The U.S. Education Department (ED) on Tuesday released the institutional share of the formula grants that the CARES Act provides to colleges, along with guidance about how those funds can be used.
ED also released more details about the emergency student grants that it announced earlier this month. The two sets of “Frequently Asks Questions” provide far more specifics on the program than previously available. The new materials may result in some planned institutional approaches to the expenditure of funds, particularly concerning emergency grants to students, being precluded.
Community college leaders remain grateful for the funds provided through the CARES Act.
The new guidance states definitively that the student emergency grants must go directly to students themselves, and that the funds cannot be applied to existing student accounts or other pending charges. This is consistent with the CARES Act and the American Association of Community Colleges’ (AACC) understanding of legislative intent. However, institutions are not responsible for tracking or documenting how students actually use the funds.
According to ED, only those students who are or who could be eligible (if they were to file a Free Application for Federal Student Aid, or FAFSA) to participate in Higher Education Act Title IV programs may receive emergency grants. This definition is restricted beyond what might have been expected because the CARES Act does not refer to Title IV.
It was uncertain whether undocumented students might qualify for the grants; ED has closed the door on that. However, it appears conceivable that students who are otherwise eligible to file a FAFSA, but are not enrolled in Title IV eligible programs, might be able to receive emergency grants. In this context, it’s useful to keep in mind that the CARES Act student emergency grants are overwhelmingly focused on students and their financial needs, not institutions and not the Title IV framework.
At the risk of adding to the complexity facing community colleges, according to the National Association of Student Financial Aid Administrators (NASFAA), “schools immediately questioned whether they would need to have a FAFSA on file in order to disburse CARES Act emergency funds to students. While ED’s guidance does state that a FAFSA is not required, having one on file would be the only practicable way for an institution to determine that a student is eligible to participate in the student aid programs and meet all applicable eligibility requirements.”
NASFAA has already reached out to ED regarding the scope of ED’s statement that only “students who are or could be eligible to participate in programs under Section 484 in Title IV of the Higher Education Act of 1965, as amended (HEA), may receive emergency financial aid grants.”
ED is also precluding colleges from using the emergency grants for students who on or prior to March 13 — when the national health emergency was declared — were enrolled 100 percent in online courses. This does not necessarily seem consistent with the CARES Act.
The guidance also reaffirms that institutions may not use emergency grant funds for institutional refunds to students, either for tuition or rooming charges. Furthermore, they cannot allocate any student funds to recover any technology costs they incurred to ensure that students could continue their studies away from campus.
ED’s guidance reaffirmed that institutions need to report to the education secretary the following: how grants were calculated, their amount, disbursement procedures and any institutional instructions they gave students about the grants. The department will publish in the Federal Register instructions on these reporting requirements.
ED is also now making available to colleges the remaining 50 percent of formula funds. Unlike the student emergency grants, the information provided is ED’s initial release about the use of these funds. Before they can apply for the funds, institutions first must enter into a certification agreement with the department on the student portion of the grants.
ED’s guidance reinforces that colleges may use the institutional funds to cover any refunds that they made to students for tuition, housing charges or other fees. Institutions may also use funds to purchase equipment or software, pay for online licensing fees or pay for internet service to enable students to transition to distance learning, to the extent that such costs are associated with a significant change in the delivery of instruction due to the coronavirus.
Colleges that purchased computers or other equipment to donate or provide to students on or after March 13 may reimburse themselves for such expenses from the institutional funds.
In accounting for the use of the funds, colleges must have in place reporting systems to ensure that funds are used for allowable purposes and in accordance with cash management principles. ED also will publish these reporting requirements in the Federal Register. The department encourages institutions to keep detailed records of how they expend all funds.
Colleges may use any portion of the institutional funds for student emergency grants, under the other terms of the CARES Act, which Education Secretary Betsy DeVos encouraged in her briefing on Tuesday with stakeholders.
AACC will continue to monitor implementation of the CARES Act and keep colleges updated on relevant developments.