American Rescue Plan: College Students


The American Rescue Plan provides for nearly $40 billion for colleges and universities and their students. At least half of the funds received by colleges and universities must be used for emergency financial aid grants. Details are below. 


In addition to the American Rescue Plan, you may be eligible for ongoing relief provided by previous COVID-19 relief laws, including the Families First Coronavirus Response Act (“Families First”), the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) of 2021as well as executive actions taken by President Biden. 

The CARES Act, CRRSAA, and American Rescue Plan together provided an unprecedented $76.2 billion to institutions of higher education and students. The CARES Act also established a freeze on student loan payments, interest, and collections for nearly 40 million student loan borrowers that have been extended by President Biden through at least September 30, 2021.   

The $76.2 billion Higher Education Emergency Relief Fund (HEERF) can be used to defray expenses for institutions of higher education, such as lost revenue, technology costs associated with a transition to distance education, and increased costs from responding to the pandemic like testing, contact tracing, and vaccination. It also provided and grants to students for food, housing, course materials, technology, health care, and child care. The American Rescue Plan provided more than half of all the funding available for the HEERF. 

Federal Student Loan Payments 
President Biden signed a presidential memorandum on January 20, 2021, that extended the student loan relief provisions originally authorized by the CARES Act. If you have a student loan held by the U.S. Department of Educationall of your payments are suspended through September 30, 2021, and you will not accumulate interest during that time. Unfortunately, borrowers with commercially-held FFEL, school-held Perkins Loans, or Public Health Service Act loans are not automatically eligible for this forbearance, but if you have this type of federal loan, you can generally consolidate such loan into a Direct Loan to obtain the freeze on payments or interest. 

Eligible borrowers should have had their payments and interest frozen in March 2020. When regular student loan payments resume, the U.S. Department of Education will notify student loan borrowers ahead of time. These notices are intended to provide a transition period to help borrowers stay on track as regular loan payments begin again and to enroll in other relief options (such as income-driven repayment) at such time. For more information, visit the Federal Student Aid’s website here.

Student Loan Collections 
You are also protected against forced collections on federal student loans (such as garnishment of wages, tax refunds, and Social Security benefits) and negative credit reporting during this time period. More information on federal student loan payments and collections can be found here. 

Student Loan Payments by Employers 
Due to provisions in the CARES Act and CRRSAA, if your employer provides a student loan repayment benefit, you can temporarily exclude up to $5,250 in these payments from your income. The $5,250 cap applies to both the new student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, or books) provided by the employer under current law. The provision applies to any student loan payments made by an employer on behalf of an employee after March 27, 2020, and has been authorized through December 31, 2025. 

Student Loan Relief Tax Exclusion 
The American Rescue Plan ensures that all COVID-19 student loan relief is tax-free for loans canceled between January 1, 2021 and December 31, 2025. For example, if your income-driven repayment plan becomes eligible for loan forgiveness in that time period, the amount of the loan that is discharged will not be included in the calculation of your gross income and you will not be taxed on the amount. 

Emergency Financial Aid Grants for Students 
Colleges and universities are required to use no less than 50 percent of their HEERF amount to provide emergency financial aid grants to students, which may be used for any component of the student’s cost of attendance, such as tuition, fees, food, housing, health care (including mental health), or child care. In making emergency financial aid grants to students, colleges and universities must prioritize grants to students with financial need. The U.S. Department of Education provides guidance to colleges and universities about this assistance, along with eligibility and administrative guidelines. More information is available from your school’s financial aid office and from the U.S. Department of Education here. 

Increased Financial Aid Due to Unemployment
COVID-19 has created widespread economic disruption. Students may have the ability to get an increase in their Federal, State, or institutional financial aid through a process known as a “Professional Judgment” if the student, or a supporting family member, lost their job and is unemployed or has significantly lower income than when the student filled out their FAFSA. The U.S. Department of Education has reminded colleges of their ability to make these adjustments. Students should contact their financial aid office for more information. 

