about 20 percent of community college students qualified for the Pell scholarships but did not receive them. This problem has not changed under HEALS since it uses the same Pell Grant formulas as CARES.

Student debt provisions

Under the CARES law, student debt holders could defer their monthly interest and principal payments until October 2020. The HEALS law extends this provision slightly by extending the deferral for student debt holders who have not. no income by October 2020. Once they have income, the monthly payment will be capped at 10% of the incumbent’s income. Those who have an income before October 2020 should resume their monthly payments. There is no provision for short-term debt forgiveness.

The HEALS Act would completely overhaul the federal student debt system by reducing the number of repayment options from nine currently to two. The two options would be a standard 10% monthly income-based repayment plan with 20-year discount and a standard 10-year repayment plan with equal monthly payments in principal and interest.