Tax Tips Logo ImageISSUE:

On December 27, 2020, the President signed the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA) (P.L. 116-260).  This law has some similarities—as well as important differences—from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116–136) that was enacted on March 27, 2020.  One of the differences is that CRRSAA/HEERF II added allocations for students enrolled exclusively in distance education.

 

 

SITUATION:

Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

We talked with DCC’s CFO about HEERF II funding and some of the differences between HEERF I (CARES Act Section 18004) and HEERF II.

“So, we can now give financial aid grants to students who are exclusively enrolled in distance education, correct?”

“Yes,” we answered.  “Students enrolled in exclusively distance education courses are included in the CRRSAA section 314(a)(1) allocation formula.  According to the Department of Education, amounts apportioned for students enrolled in exclusively distance education courses may be used only for financial aid grants to students.”

“Great.  Where can we find out more about HEERF II funding?”

“One of the best resources is ED’s “Higher Education Emergency Relief Fund (HEERF) II Public and Private Nonprofit Institution (a)(1) Programs (CFDA 84.425E and 84.425F) Frequently Asked Questions” (updated March 19, 2021).”

The link to that resource is…

updated faqs heerf II

 

RULES:                                                                        .

From “HEERF II FAQs”, Question #8:

  1. Question: What are the requirements for making financial aid grants to students?

Answer: Unlike the CARES Act, the CRRSAA requires that institutions prioritize students with exceptional need, such as students who receive Pell Grants, in awarding financial aid grants to students. However, students do not need to be only Pell recipients or students who are eligible for Pell grants. In addition, the CRRSAA explicitly provides that financial aid grants to students may be provided to students exclusively enrolled in distance education.

Institutions may not (1) condition the receipt of financial aid grants to students on continued or future enrollment in the institution, (2) use the financial aid grants to satisfy a student’s outstanding account balance, unless it has obtained the student’s written (or electronic), affirmative consent, or (3) require such consent as a condition of receipt of or eligibility for the financial aid grant.3

Institutions should carefully document how they prioritize students with exceptional need in distributing financial aid grants to students, as the Department intends to establish reporting requirements regarding the distribution of financial aid grants to students consistent with section 314(e) of CRRSAA.

Footnote [3]: The Department’s guidance for emergency financial aid grants under section 18004(a)(1) of the CARES Act did not advise institutions to use such grants to satisfy a student’s outstanding account balance. However, upon further consideration, the Department believes that allowing students to consent to the application of a CRRSAA financial aid grant to their student accounts would facilitate such a use of funds, if desired by the student, while retaining the student’s discretion to determine what costs should be covered with his or her financial aid grant funds.

 

BOTTOM LINE:

  • HEERF I funding generally did not apply to students who were enrolled exclusively in distance education.
  • HEERF II (and, presumably, HEERF III) now includes Student Aid Grants to these students.
  • HEERF II, Student Portion funds, may be applied to a student’s outstanding account balance – with the student’s consent.
  • Institutions should carefully document their methodology for providing HEERF II Student Grants as ED intends to establish reporting requirements regarding the distribution of financial aid grants to students consistent with section 314(e) of CRRSAA.  (Film at 11.)

 

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