CARES Act and What You Should Know

Recently, Nelnet Campus Commerce partnered with the National Association of College and University Business Officers (NACUBO) to share important insights on the Coronavirus Aid and Relief and Economic Security (CARES) Act.

Watch the on-demand webinar — CARES Act and What You Should Know. In this presentation, Megan Schneider, senior director of government affairs at NACBUO, highlights how CARES Act funds are appropriated to colleges and universities, explains the Department of Education’s guidance on eligibility, disbursement requirements, and allowable uses. Provides insights on tax implications and major lending programs created by the CARES Act and has information on future action items in COVID-19 relief legislation.

Here is a helpful resource list to some of the many questions generated during the live presentation:

Are the Higher Ed Emergency Relief Fund (HEERF) grants to students reportable on the 1098-T?

While no guidance has been established by the Department of Education or the IRS, NACUBO recommends reporting these grants to students in Box 5 of the 1098-T. This does not automatically make the funds taxable, but these are grants provided to students for educational purposes.

How should we report the Employee Retention Credit on the form 941?

Please see this IRS website for more information.

If students need to take online courses due to COVID-19, are they eligible to receive funds? What if they’re in an online program?

The legislation is intended to assist students who were directly affected by COVID-19. Students who were already taking exclusively online courses for the semester or are in an online program should not be eligible. Students who had to transition to online courses because of the impact of COVID-19 are eligible to receive HEERF aid if they otherwise meet the eligibility requirements specified by the Department of Education (namely that they’re eligible to receive Title IV aid).

Which office should handle disbursement of funds? Should grants be made through the financial aid office or another office? Are students required to apply for funding? Can FAFSA recipients be prioritized?

Your institution has a pretty wide latitude when it comes to the method of aid disbursement to eligible students. You can use your own formulas to determine how funds are divided among eligible recipients. Similarly, you can disburse the grants through existing or new disbursement systems, provided that your institution ensures that the aid is not in any way reduced or diminished by existing charges a student may have on their student account. Likewise, it is up to your institution’s discretion to require an application or not. The biggest issue to keep in mind is that, per an institutions’ certification and agreement forms with ED, these funds be distributed promptly.

Can funds be used to offset charges on a student account? Or to reimburse our institution for travel expenses covered for students returning home?

No, funds cannot be used to offset charges on a student account, even if the student requests that it be done. Your institution must provide the aid, in its entirety, directly to students. Similarly, you may not use the portion of HEERF funds designated for “emergency grant aid to students” to reimburse your institution for travel expenses paid on behalf of students returning home. The only exception would be if those funds were provided after the CARES Act was passed, they were given directly to students as emergency cash grants, and the student just happened to use the funds to make their own travel arrangements.

Can we hold funds for a future semester?

The legislation, Department of Education guidance, and the certification and agreement forms submitted to ED by schools, indicates that funds should be distributed as promptly as possible, so it’s not advisable to hold funds for future semesters.

Can students who graduated in May receive funds if their last semester was interrupted? What if a student withdrew before the school moved to online courses?

The legislation is intended to assist enrolled students, so if funds were disbursed to graduating students before the last day of classes, that should be fine. Once a student has reached the last day of classes, has graduated, or withdrawn, they would not be eligible.

Can CARES Act funds be used to pay work-study students if positions were suspended due to COVID-19?

Schools are still permitted to use Federal Work-Study (FWS) funds to pay work-study students whose work may have been interrupted as a result of COVID-19. There shouldn’t be a need to use HEERF funds for this — the existing FWS funds for this purpose can still be used.

Can we use institutional grant funds towards the increased cost of mental health counseling offered to students?

While ED guidance is silent on this specific question, I think it’s reasonable to assume that increased mental health expenses for students are directly related to disruption in instruction and would be a permissible expense for HEERF institutional share funds.

If you use the institutional portion of the funding to give additional money to students, do they have to be students who qualified to receive the student portion of the money?

Yes, students receiving additional aid from an institutional share of HEERF funds must meet the same eligibility requirements that students receiving aid from the “emergency grants to students” portion of HEERF funds must meet.

Are international students eligible to receive funds from the CARES Act?

Potentially in some limited cases, but generally, no. Students must be eligible to receive Title IV aid in order to receive HEERF funds. Most international students do not meet these criteria.

How long can Federal Work-Study wages continue to be paid to students who have moved off campus?

If those students’ jobs were interrupted due to COVID-19, ED has indicated that institutions may continue to pay FWS wages to students for the remainder of the current academic year (as long as those students began employment before the national emergency began).

Can remaining Federal Supplemental Educational Opportunity Grant (FSEOG) funds for Fiscal Year 2020 be transferred to federal work-study?

No, the reverse is true. Institutions can transfer up to 100% of FWS funds into FSEOG during a period of a qualifying emergency. Your institution can use any portion of your FSEOG allocation to award emergency financial aid grants to assist undergraduate or graduate students for unexpected expenses and unmet financial need as the result of a qualifying emergency.

Can you provide guidance on reporting requirements, including the fast-approaching 30-day reporting requirement?

Since our webinar, the ED has provided guidance on reporting which you can find here.

How soon can we apply and order the second part of the grant funds?

All HEERF funds under the CARES Act are currently available for disbursement following an eligible institution’s submission of its certification and agreement forms. All information pertaining to certification and agreement forms are available here.

• COVID-19 Resources
  • ED Issues
  • Employer and Tax Issues
  • Other Federal Guidance
  • Letters to Congress and the Administration
• Weekly Webcast Series
• Weekly Telephone Town Halls
• Checklists
• NACUBO Current (Now Publishing Weekly)