Can HEERF I, HEERF II, Or HEERF III Student Grant Funds Be Used To Pay a Student's Outstanding Balance?

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This AskRegs Knowledgebase Q&A was updated on March 22, 2021 to include guidance in the revised Higher Education Emergency Relief Fund (HEERF) II Frequently Asked Questions and guidance NASFAA has received from the U.S. Department of Education (ED) about awarding leftover HEERF I student grants under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), HEERF II funds under the 2021 Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA, Section 314 of the Consolidated Appropriations Act, 2021), and HEERF III funds under the American Rescue Plan Act of 2021 (ARP). It represents a change in ED's previous position.

HEERF I Funds Remaining Unspent as of December 27, 2020, HEERF II Funds, and HEERF III Funds
Yes. According to ED's updated guidance, students can voluntarily provide written authorization to allow schools to apply leftover HEERF I student grants, HEERF II student grants, and HEERF III student grants to student ledger account charges for any component of the student’s cost of attendance (COA) or for emergency costs that arise due to Coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. The charges or costs do not have to be related to a disruption in campus operations.

This is true even in cases where the charges were posted to the student's account prior to December 27, 2020 and for an outstanding balance consisting of those allowable costs. This is also true for costs that were incurred by the student prior to December 27, 2020 and for which the school is delivering the HEERF grant funds directly to the student. However, as indicated in the HEERF II FAQs, "Institutions have this expanded flexibility to use unliquidated (unspent) funds effective December 27, 2020 (the date of enactment of the CRRSAA), for costs incurred on or after March 13, 2020, the date on which the President declared a national emergency due to the COVID-19 pandemic (85 FR 15337)."

See also AskRegs Q&As, How Must Schools Pay HEERF I and HEERF II Grants To Students?, and Do We Need a Separate Written Authorization To Credit HEERF II Funds To the Student's Account?

HEERF I Student Grant Funds Spent Prior to December 27, 2020
No. Under the CARES Act, and as expressly stipulated in the Recipient’s Funding Certification and Agreement for Grants to Students, HEERF I student grants are intended to go to students “for their expenses related to the disruption of campus operations due to coronavirus, such as food, housing, course materials, technology, health care, and child-care expenses.” The April 21, 2020 Frequently Asked Questions makes it clear that HEERF I grants to students cannot be applied toward outstanding balances, stating, "The CARES Act requires institutions to provide the emergency financial aid grants to students. The institution may not use that portion of the HEERF set aside for emergency financial aid grants to students to satisfy a student’s outstanding account balance." The Frequently Asked Questions goes on to say, "The disbursement of the emergency financial aid grant to the student must remain unencumbered by the institution; debts, charges, fees, or other amounts owed to the institution may not be deducted from the emergency financial aid grant."

This means you cannot pay outstanding charges on the student's account with HEERF I funds even if you have the student's permission to do so. These funds must be delivered directly to the student using a means such as a check, an electronic funds transfer (EFT), a cash payment, a payment app, or a pre-loaded debit card with conditions. See AskRegs Q&A, How Must Schools Pay Higher Education Emergency Relief Fund Grants To Students?

NASFAA has received ED confirmation that HEERF I student grants can be applied to the student's ledger account and passed through the institution's student information system/student accounts system only as long as 100 percent of those funds are delivered to the student and do not pay the student's account balance (i.e., the funds remain unencumbered by the institution).

Update 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.