U.S. Department of Education Makes Available CARES Act Funds for Institutions of Higher Education

On April 21, 2020, the Department made available the institutional portion of the Higher Education Emergency Relief Fund (HEERF) under Section 18004(a)(1) and 18004(c) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

By statute, the institutional HEERF funds are to be used to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus so long as such costs do not include payment to contractors for the provision of pre-enrollment recruitment activities, including marketing and advertising; endowments; or capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship.

Through an associated FAQ, the Department has provided further guidance and limitations on use of the institutional HEERF funds:

  • An institution must enter into the Funding Certification and Agreement with the U.S. Department of Education to receive and distribute Emergency Financial Aid Grants to Students in order to be eligible to receive the institutional HEERF portion of the funds. In other words, institutions cannot select only to receive the institutional, but not student, portion of the HEERF funds provided by Congress.
  • Institutions that have provided refunds to students for room and board, tuition, and other fees (such as activities fees) may use the institutional HEERF funds to reimburse themselves, so long as the institution can demonstrate that such costs were incurred as a result of significant changes to the delivery of instruction, including interruptions in instruction, due to coronavirus. Institutions will need to be able to document how those reimbursements are related to the COVID-19 interruption. 
  • Institutions may reimburse themselves for refunds previously made to students on or after March 13, 2020, but only if they can demonstrate that such refunds were necessitated by significant changes to the delivery of instruction, including interruptions in instruction, due to coronavirus.
  • Institutions may use institutional HEERF funds for costs incurred by the institution to purchase laptops, hotspots, or other IT equipment and software necessary to enable students to participate in distance learning as a result of the coronavirus interruption.
  • Institutions that purchased computers or other equipment to donate or provide to students on or after March 13, 2020 may reimburse themselves for those costs, again if tied to need arising from the coronavirus interruption.
  • The institutional HEERF funds can be used to make additional emergency financial aid grants to students (to supplement the student HEERF funds), provided that such grants are for expenses related to the disruption of campus operations due to coronavirus (including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care, and child care). 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, as amended (HEA), may receive emergency financial aid grants.
  • At institutions that provide both online and ground-based education, students who were enrolled exclusively in online programs on March 13, 2020 are not eligible for emergency financial aid grants, as the Department’s position is that students who were enrolled exclusively in online programs would not have expenses related to the disruption of campus operations due to coronavirus. Fully 100% online institutions were already ineligible for HEERF funding.
  • Institutional HEERF funds may be used to award scholarships or to provide payment for future academic terms only if the institution can demonstrate that such grants are needed for expenses related to the disruption of campus operations due to coronavirus. If provided to students in the form of emergency financial aid,  such uses are allowable.
  • Institutional HEERF funds can be used to pay a per-student fee to a third-party service provider, including an Online Program Manager (OPM), for each additional student using the distance learning platform, learning management system, online resources, or other support services; however, institutions may not use institutional HEERF funds to pay third-party recruiters or OPMs for recruiting or enrolling new students at the institution.
  • The Funding and Certification Agreement that institutions must sign also makes clear that institutional HEERF funds cannot be used for: senior administrator and/or executive salaries, benefits, bonuses, contracts, incentives; stock buybacks, shareholder dividends, capital distributions, and stock options; and any other cash or other benefit for a senior administrator or executive.

More information on CARES Act grant resources and guidance can be found on the Office of Postsecondary Education’s webpage: https://www2.ed.gov/about/offices/list/ope/caresact.html