Tag Archives: Higher Education

U.S. Department of Education Releases Additional CARES Act and COVID-19 Guidance

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

 

 

U.S. Department of Education Makes Available CARES Act Funds for Institutions of Higher Education

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

 

 

U.S. Department of Education Q&A on Use of Federal Grant Funds During COVID-19

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

 

 

May 4, 2020 Deadline for Public Comment on Important Distance Education Rulemaking

On April 1, the U.S. Department of Education (“USDE”) published a long-awaited Notice of Proposed Rulemaking (NPRM) for Distance Education and Innovation in the Federal Register. The proposed regulations are the final part of the consensus negotiated rulemaking that occurred in 2019. This regulation comes at an important time as institutions across the country are transitioning to varying forms of distance education due to COVID-19, albeit temporary or longer term. The NPRM represents the next step in the Department’s agenda to modernize its distance education regulations to promote innovation and reflect technological advancements, while protecting program quality. One key component of the NPRM is the new proposed definition of “regular” and “substantive” interaction between instructors and students for Title IV eligibility purposes. In the past, Title IV institutions have been assessed multi-million dollar fines for violating substantive and regular interaction requirements that were not well-defined in regulation. The NPRM also proposes revised credit and clock hour definitions directly addressing distance education and makes changes to recognize subscription based delivery of online education.

If your institution offers distance education and/or direct assessment programs, you should strongly consider analyzing and commenting on the proposed regulations. The Department has indicated that the Final Rule will be published by November 1, 2020, to allow an effective date of July 1, 2021. Comments are due by May 4, 2020 and must be submitted through the Federal eRulemaking Portal or via postal mail, commercial delivery, or hand delivery. The Department will not accept comments submitted by fax or by email or those submitted after the comment period.

Summary of the Major Provisions

As provided in the NPRM, the proposed regulations would:

  • Clarify that when calculating the number of correspondence students, a student is considered ‘‘enrolled in a correspondence course’’ if correspondence courses constitute 50 percent or more of the courses in which the student enrolled during an award year;
  • Limit the requirement for the Secretary’s approval to an institution’s first direct assessment program at each credential level;
  • Require institutions to report to the Secretary when they add a second or subsequent direct assessment program or establish a written arrangement for an ineligible institution or organization to provide more than 25 percent, but no more than 50 percent, of a program;
  • Require prompt action by the Department on any applications submitted by an institution to the Secretary seeking a determination that it qualifies as an eligible institution and any reapplications for a determination that the institution continues to meet the requirements to be an eligible institution for HEA programs;
  • Allow students enrolled in eligible foreign institutions to complete up to 25 percent of an eligible program at an eligible institution in the United States; and clarify that, notwithstanding this provision, an eligible foreign institution may permit a Direct Loan borrower to perform research in the United States for not more than one academic year if the research is conducted during the dissertation phase of a doctoral program;
  • Clarify the conditions under which a participating foreign institution may enter into a written arrangement with an ineligible entity;
  • Provide flexibility to institutions to modify their curriculum at the recommendations of industry advisory boards and without relying on a traditional faculty-led decision-making process;
  • Provide flexibility to institutions when conducting clock-to-credit hour conversions to eliminate confusion about the inclusion of homework time in the clock-hour determination;
  • Clarify the eligibility requirements for a direct assessment program;
  • Clarify, in consideration of the challenges to institutions posed by minimum program length standards associated with occupational licensing requirements, which vary from State to State, that an institution may demonstrate a reasonable relationship between the length of a program, as defined in 20 U.S.C. 1001(b)(1), and the entry-level requirements of the occupation for which that program prepares students;
  • Clarify that a student is not considered to have withdrawn for purposes of determining the amount of title IV grant or loan assistance that the student earned if the student completes all the requirements for graduation for a non-term program or a subscription based program, if the student completes one or more modules that comprise 50 percent or more of the number of days in the payment period, or if the institution obtains written confirmation that the student will resume attendance in a subscription-based or non-term program;
  • Clarify satisfactory academic progress requirements for non-term credit or clock programs, term-based programs that are not a subscription based program, and subscription-based programs;
  • Remove provisions pertaining to the use and calculation of the Net Present Value of institutional loans for the calculation of the 90/10 ratio for for-profit IHEs, because the provisions are no longer applicable;
  • Clarify that the Secretary will rely on the requirements established by an institution’s accrediting agency or State authorizing agency to evaluate an institution’s appeal of a final audit or program review determination that includes a finding about the institution’s classification of a course or program as distance education, or the institution’s assignment of credit hours;
  • Clarify that the Secretary may deny an institution’s application for certification or recertification to participate in the title IV, HEA programs if an institution is not financially responsible or does not submit its audits in a timely manner; and
  • Clarify that an institution is not financially responsible if a person who exercises substantial ownership or control over an institution also exercised substantial ownership or control over another institution that closed without executing a viable teach-out plan or agreement.

