The Department of Education has announced the availability of the largest pot of aid allocated to colleges and universities under Section 314 (a)(1) of the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA). The available aid totals $20.2 billion and the allocations, with some modifications, are similar in nature to the funds allocated under Section 18004(a)(1) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and will be available for schools to draw down in two different portions: an institutional share and a share earmarked for emergency grants to students.
In conjunction with its announcement, ED has also released allocation tables, an FAQ document, and a comparison chart outlining the difference between CARES Act HEERF allocations and this latest set of aid.
Institutions that received allocations under Section 18004(a)(1) of the CARES Act do not need to submit any additional materials to receive these funds, unless the school paid or will be required to pay the net investment income (NII) excise tax in tax year 2019. For schools not required to pay the NII tax, the project director identified on the institution’s most current Grant Award Notification (GAN) will automatically receive an email indicating that a supplemental award has been made to their institution. Since the act of drawing down the funds constitutes an institution’s acceptance of the new terms and conditions under the CRRSAA and new Supplemental Agreements, business officers should review the documents thoroughly to ensure institutional compliance.
Institutions that were required to pay the NII tax, and do not participate in authorized work college programs, must submit to ED a required notification of the tax paid to receive their allocation, and their allocation use is limited to making additional financial aid grants to students or for sanitation, personal protective equipment, or “other expenses associated with the general health and safety of the campus environment related to the coronavirus emergency.” Schools may choose to seek a waiver of these limitations.
Finally, institutions are required to be up to date with all CARES Act Higher Education Emergency Relief Fund (HEERF) reporting requirements before they may draw down additional relief funds. This includes quarterly reports and the annual report that is due on February 1. ED has indicated that schools that haven’t yet completed their HEERF reporting “may receive delayed supplemental…awards and/or may receive awards with a restriction on the ability to drawdown those awarded funds (stop payment status) until the institution has satisfied its CARES Act HEERF reporting obligations.”
Allocations for Emergency Grants to Students
Although this latest round of relief funding is similar in nature to the CARES Act Section 18004(a)(1) HEERF aid, ED has allocated the amounts for the institutional share and the share for emergency grants to students in a slightly different manner, as required by the CRRSAA. Schools are still required to spend the entirety of their allocation earmarked for emergency grants to students on providing financial aid to students, but the amount in this allocation is equal to the amount of funding in financial aid grants to students that was required to be provided under the CARES Act HEERF, even though this may not constitute 50 percent of a school’s total Section 314 (a)(1) allocation, as was the case with HEERF Section 18004(a)(1) funds. The amount of funds in the student aid-specific allocation represents the minimum amount that schools must use for financial aid grants to students.
ED’s notice indicates that “an institution of higher education must prioritize grants to students with exceptional need, such as students who receive Pell Grants” but recipients don’t have to exclusively be Pell recipients or Pell eligible. Unlike the CARES Act HEERF, even students exclusively enrolled in distance education are eligible to receive aid from these funds, and ED has indicated that its interim final rule dictating that CARES Act HEERF student aid recipients be Title IV eligible to receive funds is not applicable to CRRSAA funds. Further, the aid may be used for any component of the student’s cost of attendance or for emergency costs that arise due to the coronavirus pandemic, such as tuition, food, housing, health care (including mental health care), or childcare.
There are certain restrictions for institutions in passing along this aid to student recipients. Schools may not condition the receipt of financial aid grants to students on continued or future enrollment in their institution. Institutions may not use an awarded financial aid grants to satisfy a student’s outstanding account balance unless it has obtained the student’s written (or electronic) affirmative consent or it requires such consent as a condition of receipt of or eligibility for the financial aid grant.
Because this aid is meant to be provided in full to students, schools may not charge any indirect or administrative costs to funds made available under this CRRSAA allocation. Additionally, ED indicates that schools must minimize the time between drawing down their funds from G5 and paying out the aid, stating that if schools do not pay distribute funds “within 15 calendar days it may be subject to heightened scrutiny by the Department, Recipient’s auditors, and/or the Department’s Office of the Inspector General (OIG).”
Allocations for Institutional Use
Institutional allocations from CRRSAA Section 314 (a)(1) may be used broadly to defray lost revenue expenses or for other expenses associated with coronavirus, reimbursement of expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll. Funds may also be used to carry out student support activities authorized by the HEA that address needs related to coronavirus, or to make additional emergency grants to students.
Effective December 27, 2020 (the date of enactment of the CRRSAA), schools that still have unspent funds from their CARES Act Section 18004(a)(1) institutional share may now use those funds in accordance with the uses outlined above for their institutional portion under the CRRSAA, provided that they still spend a full 50 percent of their CARES Act Section 18004(a)(1) allocation on emergency grants to students.
Similar to the CARES Act HEERF Section 18004(a)(1) institutional share, this allocation may not be used to “fund contractors for the provision of pre-enrollment recruitment activities; marketing or recruitment; endowments; capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship; senior administrator or executive salaries, benefits, bonuses, contracts, incentives; stock buybacks, shareholder dividends, capital distributions, and stock options; or any other cash or other benefit for a senior administrator or executive.”
As with the portion earmarked for students, ED has indicated that schools must minimize the time between drawing down their funds from G5 and using this aid, stating that if a school does not pay incurred obligations “within 3 calendar days it may be subject to heightened scrutiny by the Department, Recipient’s auditors, and/or the Department’s Office of the Inspector General (OIG).”
Unlike the portion earmarked for students, institutions may charge indirect costs to funds made available under this award at their current negotiated indirect cost rate.
Similar to the CARES Act HEERF, both allocations from the CRRSAA Section 314 (a)(1) funds are subject to Single Audit Act requirements and have a one-year performance date from the date of the Grant Award Notification. An institution that receives the aid is required to “the greatest extent practicable, continue to pay its employees and contractors during the period of any disruptions or closures related to coronavirus.”
ED also indicated that there will be future reporting requirements tied to use of these awards, which will be specified at a later date.