Can We Use Our Student and/or Institutional Share Of HEERF Funds To Make Scholarships To Students?

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This AskRegs Knowledgebase Q&A was updated on January 22, 2021 to reflect requirements under the 2021 Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA, Section 314 of the Consolidated Appropriations Act, 2021). Unless specifically indicated below, the CRRSAA rules apply to both leftover Higher Education Emergency Relief Fund (HEERF) grants under the CARES Act (HEERF I funds) after December 27, 2020 and to new funds under the CRRSAA (HEERF II funds).

HEERF I Funds Expended Prior to December 27, 2020
No and yes. The following HEERF I guidance is from the U.S. Department of Education's (ED's) Higher Education Emergency Relief Fund (HEERF) Frequently Asked Questions (FAQ) Rollup Document:

Q&A #37
"Can institutions use the Student Portion of its CARES Act funds under Section 18004(a)(1) for student scholarships?

No. The CARES Act does not allow institutions use the Student Portion of their Section18004(a)(1) funds for student scholarships. Institutions may use the Student Portion of their Section 18004(a)(1) funds only for direct emergency financial aid grants to students, not scholarships.

However, an institution may use the Institutional Portion of its Section 18004(a)(1) award for student scholarships under limited circumstances. Section 18004(a)(1) requires institutions to use Institutional Relief funds only to cover “costs associated with significant changes to the delivery of instruction due to the coronavirus” pursuant to Section 18004(c).

Therefore, if an institution wishes to use the Institutional Portion of its Section 18004(a)(1) award to fund student scholarships, the scholarships must be geared towards these types of costs. Examples of such allowable scholarships for “costs associated with significant changes to the delivery of instruction due to the coronavirus” include covering the cost of fees to access an online library in lieu of a physical library (if such fees are otherwise usually required), providing students with computers and internet access, and subsidizing the added cost of off-campus housing.

Furthermore, it is important that any scholarships funded by the Institutional Portion of a Section 18004(a)(1) award would not count toward the minimum fifty percent of an institution’s total allocation that must be spent on emergency financial aid grants to students for expenses related to the disruption of campus operations due to coronavirus."

Q&A #38
"Can institutions use CARES Act funds under Section 18004(a)(2) or Section 18004(a)(3) to make scholarships to students?

Yes. Section 18004(a)(2) and Section 18004(a)(3) of the CARES Act state that institutions may use funds specifically “for grants to students for any component of the student’s cost of attendance (as defined under section 472 of the Higher Education Act), including food, housing, course materials, technology, health care, and child care.”

HEERF I Funds Remaining Unspent as of December 27, 2020, and HEERF II Funds
The answer remains no and yes for these funds; however, the criteria for making emergency grants to students under CRRSSA differ from the criteria for making grants under the CARES Act.

The student portion of HEERF I funds unexpended as of the enactment of CRRSAA and the student portion of HEERF II funds cannot be used to fund scholarships. Schools must still use those funds only for emergency grants to students. However, the grants are now made using the selection criteria under CRRSAA. See the following guidance from 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:

Q&As #8 (public and nonprofit) and #4 (proprietary):

“What are the requirements for making financial aid grants to students?

Unlike the CARES Act, the CRRSAA requires that institutions prioritize students with exceptional need, such as students who receive Pell Grants, in awarding financial aid grants to students. However, students do not need to be only Pell recipients or students who are eligible for Pell grants. In addition, the CRRSAA explicitly provides that financial aid grants to students may be provided to students exclusively enrolled in distance education.

Institutions may not (1) condition the receipt of financial aid grants to students on continued or future enrollment in the institution, (2) use the financial aid grants to satisfy a student’s outstanding account balance, unless it has obtained the student’s written (or electronic), affirmative consent, or (3) require such consent as a condition of receipt of or eligibility for the financial aid grant.

Institutions should carefully document how they prioritize students with exceptional need in distributing financial aid grants to students, as the Department intends to establish reporting requirements regarding the distribution of financial aid grants to students consistent with section 314(e) of CRRSAA.”

Q&As #9 (public and nonprofit) and #5 (proprietary):

“How may students use their financial aid grants?

 Financial aid grants for students may be used for any component of the student’s cost of attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care) or child care.

See Question 19 of the Higher Education Emergency Relief Fund (HEERF) Frequently Asked Questions (FAQ) Rollup Document for more details as to how institutions may pay the financial aid grants to students, if not applying it to a student’s account after obtaining the student’s written (or electronic), affirmative consent.”

Q&A 10 (public and nonprofit only; emphasis added):

“How has the use of funds changed for institutional uses?

Institutions have expanded flexibility in their use of supplemental Institutional Portion funds (CFDA 84.425F). Under section 18004(c) of the CARES Act, institutions were required to use their Institutional Portion awards to cover any costs associated with significant changes to the delivery of instruction due to the coronavirus and/or for additional emergency financial aid grants, subject to certain limitations.

In contrast, allowable uses under the CRRSAA for Institutional Portion awards include:

Similar to what was required for Institutional Portion awards under Section 18004 of the CARES Act and the Department’s Certification and Agreement for those funds, under section 314(d)(3) of the CRRSAA, no supplemental Institutional Portion awards or new Institutional Portion awards may be used to fund contractors for the provision of pre-enrollment recruitment activities; marketing or recruitment; endowments; capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship; senior administrator or executive salaries, benefits, bonuses, contracts, incentives; stock buybacks, shareholder dividends, capital distributions, and stock options; or any other cash or other benefit for a senior administrator or executive.”

More Information: See the following:

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