Institutions Question Which Costs Can Be Covered With HEERF II Funds

By Jill Desjean, NASFAA Policy & Federal Relations Staff

The passage of the 2021 Consolidated Appropriations Act authorized more than $21 billion in supplemental Higher Education Emergency Relief Fund (HEERF II) dollars for institutions to spend on emergency student grants as well as to defray institutional expenses and carry out student support activities related to the coronavirus pandemic.

With this supplemental funding comes new guidance from the Department of Education (ED), some of which has left financial aid administrators confused about allowable uses of HEERF II funds and previously unexpended HEERF funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The source of confusion is language in the HEERF II Certification and Agreement forms for both the Student Share and Institutional Share funds, which reads, “Recipient acknowledges that any obligation under this grant (pre-award costs pursuant to 2 CFR § 200.458) must have been incurred on or after December 27, 2020, the date of the enactment of the CRRSAA.”

This raises questions about how HEERF II dollars can be spent on spring 2021 student account charges, and even calls into question how remaining CARES Act HEERF dollars can be spent. 

HEERF II student emergency grants were given a broader allowable use of funds than was permitted by the CARES Act. Student grants can be used for any component of the student's cost of attendance (COA) or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. ED guidance also allows institutions to apply HEERF II student emergency grants to student accounts, with student authorization. One concern raised by institutions relates to instances when spring 2021 charges were applied to students' accounts prior to Dec. 27, 2020, and whether emergency grants could be awarded to cover those COA items that were posted to student accounts prior to December 27.

The new law also permits institutions to spend any remaining CARES Act HEERF dollars in accordance with the expanded use of funds in place of HEERF II dollars. However, it is unclear whether taking advantage of the expanded use of funds for those unspent CARES Act HEERF dollars also limits those grants to expenses incurred after December 27, or if institutions would have to abide by the old uses of funds if applying CARES HEERF dollars to pre-December 27 expenses. 

As for institutional share funds, schools are also questioning how the December 27 date applies to lost revenue, which is a permitted use of funds for HEERF II institutional share dollars, but is not a cost.

NASFAA has raised these questions, along with others, to ED and will share those answers in Today's News as soon as they are available. However, NASFAA recommends that institutions do not wait to spend HEERF II or unexpended CARES Act HEERF funds until outstanding questions are answered, especially in light of the recent administration change and the possibility that answers could take longer than usual. Instead, institutions should spend funds in accordance with guidance that is clear, and instead use institutional dollars, when possible, for any uses of funds that remain unclear.

 

Publication Date: 1/22/2021


Robert B | 2/3/2021 11:7:25 AM

It appears to me in reading the agreement that the word "obligation" in the case of the student portion of the CRRSAA funds refers to the promise of the institution to pay a grant to a student. In section 9 the word "obligation" is used twice, both times in the context of cash management. We are required to minimize the time between drawing down these funds from G5 and "paying incurred obligations (liquidation.)" I read that to mean that the "obligation" is the school's obligation to pay the student, rather than the student's obligation to pay the school (for tuition, etc.) because these grants may be used for non-institutional expenses. Under this reading, Section 11 means that the school can't pay any emergency grant which was made (obligation incurred) to a student before December 27th. But if the student consents to using an emergency grant offered after December 27th to pay outstanding tuition charges incurred before December 27th, that should be permissible.

Allie B | 1/28/2021 10:2:25 AM

Hi Stacey,

The following AskRegs Q&A should answer your question: https://askregs.nasfaa.org/article/34830/should-heerf-funds-be-drawn-down-from-g5-as-they-are-awarded-or-in-a-lump-sum

It reads in part: NASFAA has confirmed with the U.S. Department of Education (ED) that there is no requirement to draw down the student and institutional shares on a dollar-for-dollar basis. The draw downs for the two funds (student and institutional) do not need to be in tandem with each other, but instead should be on an as-expended basis for each separate fund. For example, you are not limited to spending $300,000 in institutional funds just because you only spent $300,000 in student funds, or vice versa.

Stacey H | 1/27/2021 2:34:29 PM

Is anyone hearing from the business office that guidance from NAICU indicates ALL of the student emergency portion must be spent before the institutional portion can be spent? We clearly have many institutional costs and could use our entire allocation of those funds in the Spring term. I would like to reserve a small portion of student emergency funds back for emergent situations that may come up at a later date and our VP of Finance is telling me if we do that, we cannot spend all of the institutional portion. I cannot find this interpretation/restriction on the institutional funds anywhere. Anyone else?

Peter G | 1/23/2021 11:39:37 PM

I can see the angst, but from an accounting perspective I'd argue it matters less when the charge was initially posted for informational purposes vs. when it's actually incurred, which is not until the start of the term or arguably in some cases the point where a 100% refund ceases to be available.

Posting the charge before the start of the term is a billing convenience, but assuming students still can drop with no charge, it's not really "incurred" quite yet.

David R | 1/22/2021 11:37:28 AM

The answers to these questions will have a significant impact on the way institutions will be able to use these funds. Thank you for asking ED.

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