This AskRegs Knowledgebase Q&A was updated on January 20, 2021 to reflect requirements under the 2021 Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA, Section 314 of the Consolidated Appropriations Act, 2021). The same rules apply to both Higher Education Emergency Relief Fund (HEERF) grants under the CARES Act (HEERF I funds) and to new funds under the CRRSAA (HEERF II funds).
For the HEERF I funds, the Grant Award Notification (GAN) that schools receive from Grants.gov contains details about managing these funds. Among other things, the GAN states that, “Funds must be drawn only to meet a grantee’s immediate cash needs for each individual grant.” Similar language is in the GAN for HEERF II funds. Therefore, it would not be appropriate to draw down the HEERF grant funds in a lump sum before there is an immediate cash need for that entire lump sum.
Immediate cash need is defined in the Higher Education Emergency Relief Fund (HEERF) II Public and Private Nonprofit Institution (a)(1) Programs (CFDAs 84.425E and 84.425F) Frequently Asked Questions (updated March 19, 2021) and the Higher Education Emergency Relief Fund (HEERF) II Proprietary Institution Grant Funds for Students (CFDA 84.425Q) ((a)(4) Program) Frequently Asked Questions. Institutions must spend funds for student grants within 15 calendar days of drawing down those funds from G5, whereas funds used for purposes other than the awarding of student grants must be spent within three calendar days of drawdown. In other words, 2 CFR 200.305(b) applies to HEERF and requires grantees to minimize the time between drawing down funds from G5 and applying those funds to support the award’s activities within these timeframes.
Additionally, institutions must maintain grant funds in interest-bearing accounts, and any interest earned on grant funds above $500 must be returned to the federal government. With all of this in mind, the school must establish a distribution plan prior to drawing down HEERF grant funds (student and institutional shares).
While schools were required to submit the Recipient’s Funding Certification and Agreement for Emergency Financial Aid Grants to Students to Grants.gov before the Recipient’s Funding Certification and Agreement for the Institutional Portion for HEERF I funds, there was no requirement to draw down or spend the student grant funds before drawing down or spending the institutional funds. This remains the case for HEERF II funds. Schools that previously received HEERF I funds do not need to reapply for HEERF II funds. See AskRegs Knowledgebase Q&A, How Do We Apply For Higher Education Emergency Relief Funds On Grants.gov?
NASFAA has confirmed with the U.S. Department of Education (ED) that there is no requirement to draw down the student and institutional shares on a dollar-for-dollar basis. The draw downs for the two funds (student and institutional) do not need to be in tandem with each other, but instead should be on an as-expended basis for each separate fund. For example, you are not limited to spending $300,000 in institutional funds just because you only spent $300,000 in student funds, or vice versa.
See also AskRegs Q&As:
Endowment Excise Tax Note: See the respective HEERF II Certification and Agreement for public and nonprofit institutions and proprietary institutions for other important drawdown limitations for institutions that are subject to the excise tax paid on investment income of private colleges and universities under section 4968 of the Internal Revenue Code of 1986.
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