The U.S. Department of Education says it will not enforce previous guidance limiting which students can receive federal emergency grants through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It made the announcement Thursday evening in an update to its website.

But it's unclear by how much the decision widens the pool of students who qualify for the money, financial aid experts say. The department's update says its guidance is not legally binding — a nod to an executive order issued last year. Instead, it points to a section of the U.S. Code that prevents certain immigrants and non-U.S. residents, including unauthorized and international students, from receiving public support.

The department is "essentially trying to say we are not making up new policy here — you don't have to follow our guidance because it's guidance, but you have to follow other laws, and we are trying to help you do that," said Julia Martin, legislative director at Brustein and Manasevit, a law firm in Washington, D.C.

Dan Madzelan, assistant vice president of government and public affairs at the American Council on Education (ACE), contends the change is partly an attempt by the department to "inoculate themselves against lawsuits."

Monday is the department's deadline to respond to a legal challenge to the guidance's eligibility requirements brought by California's community colleges. In it, representatives of the colleges say the department's guidance "arbitrarily" excludes "hundreds of thousands of students" from receiving federal relief funding — including unauthorized students, recipients of Deferred Action for Childhood Arrivals (DACA), as well as U.S. citizens and permanent residents.

It is one of at least two lawsuits that takes aim at the department's decision to limit which students can receive funding through the CARES Act.

The legislation creates two pools of money, of around $6 billion each, for colleges: one to be passed along to students in the form of emergency grants and the other to be used for institutions' costs incurred responding to the pandemic. 

The department's latest update concerns the student grants. On April 9, the department said it would begin releasing those funds to colleges. It didn't specify whether there were any limits on who counted as a student, and neither does the legislation. The department stated in the certification agreement schools must sign that it did not consider the grants as federal financial aid under Title IV. 

Schools pressed the department for more information about what, if any, limitations it would put on how they could use the student aid funds. On April 21, the department followed up with additional parameters, saying colleges could give the money only to students eligible to receive federal financial aid. That move excluded unauthorized and international students.

The decision met immediate outcry. 

Unauthorized students already have limited avenues to receiving aid to help them through the pandemic. In all, they account for around 2% of higher ed enrollment in the U.S., according to a recent report. Of those roughly 450,000 students, about half are eligible for or receive DACA. The program offers some protections, but does not grant the residency status required under the section of the code that the department is now pointing to.

Limiting grants to Title IV-eligible students​ "was a way for them to exclude undocumented, DACA and international students without expressly saying so, and now here we are at a point where that is what they are doing," said Megan Coval, vice president for policy and federal relations at the National Association of Student Financial Aid Administrators.

Whether the update widens the pool of students who can receive the grants is another question. The guidance released on April 21 states that grant-eligible students are those who meet the requirements in Section 484 of Title IV of the Higher Education Act. That includes being a U.S. citizen or eligible noncitizen with a social security number and having a statement of educational purpose on file with the department. That statement of purpose is, effectively, a FAFSA form, said ACE's Madzelan.

However, the guidance also says students who haven't filed a FAFSA but meet the requirements to complete one can still get emergency grants. That inconsistency could open the guidance up to different interpretations — one of which could leave out students who qualify for federal financial aid.

Coval said her team is still working out who qualifies for funding under the latest update.

The department left the issue somewhat open-ended, which could be problematic for financial aid administrators distributing CARES funding, financial aid experts say. The update notes the department will not take any enforcement action based "solely" on how schools interpret its guidance, suggesting the department could still include that factor in an action along with other causes. 

Additionally, the department closed its update by saying it "continues to consider the issue of eligibility" for the emergency aid grants and "intends to take further action shortly."

Financial aid administrators tend to look for precise language, knowing the department can take strong action against schools that misapply federal financial aid rules, Madzelan said, though he added that less risk-averse administrators may think the current update provides sufficient cover. 

"It's how trusting are you of the department, basically, in terms of what they say is their enforcement policy," he said.