Are Emergency FSEOG and Higher Education Emergency Relief Fund Student Grants Taxable Or Untaxed Income?

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This AskRegs Knowledgebase Q&A was updated on May 12, 2021 to include guidance in the May 11, 2021 Higher Education Emergency Relief Fund (HEERF) III Frequently Asked Questions, as it relates to leftover HEERF I grants under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), HEERF II grants under the 2021 Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA, Section 314 of the Consolidated Appropriations Act, 2021), and HEERF III grants under the American Rescue Plan Act of 2021 (ARP).

HEERF III Funds Under the ARP
They are neither taxable nor untaxed income. The following is taken from the May 11, 2021 HEERF III Frequently Asked Questions:

"Q 15: Are emergency financial aid grants to students under the HEERF program considered taxable income?

A 15: No. Emergency financial aid grants made by a federal agency, State, Indian tribe, higher education institution or scholarship-granting organization (including a tribal organization) to a student because of an event related to the COVID-19 national emergency are not included in the student's gross income. For more information, please see the Internal Revenue Service (IRS) bulletin Emergency aid granted to students due to COVID is not taxable (March 30, 2021)."

HEERF II Funds Under the CRRSAA 
They are neither taxable nor untaxed income. The following is from the IRS Higher Education Emergency Grants Frequently Asked Questions website:

"Q1. I am a student who received an emergency financial aid grant under section 3504, 18004, or 18008 of the CARES Act for unexpected expenses, unmet financial need, or expenses related to the disruption of campus operations on account of the COVID-19 pandemic. Is this grant includible in my gross income? (added March 30, 2021)

A1. No. Emergency financial aid grants under the CARES Act for unexpected expenses, unmet financial need, or expenses related to the disruption of campus operations on account of the COVID-19 pandemic, such as unexpected expenses for food, housing, course materials, technology, health care, or childcare, are not included in your gross income.

Q2. I am a student who received an emergency financial aid grant from a Federal agency, State, Indian tribe, institution of higher education, or scholarship-granting organization (including a tribal organization) because of an event related to the COVID-19 pandemic. Is this grant includible in my gross income? (added March 30, 2021)

A2. No. Emergency financial aid grants made by a Federal agency, State, Indian tribe, institution of higher education, or scholarship-granting organization (including a tribal organization) because of an event related to the COVID-19 pandemic are not included in your gross income."

Note: Section 3504 funds are Emergency FSEOG funds. Section 18004 funds are HEERF I funds under the CARES Act. Section 18008 funds are Elementary and Secondary School Emergency Relief Fund funds under the CARES Act. Section 277 funds are any emergency financial aid grants made by a federal agency, state, Indian tribe, institution of higher education, or scholarship-granting organization (including a tribal organization) because of an event related to the COVID-19 pandemic; these include HEERF II funds under the CRRSAA.

It is NASFAA's understanding based on conversations with ED that HEERF II grants awarded to students under CRRSAA also are not untaxed income for Title IV federal student aid purposes.

Emergency FSEOG and HEERF I Funds Under the CARES Act
They are neither taxable nor untaxed income. HEERF I student grants and Emergency Federal Supplemental Educational Opportunity Grant (FSEOG) awards under the CARES Act are not taxable income for the student. According to IRS FAQs, "Emergency financial aid grants under the CARES Act for unexpected expenses, unmet financial need, or expenses related to the disruption of campus operations on account of the COVID-19 pandemic, such as unexpected expenses for food, housing, course materials, technology, health care, or childcare, are qualified disaster relief payments under section 139 of the Internal Revenue Code.  This grant is not includible in your gross income."

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