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Last week, the U.S. Department of Education began sending out letters and other information with regard to the CARES Act’s Higher Education Emergency Relief Fund (HEERF).  Does your school qualify for some funding?

 

SITUATION

Troas Bible College (TBC) 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.

TBC’s leadership team did not receive a letter from the Secretary of Education regarding the HEERF.  In addition, when they searched the ED’s listing of “Allocations for Section 18004(a)(1) of the CARES Act,” TBC was not “on the list.”

TBC’s President and Controller called us to ask about the HEERF and whether they might have been inadvertently omitted from the funding.

We gave them an overview as follows:

The CARES Act allocated about $33 billion to the U.S. Department of Education.  Of that, “roughly” $14 billion has been allocated to institutions of higher education. 90% of this relief is in the form of the “Higher Education Emergency Relief Fund” (HEERF).  Last Thursday (April 9, 2020), the Secretary of Education sent letters to the college presidents at the schools who have been allocated funding. This alphabetical listing of those schools and amounts may be found here.

The CARES Act states that schools receiving these funds shall use no less than 50 percent of the funds allocated to the to provide emergency financial aid grants to students for expenses related to the disruption of campus operations due to Coronavirus (including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care, and child care).  The Secretary “encouraged the leadership of each institution to prioritize your students with the greatest need.”

If your school participates in Title IV and did not receive a letter, take heart, the Department of Education is “working expeditiously to allocate the remaining funding that is reserved for institutional use, and we will provide details on how institutions may apply for this institutional funding, as well as for other emergency funding, in the coming days.”

Please note that if your school is listed, you still must file a Certificate of Agreement that may be found here.

 

RULES

From the Department of Education “Letter from the Secretary” (4/9/20):

“As you know, the CARES Act provides several different methods for distributing roughly $14 billion in funds to institutions of higher education. The most significant portion of that funding allocation provides that $12.56 billion will be distributed to institutions using a formula based on student enrollment. Of the amount allocated to each institution under this formula, at least 50 percent must be reserved to provide students with emergency financial aid grants to help cover expenses related to the disruption of campus operations due to coronavirus. We are prioritizing this funding stream in order to get money in the hands of students in need as quickly as possible.”

From the Department of Education “Letter from the Secretary” (4/9/20):

“The Department is also working expeditiously to allocate the remaining funding that is reserved for institutional use, and we will provide details on how institutions may apply for this institutional funding, as well as for other emergency funding, in the coming days. Thank you for your continued work on behalf of America’s students.”

From the Department of Education “Methodology for Calculating Allocations per Section 18004(a)(1) of the CARES Act”:

“There may be some currently participating and eligible schools which may be excluded from this formula. For this reason, a reserve of $50 million has been set aside in part to address such institutions.”

 

BOTTOM LINE

  • The Higher Education Emergency Relief Fund was established in the CARES Act (Section 18004) to assist institutions in navigating the difficult financial times in which we find ourselves.
  • Institutions provided funding must use no less than 50 percent of such funds to provide emergency financial aid grants to students for expenses related to the disruption of campus operations due to Coronavirus.
  • Institutions that are on the current list must still submit a “Certificate of Agreement” before the funds will be sent to them.
  • Some Bible colleges and seminaries that participate in Title IV may not be “on the list” currently.  However, the ED has set aside a reserve and will issue further guidance regarding additional funds that may be available to these schools.

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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