011521PublicationFederalRegisterWaiversStatutoryRegulatoryHEROESAct

Author
Office of Postsecondary Education
Subject
Publication in the Federal Register of updated waivers and modifications of statutory and regulatory provisions under the HEROES Act (EA ID: OPE Announcements-21-05) (Updated Feb. 26, 2021)

Note: On Feb. 26, 2021, we corrected award year references in the second paragraph under the “Community Service Requirements and Underuse Penalties” subsection of this EA and replaced the “COVID-19 Title IV Flexibilities and Waivers as of January 15, 2021” attachment to this announcement with a version that reflects those same award year corrections.

On December 11, we published a notice in the Federal Register updating waivers and modifications of statutory and regulatory provisions under the authority of the Higher Education Relief Opportunities for Students Act of 2003 (HEROES Act).  We originally explained many of the waivers and modifications contained in the Federal Register notice in a series of Electronic Announcements published between March and August of 2020; however, the December 11 notice included several provisions that had not been announced in previous Electronic Announcements. Those waivers and modifications specific to the Federal Register notice and not previously announced are described below.

The Federal Register notice also extends several sunset dates for previously established flexibilities. To assist institutions with tracking deadlines associated with the Department’s COVID-19 guidance, we have attached a matrix that briefly describes all flexibilities (including those extended under Electronic Announcements, the CARES Act, and the December 11 Federal Register notice), provides links to source documents, and explains the expiration of the waivers and modifications.

New Waivers and Flexibilities Established in the December 11, 2020, Federal Register Notice

Annual Compliance and Financial Statement Audit Submission Deadlines

The May 15, 2020, Electronic Announcement extended financial statement and compliance audit deadlines by six months. However, the December 11, 2020, Federal Register notice provides additional detail.

Entities Covered Under the Single Audit Act

Specifically, the notice clarifies that for institutions subject to the Single Audit Act, we will consider the audit submission timely if it is submitted to the Department through eZ-Audit (or as directed by the Department) at the same time it is timely submitted to the Federal Audit Clearinghouse under Office of Management and Budget (OMB) Guidance M 20-26 for COVID-19 audit submissions and any future extensions provided by OMB. All institutions and other auditees should maintain documentation of the reason for any delayed filing.

Under OMB’s Memorandum M 20-26, institutions were granted an extension of the deadline for completing and submitting their Single Audit reporting package, as required under 2 CFR 200.501, of up to six months beyond the normal due date if they:

  • Had not filed their single audits with the Federal Audit Clearinghouse as of March 19, 2020; and
  • Had normal due dates from March 30, 2020, through June 30, 2020.

OMB also granted institutions an extension of the deadline for completing and submitting their Single Audit reporting package of up to three months beyond the normal due date if they have due dates from July 31, 2020, through September 30, 2020.

Entities Not Covered Under the Single Audit Act

For institutions or other entities that do not submit audits under the Single Audit Act, financial statements and audits due to be submitted to the Department from March 1, 2020, through December 31, 2020, we have extended the submission deadline up to an additional six months beyond the usual submission deadline. The usual submission deadline is six months after the last day of the fiscal year.

This extension is intended to permit auditors to complete their audit reports; therefore, the notice reminds institutions choosing to submit their audits after the normal due date to make the submission to eZ-audit no later than 30 calendar days after the date of the audit report.

Short-Term Programs (70/70 Qualifying Requirements)

We waived, for any award year in which the COVID-19 national emergency declaration was in place for at least one day during the award year, the requirement that institutions offering short-term programs have completion and job placement rates of at least 70 percent for students in those programs. Institutions must continue to report completion and placement rates for short-term programs for such award years in compliance audits, but the programs will remain eligible even if they do not meet the 70/70 requirements.

Payment Methods

We waived the requirement that an electronic funds transfer (EFT) be a direct deposit transaction. Instead, institutions and third-party servicers may use:

  • Any type of EFT permitted under U.S. Department of Treasury regulations at 21 CFR 208.2, including person-to-person payment methods such as Zelle and PayPal; or
  • A student’s debit card number to transfer a Title IV credit balance to the student’s checking account using an original credit transaction.

Credit Balances

For institutions that are on the Heightened Cash Monitoring 1 (HCM1) payment method under 34 CFR 668.162(d)(1), we have temporarily modified the cash management requirements to permit those institutions to submit a request for funds without first paying the Title IV credit balances due to the students for whom those funds were requested.

Institutions that are on the HCM2 or reimbursement payment methods must continue to pay Title IV credit balances to students before submitting a request to the Department for reimbursement.

Borrower Defense to Repayment

We have waived the application of the 2019 borrower defense rule with respect to borrower defense applications received by the Department prior to July 1, 2020. Instead, those applications will be adjudicated under the standards for Direct Loans, including Direct Consolidation Loans, disbursed between July 1, 2017, and June 30, 2020, inclusive if the borrower’s application is based on an outstanding FFEL Program Loan or Federal Perkins Loan that the borrower would need to consolidate on or after July 1, 2020, to obtain relief.

For example, if a borrower with a FFEL Program Loan applied for borrower defense on May 15, 2020, but the borrower is not determined to be eligible for a discharge until October 15, 2020, the borrower would need to consolidate on or after July 1, 2020, to obtain relief, which would normally subject the borrower to the 2019 borrower defense rule, which has eliminated the pre-consolidation FFEL and Perkins program adjudication procedures and would subject the new loan to the 2019 rule’s statute of limitations. Instead, the borrower’s application will be judged against eligibility standards and processes that applied based on the 2016 borrower defense rule.

