Lack of Guidance on Foreign Gift Reporting Leaves Schools Confused

By Joelle Fredman, NASFAA Staff Reporter 

The Department of Education (ED) earlier this summer began opening investigations into whether institutions properly reported foreign gifts they received, despite numerous requests from the higher education community for guidance on disclosure requirements.

Last week, NASFAA sent a letter to ED Deputy Secretary Mitchell Zais urging him to dedicate a rulemaking process to foreign gift reporting to allow higher education stakeholders to "inform the process" and provide institutions with clear information about what is expected of them. 

“Institutions are eager to comply with this requirement, as evidenced by multiple, frequent inquiries from NASFAA member institutions related to this matter, but it is unreasonable to expect schools to be in compliance with limited and extremely dated information from [ED],” NASFAA wrote. “Even a cursory review of the way in which the higher education landscape has evolved from a global perspective over the last 20 years, including growth in international students and companies, and the ever-increasing need to be more engaged in global affairs, suggests that the reporting landscape is much more complex than the last time [ED] provided guidance to institutions on this issue.”

Foreign gift reporting was adopted into the Higher Education Act (HEA) 33 years ago under Section 117, and requires that institutions participating in Title IV programs submit disclosure reports to ED with information about foreign gifts and contracts valued at $250,000 or more, “considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year.” While institutions repeatedly requested guidance on reporting requirements in lieu of regulations, ED only issued two Dear Colleague Letters—in 1995 and 2004—on the topic, neither of which addressed the flurry of questions from institutions. 

For example, in a letter the American Council on Education (ACE) sent to ED in January, the group wrote that institutions were still awaiting guidance on crucial details such as “what should be considered under the Section 117 definition of an ‘institution,’” and “whether the $250,000 reporting threshold is met only when an individual gift exceeds this amount or when the aggregate amount received from a country or specific foreign entity exceeds the threshold.” 

ACE wrote that institutions also sought clarity regarding what mechanism they should use to submit corrections to old reports, and “when is it sufficient to only list the country from which a gift(s) has been received versus a specific government-affiliated university, company, and/or other entity.” 

In a February report from the Senate Committee on Homeland Security and Governmental Affairs’ Permanent Subcommittee on Investigations regarding China’s impact on the U.S. education system, they wrote that “foreign government spending on U.S. schools is effectively a black hole, as there is a lack of reporting detailing the various sources of foreign government funding.” A few months later, ED opened investigations into Georgetown University and Texas A&M University, arguing that their foreign gift reporting “may not fully capture all gifts, contracts, and/or restricted and conditional gifts or contracts from or with all foreign sources.”  

NASFAA in its letter wrote that these investigations, combined with the lack of guidance on this issue, “have led institutions to believe that they are being put into an impossible situation, tantamount to a ‘gotcha’ that needlessly erodes the partnership between ED and our aid offices.”

“The higher education community sincerely wants to work with [ED] to help college and university aid offices better understand and comply with Section 117, and we urge you to conduct a full rulemaking process allowing for public comment so that stakeholders can inform the process, and ultimately, institutions can have clear, complete guidance on this important issue,” NASFAA wrote.

 

Publication Date: 8/6/2019


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