As most colleges and universities continue to operate primarily online or in hybrid form to help combat the COVID-19 pandemic, Congress has passed the American Rescue Plan Act (ARPA), containing nearly $40 billion in relief aid for postsecondary institutions.
Similar to the postsecondary aid packages passed as part of the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) at the end of 2020, and in the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March of last year, the relief for colleges and universities is split into a large pot of aid containing allocations for most public and private two- and four-year institutions, with additional allocations made for Historically Black Colleges and Universities, Tribal Colleges and Universities, and Hispanic-Serving Institutions and other Minority-Serving Institutions.
The new funding has similarities to both previous relief bills. The allocation formula to determine each school’s award amount for these funds will be nearly identical to the one used to determine CRRSAA allocations. However, as with CARES Act allocations, institutions will be required to spend half of their ARPA allocations on emergency grants to students, with the other half available for institutional expenses.
An additional change in the ARPA eliminates the CRRSAA provision that reduced and modified the allocations made to institutions that were required to pay the net investment income excise tax.
While the stated allowable uses for ARPA allocations are otherwise identical to the allowable uses of CRRSAA allocations, two new requirements mandate that institutions also must use a portion of their allocation to “implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines;” and “conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances, described in section 479A of the [HEA].”
While earlier drafts of the legislation gave institutions sole authority to determine which of their students should receive emergency grants, this provision was ultimately removed in the final bill as the Departments of Education and Justice continue exploring the legality of providing these grants to Dreamer and international students.
As with CARES and CRRSAA, states will again be required to meet certain “maintenance of support” provisions for both K-12 and postsecondary education in order to receive other ARPA allocations made to state and local governments, which cannot include their support for capital projects or research and development, or tuition and fees paid by students.
90/10 Rule Changes
Another notable change in the bill would end the 90/10 loophole that dictates how much revenue for-profit colleges and universities can receive from the federal government in comparison to other sources. The change will expand the 90 percent cap on federal government sources to include all types of federal assistance, including Post-9/11 GI Bill and other student veterans’ benefits. The change, which NACUBO has long supported, will be implemented for applicable institutions in their 2023 fiscal year.
Employer Tax Provisions
The employer credits for sick and family leave enacted as part of Families First Coronavirus Response Act are extended to September 30, 2021. Notably, public colleges and universities are now eligible to receive the tax credit; however, this change is not retroactive and will not permit those institutions to claim the credit for leave provided prior to March 31, 2021. The voluntary nature of the provision as first modified in CRRSAA, with no mandatory requirement for eligible employers to provide this leave, is also retained in the bill. Employers may continue to opt into offering the expanded leave and taking the related credit. The bill also increases the limit on the credit for paid family leave up to $12,000 per employee.
The bill also extends the Employee Retention Credit (known as the ERTC) through the end of 2021. The ERTC is equal to 70 percent of qualifying wages and health benefits, capped at $10,000 in wages per employee per quarter, paid to employees of private and public universities that are subject to government orders to shut down partially or completely. Public institutions may only claim the ERTC for qualifying wages and benefits paid beginning January 1, 2021.
Finally, the bill extends through August 29, 2021, a CARES Act provision that provides federal support to cover 50 percent of the costs of unemployment benefits for employees of state and local governments and nonprofit organizations.
Of relevance to certain small, private institutions and some independently registered auxiliary services, both the Paycheck Protection Program and Targeted Economic Injury Disaster Loan grant program received new infusions of available aid dollars of $7 billion and $15 billion, respectively.
State and local governments also are set to receive additional direct aid of over $350 billion in the ARPA. While this aid may not flow directly to public postsecondary institutions, NACUBO has advocated that this additional direct state and local aid is needed to help states address past and future budget shortfalls because historically, public colleges and universities are among the first to see their state support reduced in times of state budget crisis.