April 24, 2020

U.S. Department of Education Releases Additional Details on CARES Act Emergency Assistance for Higher Education Institutions and Students

On Tuesday, April 21, 2020, the U.S. Department of Education (ED) released additional information regarding emergency assistance for higher education institutions and students under the Higher Education Emergency Relief Fund (HEERF) established by Section 18004(a)(1) of the Coronavirus Aid, Relief and Economic Security (CARES) Act, which is part of more than $14 billion allocated by the CARES Act to postsecondary education. The details include FAQs regarding the previously released grant of HEERF monies that must be delivered to eligible students through direct emergency grants, as well as instructions and FAQs regarding the availability and use of other HEERF amounts for institutional expenses arising from significant changes to the delivery of instruction due to COVID-19.

As described in our previous summary of the CARES Act’s educational stabilization funds, institutions receiving HEERF monies must use at least 50% of those funds to provide emergency financial aid grants to eligible students for certain personal expenses arising from the disruption to their education due to coronavirus. Institutions may also use the other 50% of their HEERF program receipts (the “institutional portion”) for additional emergency grants to students, or they may use that second grant of funds for institutional expenses arising from coronavirus-driven changes to their delivery of instruction.

Accessing and Using Institutional Portion of HEERF Allocations

In a letter to college and university presidents accompanying a breakdown of, as well as a methodology for, each institution’s HEERF allocation, Secretary of Education Betsy DeVos stated that schools may use the “institutional portion” for an array of purposes, including the expansion of remote learning capacities, increased technology capacity, and related faculty and staff training and support. Institutions may also use these funds to expand student support, including for housing, food, childcare, and technology costs that students are now incurring due to the coronavirus pandemic. The Secretary’s letter also indicated that approximately half of institutions had thus far completed the application to receive the first grant of HEERF monies, which is required to be used entirely for emergency student aid, and expressed hope that other institutions would act quickly to do so. Importantly, both the Secretary’s letter and the accompanying FAQ emphasize that institutions must complete and submit the application for the emergency student grant portion of their HEERF allocation in order to receive the second grant that may be used for institutional expenses. In other words, because 50% of an institution’s total HEERF program receipts must be used for the emergency student aid, institutions may not participate solely in the second tranche.

The Secretary’s announcement is accompanied by an FAQ regarding the “Recipient’s Institutional Costs” for which these emergency funds may be used. To receive its allocation, an institution must complete and submit a Funding Certification and Agreement through the grants.gov website. ED has posted submission procedures and an application guide for institutions. Upon receipt and verification of the agreement by ED, institutions may draw down their RIC funds using the ED’s G5 system. The agreement mandates, among other things, that institutions will not use the funds to pay contractors for pre-enrollment recruitment activities; that they will use the funds to pay for costs for which the institution has a “reasoned basis” to conclude has a “clear nexus to significant changes to the delivery of instruction due to the coronavirus;” that they will continue to pay employees and contractors “to the greatest extent practicable;” that they will comply with all applicable reporting requirements, including the submission of quarterly reports to ED; and that they will use the funds within one year, also “to the greatest extent practicable.” In addition, the ED’s FAQ for the institutional portion of HEERF includes the following specific guidance:

  • As noted above, an institution must have entered into the Funding Certification and Agreement for its grant of emergency student aid under the HEERF program in order to receive its grant for the institutional portion of funds.
  • The institutional portion of HEERF allocations may be used to make additional emergency grants to students experiencing educational disruptions due to the coronavirus, provided that the students are eligible under the separate guidance issued for such emergency student aid (which, as noted below, does not include students that were enrolled exclusively in online programs as of March 13, 2020).
  • The institutional portion of HEERF allocations may be used by schools to reimburse themselves for refunds provided to students on or after March 13, 2020. Similarly, it may be used to purchase equipment, software, online licensing fees, internet service, hotspots or other items required for their students to transition to online instruction due to the coronavirus. If institutions purchased such items on their students’ behalf on or after March 13, 2020, they may also use the institutional portion of their HEERF allocation to reimburse themselves for such prior purchase.
  • Institutions may award scholarships, or provide payment for future academic terms, from this portion of their HEERF allocation only, as the CARES Act requires, if those scholarships and payments to students are associated with significant changes to the delivery of instruction, or to campus operations, due to the coronavirus.
  • For institutions that use an online program management (OPM) provider, the institutional portion of HEERF monies may be used to pay additional per-student fees for access to the distance learning platform, learning management system, online resources or other support services. However, the CARES Act prohibits an institution from using any HEERF monies to pay third-party recruiters or OPMs for recruiting and enrolling new students.
  • Institutions should keep detailed records of their expenditure of any funds received under the HEERF program and should be prepared to describe to ED any internal controls adopted by the institution to ensure that funds are used only for allowable purposes and under existing cash management principles. ED intends to publish in the Federal Register a further notice regarding these reporting requirements.

FAQs Regarding Student Emergency Grants Portion of HEERF Allocations

Our previous summary of the HEERF allocations for emergency student aid is available here. Again, emergency student grants relate to a student’s expenses arising from the disruption of campus operations due to coronavirus. The Department’s FAQ for the minimum 50% student aid portion of HEERF receipts includes, among other items, the following specific guidance:

  • An institution cannot reimburse itself from the student portion of HEERF allocations for any amounts associated with:
    • refunds it has provided to students for room and board, tuition, and other fees.
    • information technology hardware (such as laptops and hotspot internet devices) it has provided to students.
    • payments made to student workers for campus jobs.
    • grants to students to pay outstanding or overdue student bills to the institution.
  • Institutions must maintain documentation that any reimbursements for institutionally funded emergency grants to students were made in accordance with the CARES Act. The only eligible reimbursements are those that meet all of the below criteria:
    • for authorized expenses for coronavirus-related disruptions to campus operations as set forth in the section 18004(c) of the CARES Act.
    • made to students eligible to receive emergency financial aid grants.
    • made on or after March 27, 2020.
  • Students that were enrolled exclusively in online programs as of March 13, 2020, are not eligible for emergency student grants under the HEERF program.
  • Only students that participate in (or that are eligible to participate in) the Federal Student Aid programs authorized by Title IV of the Higher Education Act of 1965 may receive funds under the HEERF program. This includes students that have filed a Free Application for Federal Student Aid (FAFSA) or that are eligible to do so (i.e., the student meets all of the requirements for eligibility as may be confirmed through the FAFSA, including U.S. citizenship or eligible noncitizen status; a valid Social Security number; registration with the Selective Service, if the student is male; and a high school diploma, GED or other acceptable high school completion credential).
  • Institutions must deliver the emergency student grants using checks, electronic transfer payments, debit cards or payment apps that adhere to ED’s requirements for paying credit balances to students. Such payments may not be encumbered by the institution, meaning that any debts owed to the institution may not be deducted from the payments.
  • Institutions must comply with the reporting requirements under section 15011 of the CARES Act, as well as report to ED: how grants were distributed to students; an explanation of how the amount of each grant was calculated; and any instructions the institution gave to students about the grant. ED intends to publish in the Federal Register a further notice regarding these reporting requirements.
  • Each institution accepting HEERF monies must continue to pay its employees and contractors “to the greatest extent practicable based on the unique financial circumstances of each institution,” but cannot use HEERF monies for such payments.
  • Amounts disbursed by ED under the HEERF program to for-profit institutions will not be counted as revenue for purposes of the 90/10 rule.

We are continuing to closely monitor developments from ED and other education regulatory authorities related to the coronavirus pandemic. Should you have questions regarding this matter, or other educational regulatory matters, please do not hesitate to contact any member of our Education team, or your usual contact at Faegre Drinker.

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