Unemployment Assistance 
The American Rescue Plan Act extended a range of Federal unemployment assistance programs through September 6, 2021 that had been set to expire in mid-March 2021. The Pandemic Unemployment Assistance (PUA) program provides benefits to many workers who are usually ineligible for traditional unemployment assistance because they do not have sufficient work history, do not earn enough to qualify for the minimum benefits, or are enrolled as full-time students and are thus considered “unable and unavailable to work.” Full-time students, and students who are self-employed or work part-time (including gig workers) can qualify for PUA if they lose their jobApproximately 11 million college students work, and three-quarters of them work 20 hours or more each week, and many on-campus jobs have been disrupted by COVID-19. The maximum weekly unemployment benefit varies by state. To apply or get more information, contact your state unemployment insurance agency. 

Economic Impact Payments (aka “Stimulus Checks”)
The American Rescue Plan provides $1,400 direct payments to eligible individuals, including adult dependents under the age of 24. Many students were excluded from previous economic stimulus payments. This crucial improvement will allow many college students, or their parents, to better address financial needs. The payments are generally based on an individual’s most recent tax return, so it is important to file taxes to make sure that you are getting the maximum amount you are eligible for, particularly if you have recently experienced a loss in income since you last filed. Nonfilers will not get a payment, and must file their taxes by May 15, 2021 to claim the paymentHouseholds will receive an additional $1,400 for each dependent, which can assist student parents. More information is available from the IRS here 

Increased Child Tax Credit
At least 1 in 5 students are parenting a child while enrolled in college, and student parents face disproportionate rates of food and housing insecurity. The American Rescue Plan contained a massive expansion of the Child Tax Credit (CTC) to $3,000 per child, or $3,600 for children under 6. Note that, like the Economic Impact Payments, a student must file taxes to claim the CTC. The changes also made the credit fully refundable and extended support to dependents ages 17 or under. Many families may receive the benefit monthly, up to $300 a month per child from July through the end of 2021. 

Help with Food
CRRSAA provided a temporary expansion of the Supplemental Nutrition Assistance Program (SNAP) to help students and families afford food. Students with an “expected family contribution” of $0 (which includes students receiving the maximum Pell Grant) and students who are eligible for Federal Work-Study qualify for this temporary expansion. The U.S. Department of Education will email students who have an expected family contribution of $0, and students may present the email communication to local and State SNAP agencies. Students who are eligible for Federal Work-Study should contact their financial aid office. Students should contact their local SNAP offices to find out how to apply, or for other questions about their SNAP eligibility through the SNAP State Directory. 

Help with Broadband Access
Under CRRSAA, a new “Emergency Broadband Benefit will provide a discount of up to $50 per month towards broadband service for eligible low-income households and up to $75 per month for households on Tribal lands. Students who are eligible for federal Pell Grants are also eligible for the Emergency Broadband BenefitEligible households can also receive a one-time discount of up to $100 to purchase a laptop, desktop computer, or tablet from participating providers if they contribute $10-$50 toward the purchase price. The Federal Communications Commission is working to implement the Emergency Broadband Benefit as soon as possible, and more information is available here. 

Help with Health Care
The American Rescue Plan provides $34 billion to help individuals purchase insurance under the Affordable Care Act and caps health insurance payments for all Americans to 8.5% of household income through the end of 2022. The bill also allows individuals who have been laid off to maintain employer-sponsored health insurance coverage under COBRA without having to pay any premiums through September 30, 2021. To find health insurance coverage, visit 

Federal Work-Study
Colleges and universities may issue payments as a lump sum or in payments similar to a paycheck to students who receive Federal Work-Study and are unable to work due to work-place closures. More information is available from your school's financial aid office.

Help for Students Who Cannot Complete the Semester
If a student must drop out of school because of the COVID-19 pandemic: 

  • The term does not count against them for the amount of subsidized federal loans and Pell Grants they are eligible for; 

  • They do not have to return unused federal student loans or Pell Grants; 

  • The portion of the student’s loan taken out for the semester (or equivalent) is canceled if a student withdrew due to COVID-19; and 

  • Grades will not impact students’ ability to meet federal academic requirements to receive Pell Grants or student loans. 

More information can be found here. 

Additional Resources for Federal Financial Aid Questions 

Federal Student Aid 
The U.S. Department of Education's office of Federal Student Aid can help answer questions about the type of loans a student holds and what kinds of relief are available.    

Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau can review complaints and help to navigate financial products like student loans.