 

U.S. Department of Education Posts Updated COVID-19 Guidance for Institutions Following Enactment of CARES Act

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.

ELECTRONIC ANNOUNCEMENTS

– April 03, 2020
(OPE Announcements) Subject: UPDATED Guidance for interruptions of study related to Coronavirus (COVID-19)
https://ifap.ed.gov/electronic-announcements/040320UPDATEDGuidanceInterruptStudyRelCOVID19

CARES Act Provides Relief to Higher Education Institutions and Students

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.

U.S. Department of Education Issues COVID-19 Guidance

Due to the outbreak of coronavirus (COVID-19), the Centers for Disease Control and Prevention recommends that institutions of higher education consider postponing or canceling upcoming study abroad or foreign exchange programs. However, this advice has raised pressing questions about how this would affect Title IV, Higher Education Act (HEA) federal financial aid and a student’s ability to finish the term if a program is interrupted or canceled. In response, on March 5, 2020, the U.S. Department of Education’s office of Federal Student Aid (FSA) offered guidance permitting temporary flexibility and clarifying how higher education institutions can continue to comply with Title IV regulations for students whose activities are impacted by COVID-19.

View the full Alert on the Duane Morris LLP website.

Lease Points Colleges and Universities Should Not Miss

DO NOT BE FOOLED BY “STANDARD FORM LEASES” and
BEWARE OF CHANGING RULE ON TREATMENT OF LEASES IN TITLE IV COMPOSITE SCORE

There is no such thing as a “standard lease,” even if the document has that title at the top.

Julie Mebane, Partner (Real Estate), Duane Morris LLP

If your institution is reviewing a lease form and you are considering signing it for the tenant, make sure that you don’t gloss over it in the belief that its terms cannot be negotiated.  Usually, many lease terms can be modified and the tenant’s position can be enhanced if you pay attention to its language, especially a few important provisions:

  • Consider starting out by having both landlord and tenant sign a term sheet with the key business points summarized.  This can avoid confusion and disagreements later when the lease is reduced to writing.
  • Pay close attention to the description of the leased premises.  Make sure that the location and the number of rentable square feet are included and accurate, and consider including a space plan as an exhibit.
  • Double-check the rent calculations in the lease.  With regard to periodic rent increases, you may want to include a chart that summarizes the timing and amount of rent increases, rather than just a description like “3% rent escalations per year.”
  • If the tenant will be paying operating expenses as part of its rent, consider negotiating a cap on the amount of annual increases that can be passed through to the tenant.
  • Ask the landlord to pre-approve and describe in the lease any up-front alterations or other work of improvements the tenant needs to do on the premises.
  • In the use clause, more general language benefits the tenant.  Try to include the right to conduct “office and other administrative uses” or possibly “all other lawful uses.”  You may enhance the tenant’s right to assign and sublet in the future by broadening the use clause.
  • With regard to the parties’ respective maintenance and repair obligations, be sure there is a complete description of the landlord’s duties.  Try to include structural maintenance and repairs, floors, ceilings, roofs, windows, HVAC and building systems, interior plumbing and wiring in the landlord’s list.
  • Get a representation from the landlord that the premises and the property are in compliance with applicable laws and in good operating condition and repair as of the commencement date.
  • Try to negotiate the surrender language so the tenant does not need to remove all of the tenant improvements, cabling and furniture, fixtures and equipment at the end of the term.
  • Beware of leased spaces formerly occupied by Title IV institutions. See our [date]  blog post on that subject.

These provisions of a lease, and many others, can usually be negotiated and improved for the tenant.  Don’t consider any lease, even a pre-printed form that says it’s “standard,” to be carved in stone.

New and Extended Lease Rules Are Changing for Title IV Composite Score Purposes

Katherine Brodie, Partner (Education), Duane Morris LLP

On September 23, 2019, the U.S. Department of Education published a Final Rule that applies to all higher education institutions that participate in the federal student financial aid programs under Title IV of the Higher Education Act (“Title IV programs”).

