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

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This guidance is not award-year-specific and applies across award years.

This AskRegs Knowledgebase Q&A was updated on January 31, 2023 to note that the COVID-19 national emergency will end on May 11, 2023.

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 the 2019-20, 2020-21, and 2021-22 award years, as well as a portion of the 2022-23 award year.

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, Emergency FSEOG, or both. 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?

Per the January 15, 2021 Electronic Announcement, schools may continue to transfer FWS into FSEOG through the end of the payment period that includes the end date for the federally declared emergency related to COVID-19. The national emergency will end on May 11, 2023. According to the August 1, 2022 Electronic Announcement, this means for the 2022-23 award year, a school can transfer FWS to FSEOG through the end of the payment period that includes May 11, 2023. If the spring 2023 payment period at your school contains May 11, then you can continue to transfer funds through the end of spring 2023. After that, you can no longer transfer unspent FWS funds into FSEOG using the COVID flexibility and will revert back to normal use of funds rules in Volume 6 of the FSA Handbook.

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.

What does this mean, for example? Since the qualifying emergency ends during the spring 2023 term/payment period, the school can continue to transfer FWS funds into FSEOG through the end of the spring 2023 term/payment period even after the qualifying emergency ends. In this example, this means the school can still make regular FSEOG or Emergency FSEOG awards for the entire spring 2023 term/payment period from those transferred funds.

According to ED, the FWS "transfer" occurs when the debit of funds occurs from G5 into the school's institutional FSEOG account, not when the school makes the policy decision that it is going to transfer up to 100 percent of the unspent FWS funds. In other words, if the school draws down its unspent FWS funds from G5 directly into its FSEOG institutional account, then that is when ED considers those funds to be "transferred" into FSEOG for CARES Act purposes.

Per ED, the correct transfer process is to draw down the funds from the FWS allocation in G5 and deposit them in the school's institutional FSEOG account for use in making either regular FSEOG or Emergency FSEOG awards within excess cash timeframes. If the school accidentally draws down unspent FWS funds from G5 directly into its institutional FWS account, and then moves those unspent FWS funds out of its FWS account into its institutional FSEOG account, then the transfer of unspent FWS occurs at the point when the school moves the funds from its institutional FWS account into its institutional FSEOG account.

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.

Because of excess cash rules in 34 CFR 668.166, the school cannot simply draw down the entire FWS allocation from G5 and deposit it into the school's FSEOG account unless those funds will be disbursed to students as regular FSEOG or Emergency FSEOG within three business days. Another cash management tolerance also applies, the school may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The school must return immediately to ED any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the seven-day tolerance period.

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.