Washington Watch: ED releases ‘CARES 2.0’ funds

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The U.S. Education Department (ED) on Thursday announced the availability of new stimulus dollars provided through the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) to help both institutions and students.  

The funds are for the main formula program that will provide $20.2 billion to nonprofit, undergraduate higher education institutions. The announcement generally tracks the statute, in ways that should generally enhance the use of funds, certainly compared to the CARES Act. Under CRRSAA, most community colleges will receive substantially higher allocations than they did under the CARES Act. The announcement did not include $1.7 billion in additional assistance for Titles III and V of the Higher Education Act. This will occur under the new Biden administration.

At first blush, detracting from the otherwise very positive news for community colleges, concerns the timeframe for which CARES 2.0 funds can be used. The fact that the new funds will apply only to expenditures that incurred on December 27, 2020, or after could limit the potential benefit of the new statute.

General process

Colleges that received grants under the CARES Act will not have to reapply for CRRSAA fund; ED will notify them about their allocations. Drawing down any of the funds obligates the institution to a new certification agreement for the new funds. A proviso for colleges accessing funds is filing their year-end report for spending their CARES Act funding. ED also expects that it will take some time, possibly weeks, due to the sheer amount of time associated with funding allocation processing.  

Student grants

Under the new law, colleges will have to allocate the same dollar amount to financial aid grants as they were required to provide for “emergency” grants under the CARES Act. That law required that at least 50% of an institution’s allocation go to these grants. Because the CRRSA allocations are significantly larger than the CARES allocations, this means that a smaller percentage of CRRSA funds must be dedicated to student grants than the 50% required by CARES. As under CARES, institutions may go beyond this requirement. 

Key features of the implementation of the new law include:

  • The June 2020 CARES Act “interim final rule” that limited emergency grants to Title IV-eligible students is not being applied. This appears to lead the way for financial aid grants to be used for non-credit and possibly undocumented students. Federal courts have split on whether a provision in the 1996 welfare reform law prohibits these grants from going to undocumented students.  
  • Students with “exceptional need” must receive priority, requiring documentation of such use. ED materials suggest the maximum Pell Grant to be generally thought of as the total grant amount that students should receive, implying that other students should be considered for awards.
  • Funds can be used for tuition and credited to student accounts, but only if the student consents.

Institutional grants

Colleges will be able to use the institutional share of funds more broadly than under the CARES Act. The primary use, as outlined in the law and reflected in guidance, is for the purpose of “defraying expenses associated with coronavirus (including, lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll).” 

Funds may also be used for carrying out student support activities as outlined in the TRIO and GEAR UP programs, for ways in which students were impacted by the coronavirus.  

Many community colleges will want to use institutional funds to make up for lost tuition revenue due to the precipitous declines in enrollment. Therefore, limiting the use of the funds under CRRSAA to expenditures incurred only after December 27, 2020, may be problematic, since lost revenue is considered an expense under the law. The guidance is generally silent on lost revenue. AACC is not certain that the new law requires this policy and may encourage that ED change the guidance concerning this matter. 

In the meantime, President-elect Biden has announced that he supports a $170 billion education stimulus investment, including an additional $35 billion for higher education.