Higher Ed and the Coronavirus Response and Relief Supplemental Appropriations Act

This article was updated March 26, 2021. Important note: Legislation and guidance on this topic are constantly evolving. Information is current as of date of publication.

More than $21 billion in additional funding is now available to help higher education institutions navigate COVID-19-related economic hardship.

The US Department of Education has designated these additional support funds under the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) as the Higher Education Emergency Relief Fund (HEERF) II.

Below, get insight into the HEERF II program, including key benefits and application deadlines. For answers to frequently asked questions (FAQs), read our related HEERF II FAQs.

HEERF Grants and CRRSAA Legislation Details

On December 27, 2020, President Trump signed into law the CRRSAA, which provides over $21 billion to be allocated to colleges and universities under the HEERF.

HEERF grants originally funded three programs under division B of the Coronavirus Aid, Relief, and Economic Security (CARES) Act:

  • Section 18004(a)(1) supplied emergency financial aid grants to students and to cover any costs associated with significant changes to the delivery of instruction due to COVID-19.
  • Section 18004(a)(2) provided grants to Historically Black Colleges and Universities (HBCUs), Tribally Controlled Colleges and Universities (TCCUs), and other minority serving institutions (MSIs).
  • Section 18004(a)(3) provided additional funds for institutions under Part B of Title VII of the Higher Education Act through the Fund for the Improvement of Postsecondary Education (FIPSE). 

Additional HEERF II Funds Available

The new CRRSAA legislation builds on the existing HEERF I structure in the CARES Act of March 2020.

Under CRRSAA, additional HEERF II money has been appropriated to the existing (a)(1) program established under CARES Act. Supplemental awards were also provided under a new (a)(4) program, which allocates funds to proprietary institutions.

The US Department of Education’s Notice Inviting Applications for Funds under HEERF II stated that eligible institutions will automatically receive an email indicating a supplemental award has been made. Drawing down any of the supplemental funds constitutes an institution’s acceptance of the new terms and conditions under the CRRSAA.

CRRSAA Grant Application

Similar to funds provided under Section 18004(a)(1) of the CARES Act, available HEERF II grants in the CRRSAA are allocated into two categories:

  • Student aid portion. Financial aid grants that must be given to students to reduce cost of attendance or emergency expenses.
  • Institutional portion. Funds that can be used to defray institutional expenses associated with coronavirus, carry out student support activities as authorized by the Higher Education Act of 1965, and make additional financial grants to students that may be used for any component of the student’s cost of attendance.

Institutions must provide at least the same amount of funding in financial aid grants to students as was required to be provided under Section 18004 of the CARES Act.

How to Use the Student Aid Portion of HEERF II

The student aid portion of HEERF II must be used to provide financial aid grants to students, including those enrolled in distance education programs. It may be used for any component of the student’s cost of attendance or emergency costs that arise due to coronavirus, such as tuition, food, housing, health care—including mental health care—or childcare. 

The amount of supplemental funds an institution receives under the CRRSAA HEERF II student aid portion represents the minimum amount an institution must use for financial aid grants to students.

Prioritize Grant Recipients

Institutions must prioritize students with exceptional need when allocating grants. The US Department of Education recommends using the maximum Federal Pell Grant for the applicable award year as an appropriate maximum for a student’s financial aid grant in most cases; however, the US Department of Education strongly encourages financial aid administrators to exercise the use of professional judgment. 

Students don’t need to be eligible for, or receive, a Federal Pell Grant to receive HEERF II funding under CRRSAA.

How to Use the Institutional Portion of HEERF II

The institutional portion may be used to:

  • Defray expenses associated with coronavirus
  • Carry out student support activities authorized by the Higher Education Act of 1965that address needs related to coronavirus
  • Make additional financial grants to students that may be used for any part of the student’s cost of attendance as defined above
Eligible Expenses Associated with Coronavirus

Coronavirus-related expenses include the following:

  • Lost revenue
  • Reimbursement for expenses already incurred
  • Technology costs associated with a transition to distance education
  • Faculty and staff trainings
  • Payroll, not including certain amounts paid to senior administration or executives
Expenses Ineligible for Grants Funds

Supplemental grant funds may not be used for any of the following expenses:

  • Contractors that provide 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
  • Any other cash or other benefit for a senior administrator or executive
Institutional Indirect Costs

Institutions may charge indirect costs using the negotiated indirect cost rate agreement. If the institution doesn’t have a current negotiated indirect cost rate, it may charge the de minimis rate of 10% of Modified Total Direct Costs. Indirect costs may only be charged to the institutional HEERF II portion received, not to the student portion.

Unexpended Institutional Portion Funds

If an institution has unexpended institutional portion funds under the CARES Act as of December 27, 2020, those funds may be used in the same way as the HEERF II institutional portion under CRRSAA.

Any obligation under either the student or institutional portion must have been incurred on or after December 27, 2020. The US Department of Education clarified that institutions may charge costs and lost revenue to their HEERF grant for the period March 13, 2020, onward.

HEERF II Reporting and Accountability

Institutions must report to the US Department of Education on the use of HEERF II funds no later than six months after the date of the supplemental award, and the institution must provide detailed accounting of how the funds were used. The US Department of Education will specify the manner and frequency with which the institution must report these items based on Section 314(e) of the CRRSAA.

All institutions were required to submit certain information about their use of HEERF I money to the US Department of Education by February 8, 2021. There are also certain quarterly reporting requirements that must be posted to the institution’s primary website.

HEERF II Deadlines and Use Timeframe

Institutions have a one-year performance period to use HEERF II money received under CRRSAA, and they must abide by several additional stipulations.

Timing and Interest

Consistent with 2 Code of Federal Regulations (CFR) Section 200.305, institutions must minimize the time between when they draw down HEERF II funds and when they pay for eligible expenditures. HEERF II funds must be maintained in an interest-bearing account, and any interest earned above $500 must be returned to the federal government.

Outstanding Student Accounts

The student aid portion may be applied to a student’s outstanding account balance; however, institutions must obtain the student’s written or electronic consent.

Endowment Excise Tax

Any institutions that paid, or will be required to pay, the endowment excise tax in tax year 2019 will have HEERF II funding reduced by 50%. They may also only be able to use funding for:

  • Financial aid grants to students
  • Sanitation
  • Personal protective equipment
  • Other expenses related to the coronavirus emergency and the general health and safety of the campus environment

We’re Here to Help

If your institution has questions about how to comply with CRRSAA requirements, read our HEERF II FAQ or contact your Moss Adams professional.

Additional Resources

For regulatory updates, strategies to help cope with subsequent risk, and possible steps to bolster your workforce and organization, please see the following resources: