Inspector General Report Finds Several Closed Schools Drew HEERF Money

By Owen Daugherty, NASFAA Staff Reporter 

More than $1 million in Higher Education Emergency Relief Fund (HEERF) grants were awarded to and drawn down by closed schools, according to a new report by the Department of Education’s (ED) internal watchdog.

The report from ED’s Office of the Inspector General (OIG) found 17 institutions of higher education that closed on or before Dec. 31, 2020 applied for and were awarded a total of nearly $5 million in HEERF grants. Of those 17 schools, 14 drew down their HEERF funds and eight of those 14 made drawdowns after their closure date, totaling about $1.2 million in grants. One of the 14 schools that drew down funds made a draw of more than $350,000 just one day before closing.

The report comes in response to information gathered from ED and complaints OIG received regarding allegations of closed institutions receiving funds through the three federal relief packages that have allocated more than $76 billion for higher education to help schools offset the impacts of the coronavirus pandemic and assist their students.

While no fraudulent activity came to OIG’s attention amid completing the report, specific observations requiring ED’s immediate action were identified.

It’s important to note, as the report pointed out, that neither the Coronavirus Aid, Relief, and Economic Security (CARES) Act nor any subsequent legislation authorizing HEERF grants expressly prohibited closed institutions from being eligible to receive funds. A section of the CARES Act did, however, state that schools receiving HEERF grants may use the funds received to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus.

The section listed several examples of allowable uses of the student portion of HEERF for expenses related to the disruption of campus operations due to the pandemic, including covering food costs, housing, course materials, technology, health care, and child care.

The examples “appear to have been written with the expectation that the funds would be used to help students continue in their programs of study and allow IHEs to adapt to providing continued instruction during the pandemic,” the report noted.

OIG suggested ED review HEERF grants already made to verify that schools that were allocated, awarded, or drew down funds were not closed. Further, ED should consider developing and providing guidance to schools that close or are set to close regarding use or potential return of HEERF funds, the report adds.

ED’s Office of Postsecondary Education (OPE) agreed with the report’s findings and even though the report did not require a formal corrective action plan to be developed, “OPE noted actions it has taken or will take in response.”

OPE added that the inspector general’s outreach efforts while compiling the report “may have missed critical input from knowledgeable” ED and OPE officials and that citing the concerns and risks expressed by staff who may not have full awareness of the process for making awards “does not present a complete picture of the department’s grantmaking process for the HEERF funds.”

The outreach in question is referencing efforts made by OIG late last year to contact officials from the Office of Federal Student Aid (FSA) and the Office of General Counsel, where officials expressed concerns that were detailed in the report.

In response, OIG noted that the corrective actions ED planned to take, “if properly implemented, are responsive to our suggestions.” OIG added that it did not make any substantive changes to the report following OPE’s comments.


Publication Date: 5/21/2021

Michelle C | 5/21/2021 9:0:47 AM

I've got $50 to bet that none of the bad actors were public institutions- another reason to limit public funding for private and proprietary schools.

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