2021 Consolidated Appropriations Act Increases Relief for Higher Education

The Consolidated Appropriations Act of 2021 (Act), signed by President Trump on December 27, 2020, provides a new COVID-19 relief package including over $22 billion for the Higher Education Emergency Relief Fund (HEERF).

Of this emergency funding, 89% is to be provided for public and private non-profit institutions. Allocations of 7.5% are provided for historically black colleges and universities, as well as minority-serving institutions. 3% of the funds are to be allocated to for-profit institutions and the last 0.5% of funds are reserved for institutions determined to have the most unmet needs stemming from the COVID-19 pandemic.

Both non-profit and for-profit institutions will receive their funds based on the following criteria, which is similar to the allocation method set by the CARES Act:

• 37.5% based on full time equivalent enrollment students and 37.5% based on total students, each who receive Pell Grants and who were not exclusively enrolled in distance learning prior to COVID-19. 
• 11.5% based on full time equivalent enrollment students and 11.5% based on total students, each who do not receive Pell Grants and who were not exclusively enrolled in distance learning prior to COVID-19. 
• 1% based on full time equivalent enrollment students and 1% based on total students, each who receive Pell Grants and who were exclusively enrolled in distance learning prior to COVID-19. 

As for the use of the funding, institutions of higher education are again required to provide a portion of the funding to students. The student portion will need to be in the same amount (not percentage) as required to be provided by the CARES Act for emergency financial aid. Institutions may spend their portion on the following:

• To help defray the costs incurred due to COVID-19, such as lost revenue, technology used to transition to distance education, faculty trainings and payroll.
• Student support activities authorized by the Higher Education Act of 1965 (HEA) that address needs related to COVID-19.
• Grants to students for student’s cost of attendance or other emergency expenses incurred related to COVID-19 such as tuition, food, housing, health care or childcare.

The act also specifies how relief may not be spent. This includes contractors for pre-enrollment recruitment, marketing or recruitment, endowments, capital outlays related to athletic facilities, sectarian instructions, religious worship, executive and senior administrator salaries or bonuses and similar executive benefits.

As was the first round of HEERF funding, the relief funds will be available through the U.S. Department of Education (USDE.)  The announcement of specific allocations to schools has been posted to the USDE website and can be found here:  https://www2.ed.gov/about/offices/list/ope/314a1allocationtableheerfii.pdf

One caveat of the Act’s funding is a 50% reduction of funding allocations to institutions of higher education who paid excise tax on their endowment during 2019, under IRC section 4968. Additional restrictions on expenditures of the relief funds also applies to these institutions. 

If you have any questions regarding the impact of The Consolidated Appropriations Act of 2021 on your institution, please reach out to our not-for-profit and higher education experts.