Administrative Capability, a Mammoth Challenge in Financial Aid’s Staffing Crisis

By: Bob Covey-Robbins, Consultant

What does it mean for an institution of higher education to be administratively capable? Why is it important? Whose job is it to ensure that a school complies with administrative capability requirements?

Administrative capability is carefully evaluated when a school’s application for certification or re-certification is reviewed by the Department of Education. The school must demonstrate administrative capability.  34CFR§668.16 extensively outlines the conditions for administrative capability. In short, it means that the institution has the people, expertise, systems, technology, policies, and procedures to effectively manage Federal Student Aid programs.

The institution must designate someone to be responsible for administering FSA programs, but it also must ensure that the person is supported by an adequate number of staff needed to effectively administer the programs. There is no specific formula for determining the number of staff needed. It must be determined by the number of students applying for financial aid, the various financial aid programs the school administers, the technology used, and how much administration is automated.

Many schools are currently struggling to maintain an adequate number of staff to remain in compliance with the daunting number of Title IV statutory and regulatory requirements.  According to a US Chamber of Commerce article, today, there are 2.9 million fewer people in the workforce than there were in February 2020, and even if every unemployed person were to gain employment, there would still be a labor shortage (Ferguson, 2022).

Has the financial aid office workload lessened with declining enrollment?  Many would say that it has actually increased since the COVID-19 pandemic started. Expanding the modality of financial aid counseling to include remote advising, administering HEERF funds with its frequent changes in federal guidance and reporting requirements, and more recently, the addition of Fresh Start student loan default relief. The number of students seeking a Fresh Start at a school can bring a significant increase to the financial aid office workload.

Declining enrollment has led to decreases in operating budgets, making it even more difficult to retain valuable staff as more attractive employment opportunities arise outside of higher education administration. Creating entry-level financial aid office positions may add staff, but those staff need extensive training, supervision, and coaching as they become proficient in their new role.  For many schools, the cost of new aid officer training programs offered by state, regional, and national associations is out of reach.

The harsh reality for many financial aid offices is that they are facing the perfect storm of increased demand for services, staffing vacancies, continuous audit pressures, shrinking budgets, and, ultimately, concern about maintaining the school’s eligibility to participate in federal student aid programs.

To provide the needed services to help families with financing higher education, while maintaining legislative and regulatory compliance, more schools are seeking interim staffing solutions. Services can range from filling a financial aid director’s role to outsourcing daily financial aid processing tasks.  For many schools, using a trusted partner for interim staffing and outsourcing processing tasks provides a more cost-effective means to providing quality student service, while maintaining compliance and making a valuable contribution to the school’s enrollment management efforts.