Student Aid Relief for Victims of Hurricane Katrina

September 9, 2005

Hurricane Katrina and its aftermath damaged or destroyed dozens of college campuses and affected tens of thousands of postsecondary students.  In response, the U.S. House of Representatives acted quickly to provide immediate student aid-related relief to students forced to withdraw because of this natural disaster, while also working in consultation with the U.S. Department of Education to develop additional assistance to meet the short- and long-term needs of the affected students and schools.

IMMEDIATE RELIEF – LEGISLATIVE ACTION

• On September 7, 2005, the House unanimously approved the Pell Grant Hurricane and Disaster Relief Act (H.R. 3169), a bill offered by Rep. Ric Keller (R-FL) to waive Pell Grant repayment requirements for students forced to withdraw from higher education due to a natural disaster.

• On September 8, 2005, the House unanimously approved the Student Grant Hurricane and Disaster Relief Act (H.R. 3668), a bill offered by Rep. Bobby Jindal (R-LA) complementing the earlier bill by extending the waiver authority to other types of grant aid under Title IV of the Higher Education Act.

IMMEDIATE RELIEF – ADMINISTRATIVE ACTION

• On September 2, 2005 , the U.S. Department of Education issued initial correspondence about flexibility within the federal student aid programs, including information on transfers, deadline extensions, and other guidance on how to administer the financial aid programs.  This letter is available online by clicking here.

• The Department also directed attention to previously published general guidance on how the administration of the Title IV aid programs would change in the circumstance of a natural disaster.  The Department indicated that it is developing more specific proposals for Congress to deal with Hurricane Katrina.  The previous guidance is available online by clicking here.

• On September 7, the Department launched a website with additional links to information on federal student aid and Hurricane Katrina.  That website is available by clicking here.

GUIDANCE AND FLEXIBILITY FOR STUDENTS & SCHOOLS

Under guidance issued by the U.S. Department of Education, significant flexibility and protections already exist for the students and schools affected by Hurricane Katrina.

• Financial aid calculations.  Through guidance issued last year by the Department, colleges and universities are able to adjust the cost of attendance used to calculate financial aid awards through the Expected Family Contribution (EFC), taking into account changes in families’ financial circumstances caused by Hurricane Katrina.  In addition, the guidance clarified that no special aid received by disaster victims from the federal or state governments will be counted as income or other resources for the purposes of calculating a family’s EFC.

• Student loan flexibility.  Under the guidance, students who withdraw from higher education because of a natural disaster are able to maintain “in-school” status for federal student loans, affording borrowers lower interest rates and the ability to defer interest payments or, for subsidized Stafford loan borrowers, to have no interest accrue on the loans.  The guidance also eases the administrative burdens on borrowers in repayment by permitting lenders to offer a 3-month administrative forbearance without obtaining any supporting documentation or written agreement from the borrower.

ADDITIONAL ASSISTANCE

The Education & the Workforce Committee is working in close consultation with the Department of Education and the congressional leadership to develop proposals that will meet the short- and long-term needs of students and the higher education systems in the Gulf Coast region.  Specifically, in the coming weeks and months the Committee will look at ways to address student loan relief, ease transfers from one institution to another, provide additional flexibility in student aid, and address ways to help institutions of higher education during this critical time.