Colleges and universities, and their students, will receive an additional $22.7 billion from the Higher Education Emergency Relief Fund (HEERF) under the second major coronavirus relief bill signed into law on December 27. The Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) builds on the earlier Coronavirus Aid, Relief, and Economic Security (CARES) Act which provided $14 billion in funding for higher education. The Department of Education (ED) is referring to these funds/programs as “HEERF II” and has posted a resource page with links to relevant documents.

Institutions that received funds last year under section 18004(a)(1) of the CARES Act for students or institutions do not need to apply for the new funds. Instead, the institution’s project director on its most recent Grant Award Notification will be emailed when funds are available. Funds will automatically be awarded based on the allocation formula in the new law. Drawing down the funds constitutes acceptance of new terms and conditions that apply to these funds. A portion must be drawn within 90 days of the funds becoming available; otherwise, the funds may be de-obligated. A January 15 Federal Register notice lays out the parameters for allocating and spending the funds. The notice includes as attachments examples of agreements with institutions governing the supplemental grant funds for students and for institutions.

Allocations. As before, institutions will be allocated funds using a formula based on full-time-equivalent and total number of students who are Pell-eligible and not Pell-eligible. For the first time, 2 percent of the allocation will take into account students who were exclusively enrolled in distance learning prior to the pandemic. Allocations for all eligible institutions have been posted.

While CARES Act funds were divvied up evenly between the institutional portion and the financial aid portion, this time Congress specified that schools must use at least the same amount of funds for student aid as they were required to allocate under section 18004(a)(1) of the CARES Act. Since the total amount appropriated for section 314(a)(1) is significantly higher, institutions may use a higher proportion of HEERF II for institutional support. The relevant amounts are included on the list of allocations by institution.

Other funding provisions apply to selected types of institutions, including:

  • Institutions that did not receive funds under the CARES Act in 2020 but appear in the allocation table for HEERF II funds will need to apply to participate. The application deadline is April 15.
  • Institutions that have not completed the quarterly and annual reports required under the CARES Act may be restricted from drawing down the HEERF II funds until they have done so.
  • Institutions that had to pay the new endowment excise tax in 2019 will see their allocations cut in half and will be required to spend all CRRSAA funds for financial aid grants to students. Some 50 schools with high endowment earnings per student likely fall in this group.
  • For-profit institutions are not eligible for supplemental funds under section 314(a)(1) of CRRSAA, but instead are eligible for student support funding under section 314(a)(4).

Uses of Funds. Institutions will have more flexibility in how they use these funds. Any remaining CARES Act funds that schools have not yet spent will be carried over and governed under the HEERF II requirements.

Institutional Portion: The institutional portion can be used to offset expenses related to the coronavirus including lost revenue, technology costs, faculty and staff training, payroll, reimbursement for past expenses, student support activities, or additional financial aid to students. Reasonable direct administrative costs may be charged to the institutional portion. Indirect costs may also, at the institution’s negotiated rate or 10 percent of modified total direct costs for institutions without a negotiated rate.

Student Portion: Under CRRSAA, students with exceptional need, such as Pell recipients, must be prioritized for financial aid grants, although non-Pell eligible students may receive funds as well. Grants may now also go to students enrolled only in distance education courses. Schools should document how they prioritize student financial need as ED plans to require reporting on methods used to distribute funds.

Financial aid grants to students may be used for any part of the cost of attendance or for emergency costs related to the pandemic. The grants may be used to cover a student’s outstanding balance, but only with written consent from the student. Institutions may not require such consent or condition the grants on students’ continued enrollment.

When implementing the CARES Act, ED took the position—later codified in an interim final rule—that only students who are or could be eligible to participate in the title IV financial aid programs could receive HEERF funds. This rule does not apply to HEERF II, according to ED, although department officials have said that undocumented and foreign students are still not eligible for the grants.

Timing. The entire award will be available to institutions as soon as they have been obligated, but institutions must ensure that funds are only drawn down as needed. For grants to students, funds should be paid to the student within 15 calendar days. For all other uses, the institution must spend the funds within three days.

Reporting. Reporting requirements for the new funds will be announced separately and will likely be similar to CARES Act parameters.