“The $37 billion in the HEROES Act is a critical lifeline to colleges and universities hobbled by budget cuts and pandemic costs. Most of these funds are dedicated to public colleges where states agree to avoid disproportionate cuts to higher education. Yet even this large sum may not be enough to ensure colleges are not crippled by this once-in-a-lifetime crisis.
“The HEROES Act suspends payments and interest on all student loans until September 2021 or later. And it delivers long-overdue loan forgiveness to students cheated by Corinthian Colleges and ITT while also strengthening protections against low-quality online schools.”
Additional information on the HEROES Act:
- The HEROES Act sends $27 billion in much-needed funding to states to shore up higher education spending. Critically, this state relief fund includes substantial money dedicated to public colleges and universities. States need significant resources to support their public institutions and to ward off tuition hikes and a new explosion in student debt. Importantly, the HEROES Act also includes provisions requiring states to stay at the funding table during and after the current crisis subsides.
- The HEROES Act also provides an additional $10 billion directly to public and nonprofit colleges and universities for coronavirus costs. It also improves earlier legislation by explicitly codifying that emergency scholarships are tax-exempt and prohibiting the Department of Education from placing additional eligibility restrictions on these funds, such as those now subject to a lawsuit from the state of California.
- However, state budget shortfalls may total about $650 billion over the next several years, according to the Center on Budget and Policy Priorities. Considering the severe budgetary challenges facing states, Congress must dedicate additional substantial funding to support both K-12 and higher education.
- The HEROES Act also fixes a flaw in the CARES Act that left millions of federal student loan borrowers behind. It expands the CARES Act’s payment suspensions, interest waivers, and other benefits to all federal student loan borrowers (including those with commercially held loans, campus-based Perkins loans, and health loans) and extends these benefits until at least September 2021 or longer if economic conditions warrant. It also provides similar relief to private student loan borrowers. It also provides similar relief to private student loan borrowers. The bill also provides a minimum of $10,000 in loan forgiveness to all federal student loan borrowers and to private education loan borrowers and expands eligibility for the Public Service Loan Forgiveness program.
- As Congress continues to debate the most effective way to reduce default, ensure affordable loan payments, and relieve the burden of student debt overall for existing borrowers, it is also imperative that they make significant front-end investments for current and future students. This must include both expanding access to the Pell Grant and boosting the amount of the maximum award, which the HEROES Act fails to do.
- The HEROES Act provides the long-overdue discharges of the entire student debts owed by borrowers affected by federally documented cases of misrepresentations made by Corinthian Colleges and ITT. It also creates a fast-track process for borrowers whose state attorneys general have filed similar claims on their behalf.
- The HEROES Act also provides $300 million to help nonprofit colleges at risk of closure to ensure students can finish programs by transferring to other colleges (so-called “teachout agreements”) and automatically discharge the loans of students who choose not to transfer.
- To protect against low-quality online programs, the bill also requires colleges to provide students with regular and substantive interaction with qualified instructors.
The Institute for College Access & Success is a trusted source of research, design, and advocacy for student-centered public policies that promote affordability, accountability, and equity in higher education. For more information see www.ticas.org or follow us on Twitter and Facebook.