HEERF III is Finally Here – A Quick Guide to the Changes for Institutional Portion

The following is a brief summary of some of the more significant questions that were answered by the U.S. Department of Education (Department) when it published new frequently asked questions (FAQs) in conjunction with the institutional aid portion of the funds that are now available under the American Rescue Plan Act (ARP).

A reminder that all previous FAQs still apply, unless directly superseded by a subsequent FAQ. You should carefully review all of the FAQs, as these documents have not been carried forward into the current document.

Are there any changes in the types of expenses that can be claimed under the latest round of the Higher Education Emergency Relief Fund (HEERF)?

Under the Act, similar to the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA), allowable uses under the HEERF III (a)(1) Institutional Portion awards include:

  • 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 training, and payroll); and
  • Making additional emergency financial aid grants to students.

The Act has added two new required uses of HEERF III institutional portion grant funds for public and private nonprofit institutions. Namely, a portion of their institutional funds must:

(a) implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines; and

(b) conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to the recent unemployment of a family member or independent student, or other circumstances, described in section 479A of the Higher Education Act (HEA).

HEERF has not permitted the use of the funds for the acquisition of real property, but what happens if we need to perform minor remodeling as a result of changes needed to promote social distancing. Is minor remodeling defined?

Minor remodeling means minor alterations in a previously completed building, for purposes associated with the coronavirus. The term also includes the extension of utility lines, such as water and electricity, from points beyond the confines of the space in which the minor remodeling is undertaken, but within the confines of the previously completed building. The term does not include permanent building construction, structural alterations to buildings, building maintenance, or repairs. Some examples of permissible minor remodeling may include, but are not limited to:

  • The installation or renovation of an HVAC system, to help with air filtration to prevent the spread of COVID-19.
  • The purchase or lease of temporary trailer classroom units to increase social distancing.
  • The purchase or costs of the installation of “room dividers” within a previously completed building to increase social distancing.

I understand the concept of lost revenue, but my institution is experiencing significant growth in outstanding balances from students. Can I use the institutional portion to help with this?

Institutions may discharge student debt or unpaid balances by discharging the complete balance of the debt as lost revenue and reimbursing themselves through their HEERF institutional grants, or by providing additional emergency financial grants to students (with their permission). The Department strongly encourages institutions to discharge such debt.  There are specific examples that can be found in FAQ #26.

Has the definition of lost revenue, the types of permissible costs or the excluded costs changed at all under HEERF III?

No. The Department continues to use the same definitions and references the same cost guidance. We have previous articles on lost revenue and how to calculate lost revenue. As a reminder, the other types of excluded costs include:

HEERF grant funds must not be used for:

  • Funding contractors for the provision of pre-enrollment recruitment activities;
  • Marketing or recruitment (See FAQ #27 for further explanation on re-engagement activities);
  • Endowments;
  • Capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship;
  • Senior administrator or executive salaries, benefits, bonuses, contracts, incentives, stock buybacks, shareholder dividends, capital distributions, and stock options, or any other cash or other benefit for a senior administrator or executive;
  • Religious worship, instruction or proselytization, or the equipment or supplies to be used for religious worship, instruction or proselytization; or
  • Construction or purchase of real property (See FAQ #23 for further examples).

Where can I learn more about the practices to monitor and suppress COVID-19?

Our article "Why Your Institution Needs to Understand Practices to Monitor and Suppress" describes this.

Is the reporting information now available for HEERF II and HEERF III?

Yes. The detail on reporting is now available. Similar to HEERF I, there are quarterly reporting requirements that are being mandated. Those reporting requirements include:

Quarterly Institutional Public Reporting Form for (a)(1) Institutional Portion, (a)(2), and (a)(3) Funds. This form must be conspicuously posted on the institutions’ website no later than 10 days after the calendar quarter (July 10, October 10, January 10, April 10).

Quarterly Student Public Reporting Requirement for (a)(1) Student Aid Portion and the CRRSAA (a)(4) and ARP (a)(4) program. The responses to these questions must be conspicuously posted on the institutions’ website no later than 10 days after the calendar quarter (July 10, October 10, January 10, April 10).

The Department will be collecting an annual report for HEERF III ARP grantees in early 2022. The Department will share more information regarding this annual report, which will also require institutions to report on their uses of any remaining HEERF I CARES Act funds and HEERF II CRRSAA funds, in advance of the ARP annual reporting deadline.

Will these funds be subject to audit?

This will depend on the specific funding your institution receives. We expect the majority of the institutions that receive this aid have their HEERF Funds (I, II or III) subject to be audited. These awards (student and institutional) will need to be reflected on your schedule of expenditures of federal awards when the funds are deemed to be expended.

You can read the full set of FAQs from the Department here.

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