The Coronavirus Response and Relief Supplemental Appropriations Act 2021 (CRRSAA) provided approximately $22.7 billion of supplemental funding to the Department of Education (the Department) through the Higher Education Emergency Relief Fund (HEERF) II program.
The CRRSAA provides more funding through the HEERF program, but it also adds more questions. Here’s what you need to know about the HEERF program.
We broke down the details of the original Higher Education Emergency Relief Fund program.
Overview of the Changes to the HEERF Program
The updates and supplemental funding made some changes to the HEERF program:
Impact of the Changes to Higher Education Institutions
Financial Grants to Students
The CRRSAA requires an institution to provide the “same amount” of grants to students as they were required to provide under the CARES Act, making grants to students a fixed amount rather than a percentage of the total award. For example, an institution that was required to pay $300,000 in grants to students under the CARES Act is required to pay $300,000 in grants to students under the supplemental funding, regardless of whether their total allocation of HEERF II funds was greater than $600,000. The amount required to be distributed to students will be added to the institution’s Student Aid Portion (Federal Assistance Listing Number 84.425E) award.
This change is impactful to institutions because the CRRSSA has been allocated approximately $8 billion more in funding than the CARES Act, which means there is going to be more HEERF II grant funds used at the institutional level than under the CARES Act.
One significant difference between grants to students under the CRRSAA compared to the Cares Act is that institutions must now prioritize grants to students that have exceptional need, such as students who receive Pell Grants. However, a student does not need to receive a Pell Grant to be considered to have exceptional need.
Rather, institutions should develop a process for evaluating student need and determining which students have exceptional need. It is important that the institution’s evaluation process and subsequent awards of grants to students with exceptional need be thoroughly documented to ensure there are records in place to support compliance with this provision of the CRRSAA because the CRRSAA does not specifically define exceptional need.
Another significant difference is that the CRRSAA has also provided additional flexibility with how students use their grants, allowing for grants to students to be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus (costs such as tuition, food, housing, healthcare, or childcare). The institution is also, upon receiving written or electronic consent from the student, now allowed to apply the grant directly to the student’s account. Alternatively, they may also provide the grants to students using checks, electronic transfer payments, debit cards and payment apps that meet the Department’s existing requirements for paying credit balances to students. This change gives the student the discretion to use their grant to help pay amounts owed to the institution.
Finally, the CRRSAA provides funding for students enrolled exclusively in distance education courses (through an allocation of funds) and for students of proprietary institutions (through the establishment of a new program). These students were not previously eligible for funding. Supplemental funds awarded for these two groups of students are required to be disbursed as grants to students with exceptional need as discussed above
Financial Grants to Institutions
Financial grants to institutions also changed under CRRSAA to provide greater flexibility to institutions regarding how their HEERF II allocations are expended. The CRRSAA allows institutions to use their grants to defray expenses associated with COVID-19, including lost revenue. Reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff training, and payroll are all types of qualifying expenses. At this time, it is not clear whether expenditures used as qualifying HEERF II expenditures need to have occurred after passing of the CRRSAA on December 27, 2020.
The most notable change is related to the inclusion of lost revenue as an allowable institutional expense. Organizations are asking:
Lost revenue is not a concept that is explained in the funding guidance, and the Department has provided very little information about the concept of lost revenue. As institutions evaluate how they will use the supplemental funding, questions around lost revenue will certainly continue. For now, there is little that we know about the best course of action to take when evaluating lost revenue.
The CRRSAA also allows institutions to carry out student support activities authorized by the Higher Education Act (HEA) of 1965, as amended, that address needs related to COVID-19. In general, the HEA’s six titles are the foundation of the United States educational system and include Title IV, which establishes student financial assistance. The Department has interpreted this provision of CRRSAA to allow grants to institutions to be used to support the transition to virtual activities, purchase personal protective equipment or support other innovative learning methods that would allow an institution to engage in student support activities authorized under the HEA, such as TRIO and GEAR Up.
Finally, institutions can use the institutional portion of their grant to make additional grants to students. In light of the increased allocations to institutions from the change in the allocations to students, and the increased level of supplemental funding, the Department is strongly encouraging institutions to expand the support they are providing to students that have significant financial needs resulting from COVID-19, subject to the Public and Nonprofit Institution Grant Funds for Students Supplemental Agreement. However, the impact on Title IV aid from additional grants to students is unknown, so institutions should be sure to fully evaluate a student’s total financial aid package.
Restrictions on use of grants to institutions require that no funds can be used for pre-enrollment recruitment activities, marketing or recruitment, endowments, capital outlays for athletic facilities, sectarian instruction or religious worship, senior administrator or executive salaries, benefits, bonuses, contracts, incentives, stock buybacks, shareholder dividends, capital distributions, stock options or any other cash or benefit for a senior administrator or executive.
What to Watch Out For
Maintaining Compliance with Your Higher Education Institution
The additional relief legislation provided added benefit for higher education institutions. It’s important to understand the requirements of these provisions and how to comply with them.
Need help understanding how HEERF funding applies to you and how to comply?