On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021. The ARPA appropriated approximately $39.6 billion for the Higher Education Emergency Relief Fund (HEERF) and represents the third stream of funding granted for HEERF to prevent, prepare for, and respond to coronavirus. Taken together, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), and the ARPA represent HEERF I, HEERF II, and HEERF III, respectively. Following the spring 2021 announcement, Senate Majority Leader Chuck Schumer released a breakdown of funds from the American Rescue Plan Act going to New York colleges and universities. Public, private, and proprietary higher education institutions within the state stand to receive roughly $2.6 billion, Schumer said.
First things first: you need to do your homework.
There is a lot to unpack within this funding, and it’s extensive. We hope your staff has had adequate time to digest all of the information made available by the U.S. Department of Education. As many schools are currently in the process of distributing and spending HEERF III money, our goal is to provide a high-level overview of several important aspects of HEERF III so your institution can make the most of available funding.
This funding is not one size fits all.
Megan Schneider, senior director of government affairs at the National Association of College and University Business Officers, noted that every college serves a different population of students with different needs. “The Education Department really wanted schools to have flexibility because no one knows your students as well as you do,” Schneider said. Schneider also said that, given the uncertainty of the pandemic, she understands why some colleges are inclined to want to preserve as much aid as they can. However, she added that her association has been advising colleges that they should get the grants to students “as quickly as possible.” HEERF III is structured like the HEERF II programs under the CRRSAA, with certain important differences that students and educators should be aware of. Unlike HEERF I and II, a portion of HEERF III institutional funds must be spent on two activities:
- Implement COVID health and safety measures
- Conduct direct student outreach regarding opportunities for further federal financial aid
Congress imposed these broad mandates in the American Rescue Plan Act and left ED to define them more thoroughly. ED’s new guidance better defined the activities associated with these stipulations but did not stipulate the exact amount of HEERF III that needs to be spent on them.
HEERF payroll uses are further defined in question 25 of the HEERF III FAQ. Institutions can use HEERF institutional aid to pay for new or repurposed staff as long as the cost is associated with COVID and occurred after 3/13/2020. Student employees are also eligible, including internships and job training. Some examples include:
- New staff such as teaching assistants, contact tracers, more instructors to lower class size, and IT workers
- Staff unable to work or who lost wages due to COVID, potentially payable retroactively (e.g., cafeteria, dorm, and clerical workers)
- Overtime pay for custodial workers, staff training, etc.
HEERF III grant money is not taxable.
These grants have been provided to students due to an event related to the COVID-19 and are therefore not included in a student’s gross income. For more information, please view the IRS bulletin: Emergency aid granted to students due to COVID is not taxable.
Ultimately, some colleges have significant numbers of students from the lowest income brackets, while others serve more students of various income levels so the way this aid is distributed will vary from school to school.
Be sure to thoroughly review the FAQs page which is intended to describe the features and allowable uses of grants received under the HEERF III programs, as it is sometimes updated with additional information. Still have financial questions or concerns about putting this funding to good use? Contact our dedicated team of RBT professionals today.