Department of Education Issues New Guidance on Use of ARP Funds

Published: May 12, 2021

The U.S. Department of Education issued additional guidance to colleges and universities on May 11 regarding the appropriate use of funds allocated to institutions as part of the American Rescue Plan (“ARP”). The additional guidance was offered in the form of an FAQ identifying changes to requirements for higher education institutions regarding the use of federal COVID-related support.

The ARP includes $39.6 billion supporting higher education institutions under its Higher Education Emergency Relief Fund (“HEERF III”). This support follows two prior rounds of funding under the CARES Act in May 2020 (“HEERF I”), and CRRSAA in December (“HEERF II”). As with HEERF I and HEERF II, funding provided to higher education institutions under HEERF III is to be split between direct student support and institutional support. Regarding the institutional support allocation, these funds are to be used for the purpose of “defraying expenses associated with coronavirus,” which may specifically include “lost revenue.”

Under HEERF III, two new requirements are added regarding the use of allocated funds. Specifically, educational institutions receiving HEERF III support will be required to utilize a portion of the allocation to: “implement evidence-based practices to monitor and suppress coronavirus” on campuses and engage in “direct outreach to financial aid recipients” to alert them to the fact that awards may be amended where changed financial circumstance exist. Regarding the monitoring and suppression of coronavirus, the FAQ offers specific examples of appropriate actions, including testing, sanitation, and the support of students in quarantine, among others. In regard to financial aid recipient outreach, the guidance cautions that such communication should be more than mere “passive notification,” and may include individual emails to students, phone calls, or in-person meetings.

The guidance does not set minimum requirements for the amount of funding to be used in meeting these new requirements. However, institutions are cautioned to allocate a “reasonable and necessary” portion of funding to implement the requirements. Further, potential sanctions on institutions that fail to properly utilize HEERF funding are identified, including, but not limited to, undergoing audit and potential termination of program eligibility.

While the availability of HEERF III funding support is good news for colleges and universities, attention to compliance is critical. If your institution has questions about its obligations under the ARP, contact the Steptoe & Johnson Higher Education Team.

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