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Updated 5/8/2020 

Colleges and universities can exclude Federal Work-Study students when determining the number of employees for Paycheck Protection Program (PPP) loan eligibility, as well as the payroll costs for those students from the calculation of payroll costs used to determine loan amounts, according to a May 5 interim final rule from the Small Business Administration. The PPP was enacted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Excluding Federal Work-Study student employees may enable some small institutions to fall below the 500-employee limit required for PPP loan eligibility. The rule explains that without this exception, some small institutions would be precluded from receiving PPP loans due solely to their provision of financial aid to students in the form of work-study. It also may have resulted in the exclusion of small colleges whose part-time work-study headcount is large compared to their full-time faculty and staff headcounts. Institutions that applied for PPP loans prior to May 5 may rely on this rule.

In conjunction with other higher education associations, NACUBO has asked Congress to allow colleges and universities to exclude all student workers from employee headcounts for purposes of the PPP and any other loans aimed at providing pandemic-related relief for employers.

Other CARES Act Updates for Employers

The IRS has updated FAQs #64 and #65 regarding the Employee Retention Tax Credit (ERTC) to permit employers to treat health-care expenses as qualifying wages for purposes of the credit. The IRS also added a new FAQ #79, explaining that if employers repay their Paycheck Protection Program loan by May 14, 2020, it will be treated as though they never received a loan for purposes of the ERTC.

Contact

Mary Bachinger

Director, Tax Policy

202.861.2581


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