Recertification of Income-Driven Repayment Plans

We have waived the annual requirement for a borrower to provide documentation that enables calculation of his or her income-driven payment amount for one calendar year from the date on which the borrower would have been required to provide recertification documentation in 2020. Borrowers will be notified of their new recertification deadlines by their servicer after payments resume.

Capitalization of Interest Under the Pay As You Earn, Revised Pay As You Earn, or Income-Contingent Repayment Plan

If a borrower was not in a deferment or forbearance prior to the suspension of payments, interest will not capitalize when the suspension of payments ends and repayment resumes even if the borrower would have normally been subject to interest capitalization under the Pay As You Earn, Revised Pay As You Earn, or Income-Contingent Repayment Plan. However, borrowers whose loans were in the type of deferment or forbearance in which interest would normally capitalize before the coronavirus-related administrative forbearance period began will have any interest that accrued prior to March 13, 2020, capitalized when the suspension period or any contiguous, subsequent deferment or forbearance ends.

Timeframes for Waivers and Flexibilities That Were Changed or Extended in the December 11, 2020, Federal Register Notice

General extensions

The following waivers and flexibilities, announced in Electronic Announcements published earlier in 2020, are extended through the end of the first payment period that begins after the date that the COVID-19 national emergency ends:

  • The waiver of the federal requirement to obtain State authorization to offer distance education (the notice does not waive any individual State requirements to obtain such authorization);
  • The waiver of the requirement that an institution must obtain accrediting agency approval prior to offering distance education programs;
  • The flexibility that permits an institution to place an enrolled student on an approved leave of absence without prior written request if the institution suspends instruction due to COVID-19;
  • The waiver of the requirement to notify the Direct Loan servicer where Direct Loan funds for living expenses are paid directly to a student who does not begin attendance in a payment period;
  • The waiver of the parental signature requirement for verification in the event that it cannot be obtained; and
  • The flexibility that permits an institution to accept verification documentation required to validate a student’s Title IV eligibility (including for the purpose of collecting the Statement of Educational Purpose (SEP) to complete the requirements of tracking groups V4 and V5) that has been signed and photographed and submitted to the school electronically, such as by email or text message attachment.

The other verification flexibilities explained in earlier Electronic Announcements are also extended through the end of the first payment period that begins after the date that the COVID-19 national emergency is rescinded. None of the verification waivers are award year-specific and apply to any award year for which an institution may be performing verification.

Overlapping Terms

For all academic years that include the end date for the COVID-19 Federally declared emergency, the existence of overlapping standard terms will not result in a program being considered non-term. During that period, a standard semester or trimester may also be comprised of as few as 13 weeks of instruction.

Deadline for Submission of Change in Ownership Materials

The six-month extension for institutions to provide accrediting agency and State approvals and same-day balance sheets to us as we evaluate their request to approve a change in ownership will be in effect until 180 days following the date on which the COVID-19 national emergency ends.

Community Service Requirements and Underuse Penalties

The December 11, 2020, Federal Register notice extends the waiver of the 7% community service spending requirement for Federal Work Study (FWS) funds through the end of the award year that begins after the end date of the national emergency. As of the date of this announcement, the community service waiver is extended through the end of the 2021–2022 award year, but no further announcement is necessary to extend the waiver through the 2022–2023 award year if the emergency ends after June 30, 2021.

We automatically waived the underuse penalty for campus-based funds for the 2021-2022 award year (as a result of any underuse that occurred during the 2019-2020 award year); however, we are not extending the automatic waiver of underuse penalties for Campus-Based funds awarded for the 2022-2023 award year. Requests for underuse waivers due to underuse that may occur during the 2020-2021 award year must be made in the Common Origination and Disbursement system under normal timeframes and requirements.

Loss of Eligibility When an Institution Ceases Operations

In an April 3, 2020, Electronic Announcement, we indicated that the temporary cessation of educational instruction due to COVID-19 would not result in a loss of institutional eligibility or participation. The December 11, 2020, Federal Register notice clarifies that, to continue their participation in the Title IV, HEA programs, institutions must resume instruction by the start of the first payment period that begins after the date that the COVID-19 national emergency ends.

Use of the Medical College Admissions Test (MCAT) at Foreign Medical Schools

The notice extends the timeframe that foreign medical schools may accept applicants without an MCAT score to include any admission year in which the COVID-19 emergency is in effect.

Limitation and Scope of This Announcement

As previously noted, the above list contains only those waivers and flexibilities initially provided or extended by the December 11, 2020, Federal Register notice. It is not intended to provide a complete overview of any provision in that notice. For a comprehensive explanation of all waivers and flexibilities offered under the HEROES Act, see that notice.

The United States Medical Licensing Exam (USMLE) Scores at Foreign Medical Schools

This announcement waives the USMLE pass rate requirement for foreign graduate medical schools for any admission year in which the COVID-19 emergency is in effect. Note that this waiver will be addressed in a future update to HEROES Act allowances.

Timeframes for CARES Act Relief

Waivers and flexibilities provided under the CARES Act were not affected by the December 11, 2020, Federal Register notice. We recently extended the deadline for submission of the Coronavirus Indicator for 2020–2021 disbursements to September 30, 2021.

Institutions continue to be permitted to transfer up to 100% of their unexpended FWS allocations to FSEOG through the end of the payment period that includes the end date for the federally declared emergency related to COVID-19. Please see the August 21, 2020, Electronic Announcement for information about this and other timeframes for CARES Act provisions.

Contact Information

Please submit any questions related to the December 11, 2020, Federal Register notice to COVID-19@ed.gov.

Attachments

COVID-19 Title IV Flexibilities and Waivers as of January 15, 2021 in PDF Format, 15 Pages, 244KB