Important note: Legislation and guidance on this topic are constantly evolving. Information is current as of date of publication.
Section 18004 of the Coronavirus Aid Relief and Economic Security (CARES) Act established the Higher Education Emergency Relief Fund (HEERF), providing emergency funds to institutions of higher education that have made substantial changes to the delivery of instruction due to COVID-19. However, certain rules and stipulations determine how institutions must spend the funding they receive.
In response to institutions’ questions about complying with these rules and regulations, the US Department of Education (ED) has published FAQs about the HEERF on ED’s website.
Below is an overview of key FAQs and ED’s responses to help your higher education institution comply with HEERF-related requirements.
According to Sections 18004(a)(1) and 18004(c) of the CARES Act, institutions may use up to 50% of HEERF funds received to cover costs related to instruction-delivery changes resulting from COVID-19. In addition, the CARES Act directs institutions to use no less than 50% of HEERF funds received to provide emergency financial aid grants to students related to the disruption of campus operations due to COVID-19.
ED’s FAQs address the following:
Higher education institutions should refer to the Information for Financial Aid Professionals (IFAP) website for additional guidance related to the HEERF. Note that ED clearly indicates that the FAQs and other guidance documents on its guidance portal lack the force and effect of law. As a result, readers should take care when using ED’s guidance to interpret and apply applicable laws and regulations.
Emergency Financial Aid Grants to Students
Our institution provided information technology equipment to students as well as refunds for room and board, tuition, and other fees. Can we use funds from the CARES Act’s emergency financial aid grants to students as reimbursement for the technology expenses and refunds?
No. Section 2 of the HEERF Funding Certification and Agreement for the emergency financial aid grants to students doesn’t allow an institution to use these funds to reimburse itself for any cost or expenses, including costs associated with:
- Changes to the delivery of instruction, due to COVID-19
- Any refunds or other benefits the institution previously issued to students
However, institutions will have flexibility when using HEERF aid that is made available for institutional costs. See the Institutional Portion of the HEERF section below for more information.
Institutions that provided COVID-19-related emergency grants to students using the institution’s funds are eligible for reimbursement, but only for grants that are:
- Authorized expenses related to the disruption of campus operations due to COVID-19
- Made to students that are eligible to receive emergency financial aid grants under the CARES Act
- Institutionally funded and made on or after March 27, 2020—the date the CARES Act was enacted
Institutions must retain supporting documentation to demonstrate compensation for institutionally funded emergency grants were made in accordance with CARES Act requirements.
Our institution has continued to pay student workers from institutional funds. Can we use the funds received for emergency financial aid grants to students under the CARES Act to reimburse ourselves?
No. Funds received under the CARES Act’s emergency financial aid grant to students should only be used to provide aid to students.
However, there’s flexibility with the wages for Federal Work Study (FWS). An institution can continue to pay FWS wages to students through the end of the academic year if those students began employment before the pandemic started.
Institutions’ Employee-Payment Obligations
The CARES Act requires institutions that accept HEERF funds to continue paying employees and contractors to the greatest extent possible, which may vary depending on each institution’s financial situation.
Institutions aren’t allowed to use emergency financial aid grants funds received under the CARES Act to pay employees or contractors.
Which students are eligible to receive emergency financial aid grant funds?
Only students who are or could be eligible to participate in programs under Section 484 in Title IV of the Higher Education Act of 1965 may receive emergency financial aid grants.
An incarcerated student will likely qualify for an emergency financial aid grant if they’re:
- Participating in the Second Chance Pell Experiment Site Initiative
- Released from incarceration as a result of COVID-19
- Incurring eligible expenses and remaining enrolled as a student
If an institution’s students are participating in the Second Chance Pell Experiment Site Initiative, the institution will need to analyze on a case-by-case basis what, if any, expenses the incarcerated student—or a formerly incarcerated student released due to COVID-19—has incurred due to disturbances in campus operations.
Institutions that Provide Online and Ground-Based Education
Students who were enrolled exclusively in an online program on March 13, 2020, aren’t eligible for emergency financial aid grants. Emergency financial aid grants to students must be used for expenses related to the disruption of campus operations due to COVID-19, which doesn’t impact students enrolled exclusively in online programs.
