What is the HEROES Act?

On May 15, 2020 the House passed the Health and Economic Recovery Omnibus Emergency Solutions Act or HEROES Act, to further the federal response to the COVID-19 emergency through provisions to support the economy, public health, state and local governments, individuals, and businesses. The HEROES Act is intended to continue supporting the nation’s response to the COVID-19 pandemic throughout the federal government, including its response via several education-related programs.

It was proposed legislation acting as a $3 trillion stimulus package in response to the pandemic, intended to supplement the earlier Coronavirus Aid, Relief, and Economic Security Act (CARES Act) stimulus package enacted on March 27, 2020. In response to the rapidly evolving Coronavirus Disease pandemic, Congress and the Administration have taken several actions to support the continued education of elementary, secondary, and higher education students and to protect student loan borrowers and educational institutions from related economic hardship.

Key Factors of the HEROES Act

  • The HEROES Act would appropriate $146.7 billion for several education-related initiatives.
  • The Secretary of Education would distribute $90.0 billion through the State Fiscal Stabilization Fund (SFSF) to states for distribution to local educational agencies (LEA) and public institutions of higher education (IHE) providing relief to postsecondary education students and student loan borrowers; and provide financial support to states for LEAs and IHEs.
  • LEAs and public IHEs could use the SFSF funds for several purposes not necessarily related to the COVID-19 emergency.
  • An additional $10.2 billion would be available for allocation to public and private nonprofit IHEs, minority-serving IHEs (MSIs), and other specified IHEs to provide grants to students for eligible expenses and to defray select IHE expenses incurred as a result of the COVID-19 emergency.
  • An appropriation of $45.0 billion would be available to the Secretary of the Treasury to make private student loan payments on behalf of economically distressed borrowers and to forgive up to $10,000 of their private student loan debt.
  • The Federal Communications Commission (FCC) would receive $1.5 billion for the Emergency Connectivity Fund to support elementary schools, secondary schools, and libraries in purchasing equipment and services, including Wi-Fi hotspots, modems, routers, connected devices, and advanced telecommunications and information.
  • The HEROES Act would expand on the temporary federal student loan benefits made available under the CARES Act. It would extend authorization of CARES Act student loan payment suspension through September 2021 and interest accrual suspension through the later of September 2021 or after specified labor metrics show initial signs of recovery.
  • The HEROES Act would also authorize new loan benefits to borrowers. It would permit the Secretary of Education and the Secretary of Health and Human Services, to suspend loan payments, interest accrual, and collections for federal student loan types not covered under the CARES Act; and to cancel or repay up to $10,000 of loans for economically distressed borrowers.

The HEROES Act would expand on the temporary federal student loan benefits made available under the CARES Act and authorize new loan benefits to borrowers of federal student loans. The CARES Act provided approximately $14.0 billion for a Higher Education Emergency Relief Fund (HEERF), of which the Secretary was required to allocate funds to IHEs through three programs: Direct Grants to IHEs; Programs for Minority Serving Institutions (MSI programs); and the Fund for the Improvement of Postsecondary Education (FIPSE) program. The HEROES Act would provide approximately $10.2 billion for supplemental appropriations for IHEs through FIPSE and the MSI programs, and for select IHEs.

The HEROES Act would include special provisions for economically distressed borrowers. A borrower of a federal or private student loan would qualify as economically distressed if, as of March 12, 2020,

  1. The borrower’s loan was in default
  2. The borrower’s loan payment was at least 90 days past due
  3. The borrower’s loan was in forbearance or deferment under specified conditions
  4. The borrower had a $0 monthly payment amount under a federal income-driven repayment (IDR) plan, 69
  5. The borrower would qualify for a monthly payment of $0 under an IDR plan if the borrower’s loan was a federal student loan rather than a private loan

The HEROES Act would direct the Department of Education, in consultation with the Secretary of Labor, to carry out activities to inform applicants for and recipients of unemployment benefits of the availability of federal student aid through the HEA. The act would further establish various avenues of outreach to FAFSA filers who may qualify for means-tested benefits beyond student aid.