Specifically, the Final Rule amends the annual Title IV financial responsibility composite score to take into account the Financial Accounting Standards Board (FASB) Accounting Standard Update (ASU) 2016-2, which requires that leases be treated as both right-of-use assets and liabilities. Public entities must adopt 2016-2 for leases entered into after fiscal years starting on or after December 15, 2018. Private entities must adopt the new standard starting January 1, 2020. FASB, however, has proposed delaying the private entity implementation date to January 1, 2021.

The Department of Education’s Final Rule exempts all leases entered into before December 15, 2018 from application of 2016-2 for composite score purposes. For leases entered into on or after December 15, 2018 (which the Department states can include extensions or modifications of pre-December 15, 2018 leases), auditors must apply FASB ASU 2016-2 and, as a result, some institutions’ composite scores may be adversely impacted. Since FASB ASU 2016-2 does not subject private entities to the new standard until at least January 1, 2020, there is an argument that the Department should not have an institution’s official composite score calculation reflect the new lease accounting standards until such time as the new standard is required under GAAP, but the Department has not yet clarified its position on this point (despite several pending requests for clarity on that point). Bottom line, as institutions negotiate new leases or seek to extend or modify current leases, they should consult Title IV counsel and their auditors for guidance because certain lease terms may significantly impact the carrying value of a leased asset under the new FASB standard as applied by the Department of Education.

First Circuit Rejects Professor’s First Amendment Challenge to Maine Law Governing University Collective Bargaining

by John M. Simpson.

On October 4, 2019 the U.S. Court of Appeals for the First Circuit affirmed the judgment of a district court dismissing an action brought by an economics professor at the University of Maine at Machias seeking to invalidate, on First Amendment grounds, a Maine statute that governs the collective bargaining process between the University of Maine system and its faculty.  Reisman v. Associated Faculties of the Univ. of Maine, No. 18-2201 (1st Cir. Oct. 4, 2019).    Continue reading First Circuit Rejects Professor’s First Amendment Challenge to Maine Law Governing University Collective Bargaining

Avoiding Land Mines: Do Your Homework on that New Campus or Instructional Location

Authors: Julie Mebane, Partner (Real Estate) and Katherine Brodie, Partner (Higher Education)

Nothing is more unwelcome than a big surprise after your institution has invested hours and dollars in a new instructional location. Up front due diligence is essential, and it needs to identify issues that may impair your ability to operate at a new location or expose the institution to significant liabilities. Be sure to consider the following and utilize counsel well versed in college and university property acquisitions and applicable regulations to examine any problems you may encounter:

  • What is the zoning of the property? Is there a zoning report that can be reviewed (if not, consider ordering one)? Does the property have the number of parking spaces required by law or local ordinances?
  • Are there any CC&Rs (covenants, conditions and restrictions) recorded against the property? Get and review copies to make sure they don’t prohibit any intended uses.
  • Is there a conditional use permit (CUP) or planned development permit affecting the property? If so, review this for any use restrictions.
  • What is the current condition of the property and the physical plant? Check for current building permits, and consider getting a professional inspection report on the building’s systems.
  • Does the current owner have a title policy covering the property? Important information about the location and its history can be gained from this document.
  • Does the owner have a Phase 1 environmental assessment regarding any hazardous materials at the location? Request and review this for possible issues, and keep it as a baseline in case of future problems.
  • Are there any litigation or condemnation actions that have been filed relating to the property? These can be red flags for any future owner or occupant.
  • Is the property in a designated flood zone, near an earthquake fault line, or otherwise located in an area exposed to natural disasters? Natural hazard disclosure reports can be obtained without much expense.
  • Was the property previously used by an institution participating in U.S. Department of Education Title IV federal student aid programs and did that institution close with unpaid liabilities owed to the Department? If so, moving into that space by lease or purchase could expose your institution to assumption of the unpaid liabilities of the previous owner.
  • Do you know your state, accreditor and Department of Education reporting obligations? These agencies must generally be notified of any change of location or any new space where more than 50% of an eduational program will be offered, or the institution risks liability for all Title IV funds disbursed to students at the new location and potentially other regulatory sanctions.

Most of these questions can be answered with the help of a forthcoming landlord when negotiating a new lease and with the assistance of experienced counsel. If the property is being purchased, the seller is likely required by law to make certain representations and warranties and to disclose property-related information and materials during the buyer’s due diligence period.

So don’t be surprised – get the information you need before you commit to a new campus or instructional location.