Can a School Transfer 100 Percent Of Its Unspent FWS Funds Into FSEOG Due To COVID-19?

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This AskRegs Knowledgebase Q&A was updated on November 19, 2020 to include clarification on when the U.S. Department of Education (ED) considers unspent Federal Work-Study (FWS) funds to be "transferred" into Federal Supplemental Educational Opportunity Grant (FSEOG) funds for CARES Act purposes.

Yes. Section 3503 of the CARES Act allows an institution to transfer up to 100 percent of its unexpended FWS allocation into its FSEOG funds (but not from FSEOG to FWS) during the period of the COVID-19 qualifying emergency. This includes unexpended initial and supplemental FWS fund allocations for both the 2019-20 and 2020-21 award years. Per the August 21, 2020 Electronic Announcement, this ability to transfer FWS into FSEOG applies through the end of the payment period that includes December 31, 2020 or the end of the payment period that includes the end date for the federally declared qualifying emergency related to COVID-19, whichever occurs later.

Institutions are then allowed to use any portion of their FSEOG allocation, including any funds transferred from FWS as noted above, to award regular FSEOG awards or emergency financial aid grants (Emergency FSEOG) to students. If the school awards the funds as regular FSEOG awards, regular FSEOG awarding rules in 34 CFR Part 676 and Volume 6 of the FSA Handbook continue to apply. If the school uses these funds to award Emergency FSEOG to students, special relaxed rules apply. See AskRegs Knowledgebase Q&A, How Can Schools Use Campus-Based Funds As Emergency Aid?

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.

Does this mean a school can transfer up to 100 percent of its unspent FWS funds from its entire 2020-21 FWS award year allocation during the fall 2020 term/payment period, while the qualifying emergency is still in effect, and make spring 2021 awards before December 31, 2020?

Yes. Without confirmation from ED, here's what NASFAA can say on this question:

Per Section 3503 of the CARES Act, “Notwithstanding sections 413D, 442, and 488 of the Higher Education Act of 1965 (20 U.S.C. 1070b–3, 1087–52, and 1095), during a period of a qualifying emergency, an institution may transfer up to 100 percent of the institution’s unexpended allotment under section 442 of such Act to the institution’s allotment under section 413D of such Act…"

This means you can transfer up to 100 percent of your unspent FWS funds from your entire 2020-21 FWS award year allocation while the qualifying emergency is still in effect. Since the qualifying emergency is still in effect during the fall 2020 term/payment period, you can transfer unspent FWS into FSEOG at this time. Once those funds become FSEOG funds, you can either award them as regular FSEOG or Emergency FSEOG for the 2020-21 award year--fall, winter, and spring, just fall, just winter, just spring, or the summer crossover payment period attached to the 2020-21 award year.

If you wait until the spring to transfer your unspent FWS funds, then the qualifying emergency will still need to be in place at that time in order for you to make the transfer and to award those transferred FWS funds as FSEOG awards for an award period that includes the spring term/payment period.

Remember: According to ED, the FWS transfer occurs when the debit of funds occurs from G5, not when the school makes the policy decision that they’re going to transfer 100 percent of the unspent FWS funds. In other words, if you draw down your unspent FWS funds from G5 directly into your FSEOG account at the institution, then that is when ED considers those funds to be "transferred" into FSEOG for CARES Act purposes. If you draw down your unspent FWS funds from G5 directly into your institutional FWS account and then move those unspent FWS funds out of your FWS account into your institutional FSEOG account, then that is when the funds are considered transferred for CARES Act purposes. The key is the date when you transfer the FWS funds into FSEOG funds, not the date you decide to implement the CARES Act flexibilities and not the date you complete the FISAP.

Note: This AskRegs Q&A was updated on November 13, 2020 to include guidance for schools that want to transfer FWS funds into their FSEOG funds and award them as FSEOG for spring 2021 before December 31, 2020.

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.