President Joe Biden on Thursday signed into law the $1.9 trillion American Rescue Plan Act of 2021, accomplishing a top legislative priority for the new administration. Approved by Congress on Tuesday, this most recent coronavirus relief package provides an additional $40 billion to the Higher Education Emergency Relief Fund (HEERF) established in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The American Council on Education (ACE) has simulated the distribution of the new HEERF dollars and published estimated allocation amounts that institutions may receive from the $36 billion pot of funds set aside for public and private nonprofit institutions and the $395.8 million pot of funds for proprietary institutions.
For public and nonprofit institutions, ACE's simulation estimates the distribution of $36 billion in relief funding among approximately 3,500 colleges and universities. They have also provided simulations to estimate the distribution of $395.8 million for 1,630 proprietary institutions. The simulations do not include estimates of the funds institutions may receive from the bill's other pots of higher education funding, such as the $3 billion for minority-serving institutions (MSIs), and the $198 million for institutions with the greatest unmet need related to the pandemic.
ACE's simulated distribution includes estimates, organized alphabetically by state, of the total allocation institutions may expect to receive from the new HEERF funds, as well as estimates of the minimum amount institutions may be required to spend on student grants. The legislation requires public and private nonprofit institutions to spend at least half of their allocations on student emergency grants, and also stipulates that any allocation received based on the enrollment of Pell Grant recipients enrolled exclusively in distance education courses must be used entirely on student grants. In the case of proprietary institutions, the simulated distribution only shows the total estimated allocation, all of which must be given to students.
Importantly, the allocations included in both simulations are only estimates, and final allocation amounts have not yet been determined by the Department of Education (ED). While the methodology used in these analyses was largely modeled after the methodology used by ED to determine HEERF I and HEERF II allocations, it is not known if ED will use this methodology or a different one to distribute the new HEERF III dollars. ACE's estimates are meant to provide institutions with a ballpark sense of how much they may receive from the new HEERF funds. ED's methodology, and consequently the final amounts received by individual institutions, may differ from these simulations. These estimates should be used for general planning purposes only, and NASFAA will publish additional information on the final HEERF III allocations as it becomes available. Please note that ACE has also developed a searchable, interactive version of the simulations for ease of use.
As a reminder, the American Rescue Plan (ARP) allocation formula is the same as the formula for HEERF II, and takes into account both student headcount and full-time equivalent enrollment (FTE), unlike the CARES Act that only included FTE. The $36 billion for public and private nonprofit institutions and the $395.8 million for proprietary institutions, or 91% and 1% of the total higher education funds, respectively, are allocated using the following formula:
Unlike the HEERF II funds, the ARP requires that 50% of an institution's funds be spent on student grants. Like the HEERF II dollars, the allowable uses for the new funds are more flexible than in the CARES Act, with institutions permitted to use their funds to defray expenses associated with COVID-19, including lost revenue, reimbursements for expenses already incurred, technology costs associated with the transition to distance education, faculty and staff training, and payroll. Institutions may also use their funds to provide emergency grants to students (including those enrolled exclusively in distance education). Public and private nonprofit institutions must use a portion of their allocation to implementing evidence-based practices to monitor and 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.
Student grants may be used to cover any component of a student's cost of attendance (COA), or for emergency costs that arise due to COVID-19, including tuition, food, housing, health care and child care. Notably, the bill includes no student eligibility requirements, however, institutions are required to prioritize grants to students with exceptional financial need, such as those who receive Pell Grants.
NASFAA expects ED to release more information about the distribution of the additional HEERF funds in the near future. Stay tuned to Today's News for updates and developments on the status of the HEERF III relief funds. If you have questions about the provisions included in the ARP, please contact us at [email protected].
Publication Date: 3/15/2021