Summary of Provisions Related to Higher Education under the 2021 Consolidated Appropriations Act and 2021 Coronavirus Response and Relief Supplemental Appropriations Act

Over the holiday weekend, President Trump signed the 2021 Consolidated Appropriations Act (“Act”), the full text of which is available here. The Act funds the federal government until September 2021 and provides $900 billion for COVID-19 relief. The relief package includes funding for institutions of higher education, which are intended to defray some of the effects of the pandemic on higher education.

Education Stabilization Fund

The COVID-19 relief provisions of the Act appropriate approximately $81.9 billion to the Education Stabilization Fund (“ESF”). The ESF is intended to prevent, prepare for, and respond to COVID-19 at the state, school district, and postsecondary level. The funding will be divided between the Governor’s Emergency Education Relief Fund ($4.1 billion), the Elementary and Secondary School Emergency Relief Fund ($54.3 billion), and the Higher Education Emergency Relief Fund ($22.7 billion). ESF funding will remain available through September 30, 2022

Higher Education Emergency Relief Fund

The Higher Education Emergency Relief Fund (“HEERF”), implemented in the CARES Act at Sec. 18004, will receive an additional $22.7 billion under the ESF, $20.2 billion of which will be allocated to public and private non-profit institutions of higher education, including those institutions that serve students enrolled exclusively in distance education, to be distributed by an allocation formula which considers head count in addition to full-time equivalent (“FTE”) enrollment. The allocation formula is a change from the CARES Act, which only used FTE enrollment. Specifically, HEERF funding will be apportioned to public and private non-profit institutions as follows:

• 37.5 percent based on FTE Pell recipients, not exclusively enrolled in distance education courses prior to the emergency
• 37.5 percent based on headcount Pell recipients, not exclusively enrolled in distance education courses prior to the emergency
• 11.5 percent based on overall FTE students, not exclusively enrolled in distance education courses prior to the emergency
• 11.5 percent based on overall headcount of students, not exclusively enrolled in distance education courses prior to the emergency
• 1 percent based on FTE Pell, exclusively enrolled in distance education courses prior to the emergency
• 1 percent based on headcount Pell, exclusively enrolled in distance education courses prior to the emergency

Public and private non-profit institutions can use HEERF funding for lost revenue, reimbursement for expenses, technology costs associated with the shift to distance education, financial aid grants for students (including those exclusively enrolled in distance education), student support activities authorized by the Higher Education Act that address COVID-19 needs, and other qualifying purposes.

Congress will also provide an additional $1.7 billion to Historically Black colleges or universities (“HBCUs”), Tribal Colleges and Minority-Serving Institutions; $819 million to schools and Tribal Colleges operated by the Bureau of Indian Education; $680.9 million to for-profit institutions, which may only be used on financial aid grants to students; and $113 million to institutions with the greatest unmet need related to the effects of COVID-19.

Institutions who receive HEERF funds must provide “at least the same amount of funding in emergency financial aid grants to students as was required under sections 18004(a)(1) and (c) of division B of the CARES Act.” The Act directs institutions to “prioritize grants to students with exceptional need, such as students who receive Pell Grants.” The Act also provides that emergency financial aid grants distributed under the CARES Act are excluded from students’ gross income.

Congress prohibits the use of HEERF funds for marketing or recruitment activities, athletics facilities, religious instruction, senior administrator or executive salaries or bonuses, stock buybacks, shareholder dividends, capital distributions, stock options, or “any other cash or other benefit for a senior administrator or executive.” Institutions that receive funding must, to the greatest extent practicable, continue to pay their employees and contractors during any periods of disruption or closures related to COVID-19.

Broadband Provisions

The Act creates an Office of Minority Broadband Initiative at the National Telecommunications and Information Administration to focus on broadband access and adoption at HBCUs, Tribal Colleges, and other Minority-Serving institutions, “including the students, faculty, and staff of such institutions and their surrounding communities.” Congress has appropriated $285 million for a Pilot Program to award grants to these institutions and certain businesses and non-profit organizations in the community to support connectivity. The Act specifies that at least 20 percent of such funds should be used to ensure that students of such institutions have internet service and devices. The Act also appropriates funding to internet service providers who provide discounted service or devices to eligible households. Relevant to higher education, Pell grant recipients are specifically cited as members of eligible households who benefit under the program.

For more information or assistance with matters related to COVID-19’s financial impact on institutions, please contact HMBR’s Higher Education Group at 312-946-1800.