CARES Act: Higher Education Emergency Relief Fund

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The CARES Act provides $30,750,000,000 for the Education Stabilization Fund of which approximately $14,237,250,000 is set aside for the Higher Education Emergency Relief Fund.  

  • Most higher education institutions will receive funding under the Act.  
  • A key consideration is to review the restrictions on the use of the funds received and prepare a spending plan on how your institution can allocate costs to meet these restrictions.

The Higher Education Emergency Relief Fund is split into three components: the 90% component, the 7.5% component, and the 2.5% component. 

The 90% component is to be used by institutions “to prevent, prepare for, and respond to coronavirus by apportioning it” into two pools equal to 75% and 25%.  The 75% pool is to be allocated proportionately across higher education institutions based upon their relative share of full-time equivalent enrollment of Pell Grant recipients. The 25% pool is distributed in a similar manner using students who did not receive Pell Grants. Students enrolled exclusively in on-line courses are excluded from both of these pools.  A critical point regarding the 90% component is that 50% or more of the amount received by each institution must be used “to provide emergency financial aid grants to students for expenses related to the disruption of campus operations due to coronavirus which includes a student’s cost of attendance, such as food, housing, course material, technology, health care and childcare.”  The remaining portion may be used to “cover any costs resulting from significant changes to the delivery of instruction due to the coronavirus so long as such costs do not include payments to contractors for pre-enrollment recruitment activities; endowments; or capital outlays for facilities related to athletics, sectarian instruction or religious worship.” 

The 7.5% component is to be used to cover costs directly related to the coronavirus and is distributed based on the same relative share of funding allocated in the Further Consolidated Appropriations Act, 2020.  These funds may be used to defray expenses, such as lost revenue, reimbursements for expenses already incurred, technology costs associated with the transition to distance education, faculty and staff training, payroll and grants to students to cover the cost of attendance. 

The 2.5% component is to be used to support institutions that the Secretary of Education determines have the greatest unmet needs with priority given to institutions receiving less than $500,000 under the 90% component and to institutions serving minorities.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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