Since the global pandemic forced most college campuses to resort to online instruction in March 2020, college students across the country have filed more than 150 lawsuits against their schools seeking refunds of tuition and related fees.
This month, a federal judge in Boston made the first dispositive ruling in such a case against Northeastern University – tossing out most of the claims asserted by the students in a putative class-action matter. Judge Richard G. Stearns of the District of Massachusetts found in Chong v Northeastern University, 20-10844-RGS, that the contract between the university and its students (the Financial Responsibility Agreement, “FRA”) did not specifically include a right to in-person instruction. The Judge noted that the FRA ties the payment of tuition to the registration for courses, “not to the receipt of any particular method of course instruction.”
The Judge also dismissed the students’ claims seeking a refund of certain student fees, such as student activity fees, finding that they paid the fees to support certain campus facilities – not necessarily to gain access to them. Thus, the Court gave no credence to the students’ claims that they should receive a refund of activity fees because the school prevented them from accessing those facilities due to the pandemic.
However, the Court did allow the students’ claims seeking a refund of campus recreation fees to go forward, finding that the students’ payment of those fees may have implicitly created a right to attend home athletic events and use the campus gym and fitness facilities, which ceased on March 12.
Judge Stearns’ ruling may be a sign of things to come for the many similar lawsuits currently pending against colleges and universities throughout the country. However, as in this case or any breach of contract action, these rulings will likely turn on the specific language of the applicable contract between the institution and the student.
According to Dave Clayton, senior vice president of consumer insights at Strada Education Network, hybrid education “was a consistently popular option” throughout a recent survey taken by his organization. It beat out both online and in-person when it came to which option Americans were likely to recommend, as well as which option offered the best preparation for joining the workforce.
Will this change higher education? Of course it will. The market to find students gets more competitive for colleges every year. That trend is predicted to continue long into the future. If today’s junior high schoolers already know that they want “both,” this shift in consumer demand won’t go unnoticed. If college leadership wants the freshman class of 2026 to enroll in their institution, they would be foolish not to adapt.
To read the full text of this article by Duane Morris partner Edward M. Cramp, please visit the University Business website.
Colleges and universities across the country are beginning to figure out what the fall semester for students will look like. In-house counsel at the schools that have chosen to bring students back to campus full-time need to worry about furthering the spread of the new coronavirus and class action litigation over refunds for tuition, housing and service fees.
It is too early to tell how courts will rule on these kinds of lawsuits, Ed Cramp, a partner at Duane Morris in San Diego said. From his perspective, how education is delivered to a student is not something guaranteed by the university. However, the suits asking for a refund of fees for services not used could be problematic.
“The issue for the institutions is that many of them just don’t have the money. It is not a matter of, ‘Let me just write you a check,’” Cramp said.
To read the full text of this article in Corporate Counsel magazine quoting Duane Morris partner Ed Cramp, please visit law.com (subscription required).
In a welcome bit of regulatory relief at time when institutions of higher education are working to comply with a new Title IX rule by August 14, 2020, the Department announced on July 10 that it is extending the date for institutions to distribute their Annual Security Report (ASR) and Annual Fire Safety Report (AFSR) to required recipients to December 31, 2020 (from October 1). The Department does encourage institutions to distribute their reports on the normal schedule if possible.
In addition, the electronic annual crime and fire statistics survey will now be open now from November 18, 2020 through January 14, 2021 for transmission of data to the Department.
The Department states in its July 10 announcement that it “encourages schools to take appropriate steps to ensure the health and safety of their students and employees, to continue to act in accordance with their campus safety policies and procedures, and to advise the campus community about changing conditions that may affect their safety or any major changes to safety policies or practices.” Institutions continuing or returning to partial or full on ground operations should keep in mind that they are still obligated to comply with their published campus safety policies and procedures, including with regard to emergency notifications and crime statistics collection and reporting. Any changes to published procedures should be communicated to the campus community.
On March 15, 2020, the U.S. Department of Education published additional guidance for postsecondary institutions extending and clarifying regulatory flexibilities contained in the CARES Act and related to COVID-19.
