Higher Education Emergency Relief Funding Update

The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) signed into law on December 27, 2020 authorized $81.88 billion in support for education, in addition to the $30.75 billion appropriated for education in the Spring through the Coronavirus Aid, Recovery, and Economic Security (CARES) Act. Of the $81.88 billion, $21.2 billion has been made available to Institutions of Higher Education (IHE) to serve students and the institutions themselves. This funding is being referred to as the Higher Education Emergency Relief Fund (HEERF II or HEERF 2.0). IHEs that have already been approved for CARES Act HEERF awards are not required to submit a new or revised application and should have received notice of funding, which was made available on January 14, 2021. The differences between CARES act funding and CRRSAA funding are highlighted below.

Allocation of Funding:

For IHEs receiving CARES funding, there is still an allocation between the student portion and the institution portion; however, the allocation favors the institution portion in CRRSAA. The amount allocated to the student portion must be at least the amount allocated to the CARES act for student aid. A simple example would be an institution received $1 million in CARES act funding, $500,000 for the student portion and $500,000 to the Institutional portion. If the institution is then allocated $1.5 million for the CRRSAA funds, $500,000 of those funds must be allocated to the student portion and the remaining can be used for institutional expenses; however, the Department of Education still strongly encourages allocations to students. As the amount allocated to institutions is higher than the amount allocated during the CARES act, additional amounts should be available for the institutional portion of the funding.

Student Funding:

Students who are enrolled exclusively in distance education courses are now included in the CRRSAA allocation formula, which means an institution with a large presence of distance education can receive additional funds under CRRSAA. In addition, students enrolled in distance education courses are eligible for grants from their IHE. Previously, if students were enrolled exclusively online there was a stricter eligibility requirement, and they were usually not considered eligible for CARES act money. CRRSAA requires that institutions prioritize students with exceptional need, such as Pell grant recipients. The CRRSAA also allows the IHE to credit a student’s account for tuition and fees, but only if the student consents to the credit to their account.

Institutional Funding:

One of the biggest issues with the CARES funding was the restriction on reimbursement of lost revenues to the IHE. CRRSAA has expanded the flexibility in the allowed uses of the institutional portion of the funding. CRRSAA allows IHEs to defray expenses associated with the pandemic including lost revenue, reimbursement for expenses already incurred, technology costs, faculty and staff trainings, and payroll. In addition, other allowable uses include carrying out student support activities authorized by the Higher Education Act addressing needs related to the pandemic and making additional financial aid grants to students. Student support activities are further defined as utilizing CRRSAA funds to carry out TRIO and Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) to the extent that those activities address needs related to the pandemic. The most important update is that any remaining CARES act funding that is available as of December 27, 2020, now takes on the expanded uses noted above. All expenses related to the CARES and CRRSAA money should be documented and maintained for audit purposes, especially how the expenditures relate to the pandemic.

IHEs may also charge indirect costs to both CARES Act (after December 27, 2020) and CRRSAA utilizing the institutional portion of the funding. The indirect costs rate will be the on-campus rate specified in an institution’s negotiated indirect cost rate, or if there is not an indirect cost rate, the de minimis rate of 10% of modified total direct costs. Direct administrative costs can be charged to the grants as well and must be documented as reasonable and necessary for the performance of the grant per the cost principles of the Uniform Guidance.

There will be additional guidance for quarterly and annual reports in upcoming announcements. The Department of Education’s website will publish reporting requirements when issued. The Department of Education issued an FAQ on January 14, 2021.