What documentation should institutions retain to support the disbursement of funds to students?
Institutions will need to report the following to the Secretary of Education (Secretary):
- How each granted amount was calculated
- How grant funds were disbursed to students
- Any instructions the institution gave to students about the grant
Institutional Portion of the HEERF
Our institution provided information technology equipment and refunds to students for room and board, tuition, and other fees. Can we use funds from the CARES Act’s funds for Recipient’s Institutional Costs as reimbursement for technology expenses and refunds?
Yes. Institutions may use funds for Recipient’s Institutional Costs for expenses that relate to allowing students to transition to distance learning as a result of a significant change to the delivery of instruction due to COVID-19. These include:
- Technology equipment
- Online licensing fees
- Internet service
Institutions may also use these funds to reimburse themselves for:
- Computer equipment purchased for, or provided to, students on or after March 13, 2020
- Refunds to students for fees such as room and board, tuition, and other fees, as a result of the COVID-19 outbreak
Financial Aid Grants and Scholarships to Students
Institutions are allowed to use funds for Recipient’s Institutional Costs received through the CARES Act to make additional emergency financial aid grants or scholarships to students. However, this is only allowed if the grants are for expenses related to the disruption of campus operations due to the COVID-19 pandemic.
Can our institution use funds for Recipient’s Institutional Costs to pay for online program management needed to transition group-based students to distance learning due to the COVID-19 outbreak?
Yes. Institutions may use these funds to pay a per-student fee to a third-party service provider. Institutions may not, however, use the funds to pay third-party recruiters for recruiting or enrolling new students at the institution.
What documentation should institutions maintain to support the disbursement of Recipient’s Institutional Costs?
An institution should be prepared to report how dispersed funds were used and demonstrate the funds were spent in accordance with Section 18004(c), accounting records for any reimbursements, disbursements, or refunds.
An institution should also be prepared to provide details about internal controls it used to make sure funds were correctly allocated and dispersed.
Other Compliance Considerations
The HEERF Certification and Agreement requires that each institution receiving HEERF funds comply with Section 18004(e) of the CARES Act. Institutions are also required to submit an intitial report (the 30-Day Fund Report) to the Secretary 30 days from the date of the institution’s Certification and Agreement to ED.
Additionally, institutions receiving HEERF funds must post specific information on their websites in a format and location that is easily accessible to the public. This must occur 30 days after the date the institution receives its allocation, and it must be updated every 45 days after that. This information should include:
- An acknowledgment that the institution signed and returned to ED the HEERF Certification and Agreement and assurance that the institution has used, or intends to use, no less than 50% of HEERF funds received under Section 18004(a)(1) of the CARES Act to provide emergency financial aid grants to students.
- The total amount of funds that the institution will receive, or has received, from the Department, which is in accordance with the institution’s Certification and Agreement for emergency financial aid grants to students.
- The total amount of emergency financial aid grants distributed to students under Section 18004(a)(1) of the CARES Act as of the date of submission—as of the 30-day report and every 45 days thereafter.
- The estimated total number of students at the institution eligible to participate in programs under Section 484 in Title IV of the Higher Education Act of 1965, making them eligible to receive emergency financial aid grants to students under Section 18004(a)(1) of the CARES Act.
- The total number of students who have received an emergency financial aid grant under Section 18004(a)(1) of the CARES Act.
- The methods the institution used to determine which students receive emergency financial aid grants and how much they would receive under Section 18004(a)(1) of the CARES Act.
- Any instructions, directions, or guidance the institution provided to students concerning emergency financial aid grants.
We’re Here to Help
If your institution has questions about how to comply with HEERF requirements or correctly distribute and record financial aid grants to students, contact your Moss Adams professional.
Note on COVID-19
During this unparalleled time, we’re closely monitoring the COVID-19 situation as it evolves so we can provide up-to-date guidance and support to help you combat uncertainty. For regulatory updates, strategies to help cope with subsequent risk, and possible steps to bolster your workforce and organization, please see the following resources: