The U.S. Department of Education (Department) announced an Interim Final Rule (Rule) on June 11, setting standards for determining which higher education students are eligible to receive emergency financial aid grants under the Higher Education Emergency Relief Fund (HEERF). The Rule is effective today, June 17.

The CARES Act, which was enacted in March 2020, established the HEERF to provide emergency financial relief, in part, to students. The CARES Act requires institutions receiving HEERF funds to allocate at least 50% of that funding to students to cover coronavirus-related expenses and disruption of campus operations, including technology, course materials, food, housing, health care and child care. The Department released the Rule with a statement from Secretary Betsy DeVos stressing the importance of ensuring that taxpayers are protected “from waste, fraud and abuse” and that HEERF funds are directed only to eligible students and only for covered expenses. The Rule notes that institutions will be required to submit reports to the Secretary of Education describing how the funds were used at a time and in a manner to be later determined by the Secretary. 

Although the CARES Act states that the emergency financial aid grants are to be given to students, the statute does not define the term “student” or the phrases “grants to students” or “emergency financial aid grants to students.” The Rule fills those gaps by clarifying that the following categories of students are not eligible to receive HEERF grants:

• foreign nationals and most other noncitizens;
• students who are dual-enrolled in secondary school;
• those who do not meet academic progress standards;
• students in default on a federal student loan, or who owe any refund relating to a federal student grant;
• students who lack a high school diploma, GED certification, or recognized equivalent or exception; and
• students in programs that are not Title IV-eligible.

By tying the definition of “student” under the CARES Act to the Title IV eligibility requirements set forth in the Higher Education Act, the Department has taken the position that the failure to satisfy any of the following criteria would render a student ineligible to receive HEERF emergency financial aid grants:

• enrollment, or being accepted for enrollment, in a program leading to a recognized credential at an eligible institution of higher education;
• not being enrolled in elementary or secondary school;
• if presently enrolled, maintain satisfactory academic progress;
• not owing a refund on a federal student grant or be in default on any federal student loan;
• submission of a Statement of Educational Purpose;
• being a U.S. citizen, national or eligible noncitizen;
• not having been convicted of, or pled nolo contendere or guilty to, a crime involving fraud in obtaining federal student aid;
• having a high school diploma or its equivalent;
• having a valid Social Security number;
• registering with the Selective Service (if required); and
• having no conviction of any offense under any federal or state law involving the possession or sale of a controlled substance for conduct that occurred during a period of enrollment for which the student was receiving federal student aid.

Although the Rule takes effect immediately upon its publication in the Federal Register, the Department has clarified that it will not enforce the Title IV eligibility interpretation in the Rule against distribution of HEERF funds that occurred prior to the Rule’s publication. Furthermore, members of the public will be permitted to submit comments on the Rule during the 30-day period following the Rule’s publication in the Federal Register, and the Department is obligated to consider those comments when determining whether the Rule should be revised. 

To comply with the Rule, colleges and universities should review their procedures for determining student eligibility to receive HEERF grants and to determine whether such funds that have been awarded but not yet distributed to ineligible students should be reallocated to other students to avoid Rule violations.

Armstrong Teasdale’s Higher Education team has a long history of representing educational institutions in all facets of their business operations and governance. Our attorneys will continue to monitor changes in the law and impending deadlines as a result of COVID-19 and otherwise, and distribute advisories covering such topics as they arise.