Deciphering the CARES Act for higher education - Webinar Part 4

Key takeaways

• Applications are now open, but institutions must apply for the student aid portion before they can apply for the institutional portion
• Institutions can access the funds once they show up in the G5 system
• Documentation is critical; plan to keep detailed records for 24 months or longer
• Competitive Grants will be announcing their competitions with added CaresAct funding, therefore monitoring Title III, Title V, and FIPSE websites is encouraged

Ellucian welcomes the opportunity to provide information on, and to address customer questions and inquiries regarding the CARES Act. Please note, however, that Ellucian is not providing and does not provide legal, regulatory or financial advice. We strongly encourage each institution to seek legal, regulatory and financial guidance from legal counsel and financial experts of the institution’s own choosing. For more information or clarification directly from the Department of Education, please contact: e-mail to [email protected], or by phone, at 202-377-3711.

On April 23, the Ellucian community met online for “Deciphering the CARES Act for Higher Education,” a discussion of the recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act. Our panelists reviewed the elements that apply to higher education and discussed best practices for institutions.

Speakers

• Paul Johnson, Senior Strategist, APCO Worldwide
• Dan Scandling, Senior Director, APCO Worldwide
• Dan Maier, Senior Vice President, Ellucian
• Christi Segal, Senior Director, Ellucian

What is the CARES Act?

Breaking down the largest emergency relief expenditure to date in U.S. history.

• The CARES Act was signed into law on March 27, 2020
• It’s the third of many stimulus measures aimed at helping Americans during the pandemic
• The fund totals $2 trillion
  • The Education Stabilization Fund includes $30.75 billion

How much of the CARES Act is dedicated to higher education?

Here’s the breakdown of the funding for institutions.

• $14 billion of the CARES Act is dedicated to higher education
  • $12.3 billion is earmarked for institutions in the form of institutional formula grants
    • 75 percent based on the enrollment equivalent of full-time students eligible for Pell Grants; 25 percent based on non-Pell Grant enrollment
    • 50 percent of funds must be used for emergency financial aid grants for students impacted by the coronavirus
    • Institutions have broad discretion to use funds for additional costs related to COVID-19
  • $2 billion is divided between minority-serving institutions and grants for small institutions
    • 7.5 percent goes to Title III and Title V institutions
    • 2.5 percent goes to FIPSE, with priority for smaller colleges that receive less than $500,000 from other relief funds and demonstrate significant unmet needs related to COVID-19
    • At least 50% of funds must be used for students
    • Previously awarded program funds can be used for COVID-19 response
• An additional $3.5 billion was set aside in a Governors’ Fund that may also be made available to institutions

What’s the process for applying for funds from the CARES Act?

The CARES Act contains no guidance on process or timing for disbursing funds. Here’s what we know so far:

• The U.S. Department of Education released formula funding for the students’ emergency grants on April 9, 2020 and the remaining institutional portion on April 21, 2020
• Institutions access the application from the U.S. Department of Education website
• Institutions are required to sign and submit a Certificate of Agreement indicating how they will allocate student aid—the 50 percent emergency financial aid grant requirement—before they can apply for the institutional portion
• It’s critical for institutions to keep solid records during this process and maintain those records for at least two years
• The process is fluid—it can and likely will change as new stimulus measures are introduced, so it’s important to stay informed

Almost 80 percent of attendees have already submitted their Certificate of Agreement for the student aid portion of the formula funding.

How will the funds be disbursed?

Here’s what we know about drawing down CARES ACT funds:

• Institutions can access the funds once they show up in the G5 system. You will see the amount available to you and instructions about disbursement and drawing down funds.
• We are hearing from our customers that it is taking a week to 10 days for funds to appear in the G5 system.
• It's a process that the Department of Education is working to streamline.

How can the money be used?

Institutions can use the funds for:

• Lost revenue
• Expenses
• Technology costs “associated with a transition to distance education”
• Faculty & staff training and/or payroll

Important: Institutions shall use no less than 50% of the money to provide emergency financial aid grants to students for expenses related to the disruption of campus operations, including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, healthcare, and childcare.

How can the money not be used?

The funds cannot be used for the following:

• Payment to contractors for the provision of pre-enrollment recruitment activities
• Capital outlays associated with facilities related to athletics, sectarian instruction, and religious worship
• Payment into endowments

How are student loans impacted?

Here are the changes currently provided by the CARES Act:

• Suspends the payment of student loans through September 30 with no penalty and no interest
• Suspends all involuntary collection of defaulted loans, including no wage garnishments and no federal interception of government benefits
• Does not cancel student loan debt during the coronavirus crisis

What special provisions have been made?

The CARES Act also allows for the following:

• The U.S. Department of Education has the authority to distribute $349 million through Fund for Improvement of Post-Secondary Education (FIPSE) to colleges hit hardest by the coronavirus crisis
• All colleges—including for-profit institutions—will be allowed to retain federal funds allocated to help educate qualifying students, even if the students in question dropped out because of coronavirus-related emergencies

How does the CARES Act impact Advancement?

Advancement teams have been tasked with soliciting and securing funding to support immediate student needs. Here’s how the CARES Act can help support those efforts:

• Incentives for donors to give to higher education
• Philanthropy can make a greater impact on institutional needs by matching the funding coming through the CARES Act
• Technology investments for Advancement are consistent with the CARES Act requirement that institutions spend at least 50% of funding to support students

What areas can be tied to CARES Act funding?

Funds can be used for technology and services related to:

• Support student well-being
• Connectivity
• Improve recruiting and retention processes
• Addressing gaps to achieve full distance learning, security, and remote working
• Enrich student engagement with direct communication with faculty and financial aid

For the institutional portion of the formula funding, 46 percent of webinar attendees said they would focus those funds on student success and retention, and nearly 40 percent said they would focus on funding technology supporting gaps in the move to remote learning and administrative processes.

View the on-demand webinar