Will We Be Penalized For Not Spending Our Entire 2019-20 FWS and FSEOG Allocations Due To COVID-19?

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

No. See the September 24, 2020 Electronic Announcement, which reads:

"Automatic Underuse Penalty Waiver– As announced in the August 3, 2020 Electronic Announcement, schools that return more than 10 percent of their 2019–20 FSEOG or FWS allocation do not need to request a waiver for the underuse of funds penalty in Part II, Section C, Line 6 of the FISAP. Underuse penalties will not be applied on any 2021–22 FWS or FSEOG awards for all schools due to the impact of the COVID-19 emergency."

Remember the following:

The school could exercise the carry-forward option to spend up to 10% of its initial and supplemental FWS and/or FSEOG authorizations in the following award year (carry forward). See Volume 6, Chapter 1 of the FSA Handbook.

Section 3503 of the CARES Act waives the institutional share (match) requirement for FWS for the 2019-20 and 2020-21 award years. An institution may reimburse itself from the FWS allocation for the nonfederal portion of wages paid to students on or after March 13, 2020. Likewise, an institution may, for all disbursements of FSEOG made on or after March 13, 2020, reimburse itself from the FSEOG allocation for the nonfederal portion of FSEOG awards contributed through a fund-specific match. Additionally, this section permits an institution to transfer up to 100 percent of its unexpended FWS allocation to FSEOG. See the May 15, 2020 Electronic Announcement and the August 21, 2020 Electronic Announcement.

ED issued waivers for the FWS community service requirements in the April 23, 2020 Electronic Announcement.

Note: ED has not issued similar guidance for underuse of 2020-21 and subsequent award year allocations. Our understanding is that schools would need to follow the normal process to request an underuse penalty waiver, by requesting it through the FISAP process (Part II, Section C).

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