The Whole Institution Approach: Mitigating Risks and Achieving Compliance in Student Aid Administration

By: Bob Covey-Robbins, FAS Sr. Consultant

An institution’s eligibility for administering federal student aid is critically important, and everyone must understand that compliance with federal regulations is an institutional responsibility and not just a financial aid responsibility. When we review the top audit and program review findings published by the US Department of Education we find that lack of compliance often falls outside the financial aid office’s responsibility. Let’s look at a few examples.

Audit Finding #2 and Program Review Finding #1: Student Status – Inaccurate/Late Reporting

Accurate enrollment reporting is important. The student status effective date drives when student loan repayment begins, or when a deferment should become effective. If a student has been repaying their loans and returns to school at least half-time, then their loan repayments can be deferred, so the student may cease making payments while they are furthering their education. If the school, however, fails to report that the student is now enrolled, then the lender or servicer of the loan continues to expect payments, and if the enrollment fails to be reported too long, the student can suffer undue consequences like negative impact to their credit rating, and is determined to be delinquent or in default on their loans.

Enrollment reporting is generally the responsibility of the Registrar or Student Records department, but problems are found as part of the Title IV Audit or Program Review.

Audit Finding #3 and Program Review Finding #2: Return to Title IV (R2T4) Calculation Errors

The Financial Aid Office is usually responsible for calculating R2T4, revising awards, and informing students of their responsibilities. However, the R2T4 calculation relies heavily on the student’s withdrawal date. For an unofficial withdrawal where a student stops attending classes, the R2T4 calculation may rely on accurate reporting of the student’s last date of attendance. Responsibility for accuracy of the calculation then, is a shared responsibility between Financial Aid, Faculty, and the Registrar.

Audit Finding #6 and Program Review Finding #3: Student Credit Balance Deficiencies

Federal regulations require the separation of responsibility for awarding/authorizing federal student aid awards and disbursing the funds, so again, we have shared responsibility between departments. The Financial Aid office has its set of rules and regulations to follow when determining a student’s eligibility, and the Bursar or Business Office has a separate set of rules and regulations to follow when applying funds to institutional charges and delivering excess funds to the student.

Program Review Finding #9: Consumer Information Requirements Not Met

This is a finding that can involve many different departments of an institution of higher education. Specific information and how the information is made available is complex and perhaps the best example of how Title IV compliance is an institutional responsibility. Besides the financial aid information that must be distributed or made available to students, Title IV regulations also require much information from other departments such as an Annual Fire Safety Report, Annual Security Report, Completion or Graduation Rates, Constitution Day and Citizenship Day program, Drug and Alcohol Abuse Prevention Program, Athletic Program Participation Rates and Financial Support Data, and the list goes on.

Managing Compliance

Maintaining Title IV compliance in the Financial Aid Office is complex and requires continual attention, and the responsibilities of Title IV compliance outside the Financial Aid Office make it even more daunting. Compliance can be considered much like a person’s general health, which requires day-to-day attention with regular check-ups. Many schools consider it valuable to have a regular, impartial, external review of their overall compliance. It’s better to find and close compliance gaps with a regular compliance check-up than to have them exposed in an audit or program review.