Key components of the guidance include:
- Extension of the time frame for authorization by the Department of temporary distance education approval for previously on-ground programs to include payment periods that overlap March 5, 2020, or that begin on or between March 5, 2020, and December 31, 2020.
- Waiver of the Department’s requirement that an institution offering at least 50% of a program by distance education to be accredited for distance education by an accrediting agency that has distance education in the scope of its recognition. The waiver is effective for payment periods that begin on or before December 31, 2020.
- Six month extension of the Title IV financial statement and compliance audit deadlines.
The guidance also includes important new information concerning:
- Accreditation site visit extension flexibilities and requirements.
- Extension by six months of the “materially complete application” requirements following a Title IV change of ownership and control to allow additional time for the institution to remain TItle IV certified while secure state and accreditor approvals as well as the audited same day balance sheet.
- Waiver of MCAT score requirement for foreign graduate medical school admissions for students admitted to medical school during an admissions year in which the MCAT was unavailable to students for some period of time during that year due to COVID-19 related interruptions.
- Additional flexibilities concerning verification of high school (or equivalent) completion status that applies until December 31, 2020, for both the 2019-2020 and 2020-2021 award years.
- Treatment of the PPP loan forgiveness amount in calculating the institution’s composite score.
- Treatment of student workers when determining the number of employees for PPP loan eligibility.
- Tax treatment of HEERF and emergency financial aid grants to students.
- Clarifications regarding Campus-Based Waivers/Reallocation and FSEOG Emergency Aid Grants.
- Clarifications regarding Leaves of Absence (LOA) flexibilities.
- Return of Title IV Funds (R2T4) guidance and processing detail.
- Clarifications regarding Satisfactory Academic Progress (SAP) flexibilities.
- Clarifications regarding Teacher Education Assistance for College and Higher Education (TEACH) Grant Program flexibilities.
Institutions should carefully analyze the full guidance document and related Q&A , available here: https://ifap.ed.gov/electronic-announcements/051520UPDATEDGuidanceInterruptStudyRelCOVID19May2020
On April 21, 2020, the Department made available the institutional portion of the Higher Education Emergency Relief Fund (HEERF) under Section 18004(a)(1) and 18004(c) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
By statute, the institutional HEERF funds are to be used to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus so long as such costs do not include payment to contractors for the provision of pre-enrollment recruitment activities, including marketing and advertising; endowments; or capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship.
Through an associated FAQ, the Department has provided further guidance and limitations on use of the institutional HEERF funds:
- An institution must enter into the Funding Certification and Agreement with the U.S. Department of Education to receive and distribute Emergency Financial Aid Grants to Students in order to be eligible to receive the institutional HEERF portion of the funds. In other words, institutions cannot select only to receive the institutional, but not student, portion of the HEERF funds provided by Congress.
- Institutions that have provided refunds to students for room and board, tuition, and other fees (such as activities fees) may use the institutional HEERF funds to reimburse themselves, so long as the institution can demonstrate that such costs were incurred as a result of significant changes to the delivery of instruction, including interruptions in instruction, due to coronavirus. Institutions will need to be able to document how those reimbursements are related to the COVID-19 interruption.
- Institutions may reimburse themselves for refunds previously made to students on or after March 13, 2020, but only if they can demonstrate that such refunds were necessitated by significant changes to the delivery of instruction, including interruptions in instruction, due to coronavirus.
- Institutions may use institutional HEERF funds for costs incurred by the institution to purchase laptops, hotspots, or other IT equipment and software necessary to enable students to participate in distance learning as a result of the coronavirus interruption.
- Institutions that purchased computers or other equipment to donate or provide to students on or after March 13, 2020 may reimburse themselves for those costs, again if tied to need arising from the coronavirus interruption.
- The institutional HEERF funds can be used to make additional emergency financial aid grants to students (to supplement the student HEERF funds), provided that such grants are for expenses related to the disruption of campus operations due to coronavirus (including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care, and child care). Only students who are or could be eligible to participate in programs under Section 484 in Title IV of the Higher Education Act of 1965, as amended (HEA), may receive emergency financial aid grants.
