How Can Schools Use Campus-Based Funds As Emergency Aid?

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This AskRegs Knowledgebase Q&A was updated on January 19, 2021 to point out that the January 15, 2021 Electronic Announcement retains the August 21, 2020 Electronic Announcement timeframe for schools to transfer unspent Federal Work-Study (FWS) funds into Federal Supplemental Educational Opportunity Grant (FSEOG) at any time through the end of the payment period that includes the end date for the federally declared emergency related to COVID-19. This is different than NASFAA's understanding of informal guidance provided by the U.S. Department of Education (ED) in mid-December.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) makes two types of funding available to institutions to provide emergency aid to students as a result of the Coronavirus (COVID-19) outbreak—campus-based FSEOG funds and Higher Education Emergency Relief Fund (HEERF) grants to students. This article only addresses the campus-based funds.

In the May 15, 2020 Electronic Announcement and the August 21, 2020 Electronic Announcement, ED provided guidance on the nonfederal share waivers for FWS and FSEOG, as well as the use of remaining FSEOG funds.

FWS and FSEOG Programs: Under the CARES Act, the institutional share requirements of the FWS and FSEOG programs shall be waived for the 2019-20 and 2020-21 award years in cases where the nonfederal share is paid by the institution. Schools are not required to provide an institutional share for any FWS wages or FSEOG disbursements paid to students on or after March 13, 2020 through the remainder of the 2019-20 award year. NASFAA has confirmed with ED that the August 21, 2020 Electronic Announcement does not change this "on or after March 13, 2020" provision. The institutional share waiver also applies to the entire 2020-21 award year, regardless of when the qualifying emergency is lifted. ED recognized this CARES Act provision in the May 15, 2020 Electronic Announcement, but applied a narrower interpretation than the CARES Act itself.

The CARES Act does not waive the nonfederal share requirement for third-party private for-profit organizations that employ an institution's FWS students under an off-campus agreement under 34 CFR 675.20(b). Under such arrangements, the federal share cannot exceed 50 percent, and the private for-profit organization still must pay the nonfederal share of the student's compensation. Likewise, nonprofit organizations still must provide their nonfederal share if the entire share is not paid with federal funds under community service requirements.

Note that if your institution decides to stop providing its institutional matching funds into its FSEOG fund, the institution will have less FSEOG funds to spend and will deplete those funds more quickly. The CARES Act does not require institutions to stop making the nonfederal match; that is the institution’s choice.

This waiver is automatic; the school does not need to submit a request to ED. Per the May 15th announcement, "An institution may reimburse itself from the FWS allocation for the nonfederal portion of wages paid to students on or after March 13, 2020. Likewise, an institution may, for all disbursements of FSEOG made on or after March 13, 2020, reimburse itself from the FSEOG allocation for the nonfederal portion of FSEOG awards contributed through a fund-specific match." Consult with your business office on how this is done.

FWS: The CARES Act allows an institution to transfer up to 100 percent of its unexpended FWS allocation into FSEOG (but not from FSEOG to FWS). This includes unexpended initial and supplemental fund allocations. Unfortunately, according to guidance NASFAA has received from ED, schools that are graduate or professional schools with no undergraduate programs (graduate-only schools), and that have an FWS allocation but no FSEOG allocation, cannot transfer unused FWS funds into FSEOG.

Per the January 15, 2021 Electronic Announcement, this ability to transfer FWS into FSEOG applies through the end of the payment period that includes the end date for the federally declared emergency related to COVID-19.

Emergency FSEOG: Institutions are allowed to use any portion of their FSEOG allocation, including any funds transferred from FWS as noted above, to award emergency financial aid grants (Emergency FSEOG). Except for graduate-only schools, Emergency FSEOG funds can then be spent to assist undergraduate or graduate students in paying for unexpected expenses and to cover unmet financial need as the result of a qualifying emergency. According to the April 3, 2020 Electronic Announcement, this can include paying Emergency FSEOG to students who would have otherwise received FWS wages had they started their job prior to the COVID-related disruption. Other scenarios of when Emergency FSEOG funds might be used include, but are in no way limited to:

The law does not define “unexpected expenses.” This is left to schools unless ED defines it in future guidance. If/When that happens, we will update this AskRegs Q&A.

Except as noted below, recipients still must meet the Title IV general student eligibility criteria under 34 CFR 668.32, but standard FSEOG awarding rules are waived for Emergency FSEOG only. Emergency FSEOG funds:

Because CARES does not waive the general student eligibility criteria, it is NASFAA's understanding that a FAFSA is required for the student eligibility database matches (even for parent PLUS). NASFAA has asked ED to confirm this. NASAA has also asked whether verification is required for graduates or undergraduates when awarding Emergency FSEOG. As soon as we hear from ED, we will update this AskRegs Q&A.

This gives institutions broad flexibility to determine their own packaging or selection criteria used to award the Emergency FSEOG funds to its students. Since this is entirely the school’s discretion, NASFAA will not be reviewing or approving unexpected expenses or packaging criteria for schools.

In determining eligibility for Emergency FSEOG, institutions may contract with a scholarship-granting organization designated for the sole purpose of accepting applications from or disbursing funds to students, if the organization disburses the full allocated amount provided to the institution to the recipients and no FSEOG funds are used to pay for the contract.

Standard awarding rules are not waived when packaging non-emergency-related (regular) FSEOG. Refer to Volume 3, Chapter 6 of the FSA Handbook. This means you will want to create two award codes within your financial aid management system (FAMS) so that you can properly track and package regular FSEOG awards and Emergency FSEOG awards separately.

Regular FSEOG and Emergency FSEOG exist separately. For example, a student can receive both a regular FSEOG award of $2,000 plus an Emergency FSEOG award up to the Federal Pell Grant maximum for the applicable award year.

Period of Qualifying Emergency: See AskRegs Q&A, What Is the Definition Of a Qualifying Emergency Under the CARES Act?

See also AskRegs Q&As, Can a School Transfer 100 Percent Of Its Unspent FWS Funds Into FSEOG Due To COVID-19?, and Can We Make Emergency FSEOG Awards For the 2020-21 Award Year?

Notes:

AskRegs Q&As represent NASFAA's understanding of regulatory and compliance issues. They are FOR INTERNAL USE ONLY. While NASFAA believes AskRegs Q&As are accurate and factual, they have not been reviewed or approved by the U.S. Department of Education (ED). If you should need written confirmation of AskRegs information for audit or program review purposes, please contact your ED School Participation Division. NASFAA shall not be liable for technical or editorial errors or omissions contained herein; nor for incidental or consequential damages resulting from the furnishing, performance, or use of this material.