The American Rescue Plan Act and Its Impact to the Higher Education Emergency Relief Fund

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (“ARP”). The ARP is a $1.9 trillion economic stimulus bill intended to speed up the nation’s efforts to recover from the COVID-19 pandemic. For the higher education community, the ARP provides almost $40 billion for colleges and universities (“HEERF III”), at least half of which must go to emergency grants to students.  The American Council on Education has issued a simulated distribution of funds for proprietary institutions and public and private non-profit institutions.

With a few exceptions, HEERF III funds are to be used in accordance with the same terms and conditions of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (“CRRSAA”). For an overview of the higher education provisions of CRRSAA, please see our blog post here. We identify the following important differences between HEERF III under the ARP and HEERF II under the CRRSAA:

• HEERF III removes “carrying out student support activities authorized by the HEA” as an allowable use for the Institutional Fund. Under HEERF II, institutions could use funds to “carry out student support activities authorized by the HEA that address needs related to coronavirus.” ED guidance previously identified TRIO and the Gaining Early Awareness and Readiness for Undergraduate Programs (“GEAR UP”) programs as examples of HEA-authorized student support activities, and provided that an institution could use HEERF II and unspent HEERF I funds to support the transition to virtual activities, purchase personal protective equipment, or support other innovative learning methods. HEERF III funds cannot be used on these expenses. Note however that HEERF III funds continue to allow institutions to use funds to “defray expenses associated with coronavirus” and to issue additional emergency financial aid grants to students.
• HEERF III requires institutions to use a portion of the Institutional Fund on specific outreach programs. Institutions are directed to:
  • “Implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines”; and
  • “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,” as described in the HEA at section 479A. Section 479A describes circumstances in which a student or family member is a dislocated worker; a student’s parent or parents are enrolled at least half-time in a degree, certificate, or other program leading to a recognized educational credential at an institution with a program participation agreement; a change in housing status that results in an individual being homeless; or other changes in a family’s income, a family’s assets, or a student’s status.

Separate from allocating additional funds to HEERF, the ARP lays out a timeline for the Department of Education to begin a negotiated rulemaking to modify revenue requirements for proprietary institutions (“90/10 rule”). The 90/10 rule provides that a proprietary school must derive at least 10 percent of its revenue from sources other than the Federal Student Aid programs to be eligible for participation in Federal Student Aid. The negotiated rulemaking will occur no later than October 1, 2021 and implementation of the negotiated rule will begin no earlier than January 1, 2023.

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.