- At institutions that provide both online and ground-based education, students who were enrolled exclusively in online programs on March 13, 2020 are not eligible for emergency financial aid grants, as the Department’s position is that students who were enrolled exclusively in online programs would not have expenses related to the disruption of campus operations due to coronavirus. Fully 100% online institutions were already ineligible for HEERF funding.
- Institutional HEERF funds may be used to award scholarships or to provide payment for future academic terms only if the institution can demonstrate that such grants are needed for expenses related to the disruption of campus operations due to coronavirus. If provided to students in the form of emergency financial aid, such uses are allowable.
- Institutional HEERF funds can be used to pay a per-student fee to a third-party service provider, including an Online Program Manager (OPM), for each additional student using the distance learning platform, learning management system, online resources, or other support services; however, institutions may not use institutional HEERF funds to pay third-party recruiters or OPMs for recruiting or enrolling new students at the institution.
- The Funding and Certification Agreement that institutions must sign also makes clear that institutional HEERF funds cannot be used for: senior administrator and/or executive salaries, benefits, bonuses, contracts, incentives; stock buybacks, shareholder dividends, capital distributions, and stock options; and any other cash or other benefit for a senior administrator or executive.
More information on CARES Act grant resources and guidance can be found on the Office of Postsecondary Education’s webpage: https://www2.ed.gov/about/offices/list/ope/caresact.html
On April 9, 2020, the Secretary of Education announced the availability of more than $6 billion for immediate distributed to colleges and universities to provide direct emergency cash grants to college students through the authority of the Higher Education Emergency Relief Fund authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act provides nearly $14 billion to support postsecondary education students and institutions. Colleges and universities are required to utilize the $6.28 billion made available today to provide cash grants to students for expenses related to disruptions to their educations due to the COVID-19 outbreak, including things like course materials and technology as well as food, housing, health care, and childcare. In order to access the funds, the Department must receive a signed certification from the higher education institution affirming they will distribute the funds in accordance with applicable law. The college or university will then determine which students will receive the cash grants.
School allocations are set by formula prescribed in the CARES Act that is weighted significantly by the number of full-time students who are Pell-eligible but also takes into consideration the total population of the school and the number of students who were not enrolled full-time online before the coronavirus outbreak. The Department is utilizing the most recent data available from the Integrated Postsecondary Education Data System (IPEDS) and Federal Student Aid (FSA) for this calculation.
Institutions will receive allocations and guidance for the institutional share of the Higher Education Emergency Relief Fund in the coming weeks. Institutions will be able to use these funds to cover costs associated with significant changes to the delivery of instruction due to the coronavirus.
Additional information on institution-level funding for students, including data tables, can be found here. The Secretary’s letter to college and university presidents with additional information on this funding allocation can be found here.
On April 8, 2020, the U.S. Department of Education published a Q&A that answers questions related to use of Department grant funds during the novel Coronavirus Disease 2019 (COVID-19) with respect to compensation, travel, and conference costs that are otherwise allowable costs under applicable program statutes and regulations. factsheet-fiscal-questions
Late on Friday, April 3, the Department posted updated guidance for institutions that recognizes the regulatory flexibilities authorized by Congress in the CARES Act, but also addresses other areas including Clery Act, Distance Education, Foreign Schools and FERPA, among other issues relevant to the COVID-19 interruption. The guidance is effective through June 30, 2020 unless otherwise extended by the Department. The Higher Education Relief Fund portion of CARES ACT is not addressed and will be the subject of future guidance.
– April 03, 2020
(OPE Announcements) Subject: UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19)
The CARES Act appropriates $30.75 billion for an Education Stabilization Fund available through September 30, 2021, to assist governors and postsecondary institutions with preventing, preparing for and responding to COVID-19. The Act also includes important student relief and temporary regulatory flexibilities.
For more information, please visit the Duane Morris website.