The American Rescue Plan Act of 2021 (ARPA) allocates nearly $40 billion in additional aid to the Higher Education Emergency Relief Fund (HEERF), which is available through September 30, 2023. This is the third stream of funding appropriated for HEERF (HEERF III) to prevent, prepare for, and respond to the COVID-19 pandemic (coronavirus).

In a new round of funding announced January 20, 2022, the federal government will provide an additional $198 million in grant funding under the Supplemental Support under American Rescue Plan (SSARP). The federal government is accepting applications and will allocate the money to institutions in late spring 2022.

This increase in funds accompanies the US Department of Education’s expanded HEERF application, flexibility, and guidance for recipients.

Below, learn how ARPA and SSARP funds will be allocated, steps to receive aid, and how your higher education institution can more easily apply HEERF grants.

How ARPA Funds Will Be Allocated

The ARPA’s allocation methodology, terms, and conditions closely follow those provided in the second stimulus legislation, Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSAA).

Congress appropriated the funding as follows:

• Approximately $36 billion for public and private not-for-profit institutions
• Approximately $3 billion for historically black colleges and universities, Tribal-controlled colleges and universities, minority-serving institutions, and Strengthening Institutions Program institutions
• Approximately $198 million for institutions that the Department of Education, after allocating other funds available under HEERF III, determines have the greatest unmet needs related to the coronavirus
• Approximately $396 million for proprietary institutions

How ARPA Funds Must Be Used

Student Portion of Received Funds

A new formula determines how funds must be used to provide emergency financial aid grants to students. The Department of Education’s allocation table has more information.

Funds received may be applied towards:

• Any component of the student’s cost of attendance 
• Emergency costs that arise due to COVID-19, such as tuition, food, housing, childcare, or health care—including mental health care

How SSARP Funds Will be Allocated

Institutions will have to apply for the funding, and the Department of Education will prioritize community colleges and institutions with the greatest unmet needs related to the pandemic.

Rural institutions serving a high percentage of low-income students get priority.

How to Spend SSARP Funds

Institutions are encouraged to use the new grant funds on:

• Evidence-based practices for monitoring and suppressing COVID-19
• Strategies for addressing students’ basic needs
• Support for students’ continued enrollment and re-enrollment
• Forgiveness of institutional debts
• Expansion of programs that lead to in-demand jobs

The Department of Education released additional information, including an FAQ, on how institutions can use new and existing federal funds to meet the basic needs of students.

How to Apply for SSARP

Institutions will need to apply for the funding through Grants.gov, completing an Application for Federal Assistance (SF-424) as well as the Department of Education Supplemental Information Form for the SF-424.

A Funding Certification and Agreement and Program Profile must be attached to the Supplemental Information Form and must have a wet inked or digital/electronic signature by the institution’s authorized representative, usually the president, chancellor, or CEO.

Institutional Portion of Received Funds

The remaining funds can be used for the same items as listed under the CRRSAA to defray expenses associated with COVID-19, including:

• Lost revenue
• Reimbursement for expenses already incurred
• Technology costs associated with a transition to distance education
• Faculty and staff training
• Payroll and benefits
• Additional financial aid grants to students, especially those with exceptional need

A student is defined as “any individual who is or was enrolled (as defined in 34 CFR 668.2) at an eligible institution (as defined in 34 CFR 600.2) on or after March 13, 2020.”

On January 20, 2022, the Department of Education issued a new FAQ about how the institutional portion may be spent to meet the basic needs of students. In this FAQ, the Department of Education provides examples of how the funds can be spent to support students navigating the pandemic.

Some examples listed in the FAQ include:

• Expanding on-campus childcare centers or creating subsidy programs for parents to pay childcare providers
• Expanding offerings at campus-based food pantries
• Creating universal meal programs
• Providing subsidies or covering the full cost of public transportation
• Subsidizing on-and off-campus housing costs
• Providing mental health services

In addition, the FAQ discusses using HEERF grants to build long-term capacity to support students such as paying for staff or contractor work to coordinate, plan, or implement services that continue to support students’ basic needs through the pandemic and beyond.

Lastly the FAQ provides examples for how the funds can be used to provide direct outreach to students.

Students are no longer required to be eligible for Title IV student financial aid to receive HEERF grants. Students who are undocumented, international, or studying abroad may receive HEERF grants.

Coronavirus Safety Measures and Outreach

In a departure from CRRSAA guidance, the ARPA adds a requirement that if an institution doesn’t use all its portion for emergency financial grants to students, a portion of the institutional funds received must be used to both:

• Implement evidence-based practices to monitor and suppress the coronavirus under public health guidelines
• Conduct direct outreach to financial aid applicants about the opportunity to receive a financial aid adjustment due to recent unemployment of a family member or independent student, or other circumstances

Reporting Requirements

HEERF grantees must continue to adhere to the two quarterly reporting requirements originally implemented through the CARES Act for HEERF I funding.

Quarterly institutional public reporting forms and responses to the quarterly student public reporting requirement must be conspicuously posted on institutions’ websites no later than 10 days after the calendar quarter ends.

The Department of Education will collect an annual report for HEERF III ARPA grantees in early 2022 and share more information in advance of the annual reporting deadline.

Retroactively Charge HEERF Costs

Grantees will now have the flexibility to charge HEERF costs back to March 13, 2020, the date that the coronavirus pandemic was declared a national emergency.

These updates reflect a change in the Department of Education’s prior position, which only allowed funds received under the CRRSAA to be used for costs incurred on or after December 27, 2020—the date of the CRRSAA’s enactment.

Guidance for Calculating Lost Revenue

The US Department of Education supplemented this change of interpretation with additional guidance addressing:

• How grantees may calculate and charge lost revenue to their HEERF awards
• Additional FAQs for Lost Revenue

Taxability of Emergency Financial Aid Grants

Emergency financial aid grants made by a federal agency, state, Tribe, higher education institution, or scholarship-granting organization to a student because of an event related to the COVID-19 national emergency aren’t included in the student’s gross income.

To learn more about HEERF regulations and availability, visit FAQs related to HEERF II funding or you can also reference the ED COVID-19 Handbook.

We’re Here to Help

For more information about coronavirus relief available to higher education institutions, ways to apply ARPA or SSARP funds, or changes to HEERF grants, contact your Moss Adams professional.

You can also visit our Higher Education Practice for additional insights.