The Coronavirus Aid, Relief and Economic Security Act (CARES Act) was passed by Congress in March 2020, allotting $2.2 trillion to provide economic aid to the American people negatively impacted by the pandemic. About $14 billion went to the Office of Postsecondary Education as The Higher Education Emergency Relief Fund (HEERF). In December 2020, the Higher Education Emergency Relief Fund II was signed into law, authorizing $81.99 billion in support for education. Most recently, HEERF III became law in March 2021, devoting $39.6 billion in support to higher education institutions to serve students and ensure learning continuation during the pandemic.
According to guidance from the National Association of Student Financial Aid Administrators (NASFAA), institutions have nearly a year from the date of the last funding round to spend all money. While about half of the money is earmarked to help students in the form of grants and aid, the other half is meant to institutions to cover the revenue shortfall due to the pandemic. The U.S. Department of Education strongly recommends that institutions devote the maximum amount of funding to financial aid grants to students and prioritize costs associated with student safety and testing services.
Lost revenue associated with the pandemic falls into two broad categories: Academic sources – tuition, fees, roam and board, enrollment declines, for instance – and auxiliary services, including cancelled ancillary events, disrupted food services, dormitory services, parking, bookstore, lease and other operating revenue. Sources of lost revenue that are not reimbursable under the HEERF grant programs include marketing or recruitment activities and capital outlays associated with athletic facilities, along with acquisition of real property.
Colleges and universities have to tie the lost revenue to the pandemic. The DoE acknowledges that these lost revenues can only be estimated for the period from the declaration of the national COVID-19 emergency on March 13, 2020 through the end of the HEERF grand performance period. Institutions have some flexibility to calculate estimated lost revenue using a year-over-year comparison using the prior year, or a semester-over-semester comparison using the prior year’s semester, for instance.
Using Funding to Support Learning
Under certain circumstances, colleges and universities can use American Rescue Plan (ARP) funding to defray costs associated with transitioning to a remote learning model and to hire more staff or expanding class sections due to the pandemic, according to DoE guidance. Schools must be able to demonstrate that the costs are clearly related to the pandemic and that they were incurred after March 13, 2020.
Institutions can also use HEERF grant funds to pay for new hires, or to repurpose staff, provided each employee’s work is associated with COVID-19. The funding can be used to pay for individuals working as contract tracers, IT staff, additional medical personnel and teaching assistants, but only if the school can demonstrate how the new hires or repurposed staff were necessary to deal with pandemic restrictions.
Institutions also need to carefully document how the funding was used to respond to the pandemic. A college that was already in the midst of expanding its online learning capabilities when COVID-19 hit but that was forced to accelerate the program would need to separate the costs it incurred when the school had to transition to online learning only and charge only the newer costs to the HEERF grant.