On March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, providing, among other things, the largest amount of funding to colleges and universities since the start of the COVID-19 pandemic: $40 billion dollars, with $20 billion earmarked for emergency aid. Today, the Department of Education released its guidance to institutions governing the deployment of these funds.
These dollars represent an unprecedented, and perhaps the largest, opportunity to target student equity and success. While further guidance may be forthcoming, we’ve summarized three key themes that institutions should consider as they seek to maximize the impact of these funds over the next 12 (to possibly 27) months:
- HEERF III is similar to HEERF II but with even more flexibility. While similar to HEERF II, HEERF III appears to offer the greatest flexibility for institutions in comparison to the previous HEERF funds. Like HEERF II, it allows for the use of emergency funds for any area of cost of attendance, the application of funds to student outstanding balances (with explicit student consent), the use of funds to target students who have previously stopped out or dropped out (though not in such a manner that would allow conditionality on future enrollment or promotes the availability of a grant as an incentive for enrollment), and broad flexibility around determining a methodology for "prioritiz[ing] exceptional need." New guidance allows for all students, including undocumented, DACA, and international students, to receive HEERF III funds, which enables institutions to consider how best to structure programs to support the most students with an eye toward supporting all students. A very interesting nuance for HEERF III is that while institutions are tasked with spending the funds within a year of drawdown similar to prior HEERFs, ED is allowing for a no cost extension beyond September 30, 2022, which could enable institutions to consider if and how these funds could best serve students in 2023 when there will likely be fewer available cash assistance resources for students.
- HEERF III aims to support students during an extremely different macroeconomic landscape than HEERF I, and institutions need to consider how it should be leveraged in conjunction with other available resources like HEERF II to maximize outcomes. The pandemic has devastated students, but the immediate presence of other funds for students in the form of recent stimulus checks, tax credits, expanded benefits access, grants under HEERF I, and grants under HEERF II all suggest that at this moment in time, HEERF III funds may be most impactful 9, 12, 18, or even 24 months from now when fewer avenues of support will be available. Unlike with HEERF I or even the majority of HEERF II, HEERF III will be unique in that many institutions may still have HEERF II funds available to deploy as relief for students. Because of differentiated reporting requirements and similar allowable characteristics between HEERF II and HEERF III, making them effectively fungible, institutions should first exhaust their HEERF II funds to simplify reporting and provide the cleanest path to full compliance. Strategies could include spreading remaining HEERF II and HEERF III funds over the entire HEERF spending window (which with an extension could run as long as September 30, 2023) and pacing deployment, with considerations of student spikes in need, such as around the beginnings and ends of semesters. Speed itself may not be most impactful; rather, intentionality in the use of HEERF II relative to HEERF III will be critical. That said, the guidance does require that institutions spend at least $1 within 90 days of being awarded their HEERF III allocation.
- Institutions need to consider how student need has been transformed by the pandemic and how the inclusion of non-Title IV students could have both student success and compliance implications for institutions in their attempts to prioritize exceptional need. Beyond optimizing for the interactions of HEERF II and HEERF III, institutions should consider how ED’s language and stated intent around “prioritizing exceptional need” might necessitate a change in awarding methodology relative to previous HEERF funds. For past HEERF funds, many institutions have used expected family contribution (EFC) as a proxy for establishing and prioritizing need. While perhaps not the most effective metric for optimizing student success outcomes given that EFC is inherently a lagging metric that fails to capture any of the changes to financial health due to the pandemic. EFC was a strong metric for checking the box of compliance for administering HEERF I and II funds. However, given two noteworthy changes to the guidance, this may no longer be the case for HEERF III. First, ED has explicitly stated that institutions must “prioritize domestic students… [which for the first time] includes...refugees, asylum seekers, DACA recipients, other DREAMers, and similar undocumented students.” With this in mind, any methodology that would inherently omit a subset of these students could be problematic; EFC by definition omits any non-Title IV students. Additionally, ED has been explicit that any methodology for distributing funds cannot be done so “in a manner that excludes individuals on the basis of race, color, national origin, disability, or sex.” While likely unintentional, EFC’s methodology of calculating need omits financial burdens like household debt that disproportionately impact minoritized families and thus may underrepresent their financial hardship. Moreover, EFC omits a wide array of students who fail to submit a FAFSA for any variety of reasons -- a trend that has worsened during the pandemic -- who similarly tend to be disproportionately Black, Latinx, or Indigenous. Due to the spirit of the guidance as focusing on equity, it is possible that EFC on its own may no longer satisfy full compliance (in addition to certainly not optimizing for outcomes). As institutions aim both to comply with the guidance and to leverage HEERF III to best target success outcomes in a challenged enrollment environment, they should develop a methodology of accurately capturing student need, perhaps by measuring basic needs insecurity or other indicators of financial hardship, and targeting dollars accordingly.
The past 12 months have presented an unbelievable challenge to students and higher education, and it's been shown that institutions need to make substantial changes to serve students quickly and effectively around deploying funds. Part of this has been due to uneven and inconsistent messaging from the Department of Education around compliance, lack of certainty around the macroeconomic environment, and the need to build administration infrastructure from scratch. We are now at a very different juncture than we were 12 months ago, however, and institutions have an opportunity like no other before them to make HEERF III narrow equity gaps at their institutions and improve enrollment outcomes.
Edquity has been helping partners administer HEERF I and HEERF II and will continue to aggregate learnings and insights from these programs to ensure the field can refine its practices to achieve student-centered, and thus institution-benefiting, goals.
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