ED Inspector General's Semiannual Report to Congress Highlights Areas of Improvement for Oversight of Aid Management

By Hugh T. Ferguson, NASFAA Staff Reporter

The Department of Education’s (ED) Office of Inspector General (OIG) this week released an extensive semiannual report, which identified areas of improvement being needed for heightened cash monitoring (HCM) payment methods.

The report, which summarizes the activities of OIG during a six-month period, is required by law to be submitted to Congress twice each year. While the summary determined that the Office of Federal Student Aid’s (FSA) oversight of HCM was an “effective” tool, the audit — which was published in February — also determined that FSA had inconsistent placement of schools on HCM, and did not have “adequate internal controls” to enforce HCM that would prohibit schools from drawing certain federal funds.

“FSA did not have adequate internal controls to reasonably ensure it consistently placed schools on HCM payment status when the schools submitted late annual financial statements or had composite scores that fell below the minimum financial responsibility score,” the report read.

According to OIG, due to this inconsistency, FSA regional offices that monitor schools to determine Title IV eligibility, among other things, were unable to consistently place schools on provisional certification and HCM for submitting late financial statements. 

Additionally, the report found that FSA lacked the ability to track a school’s method of payment status during the time between when the School Participation Division recommended a school’s placement on HCM status and the time that placement occurred, leaving an opportunity for at-risk institutions to continue to draw down funds under the advance payment method and putting Title IV dollars at risk.

In order to combat these discrepancies, the report recommended that FSA develop and implement controls to:

— Ensure consistent, appropriate, and timely actions are taken when schools fail to submit financial statements timely or receive non-passing composite scores; 

— Track a school’s method of payment status from the recommendation for placement until the change is implemented; and 

— Ensure that all required HCM documentation is retained. 

The report accounted for activities and accomplishments by ED’s OIG from Oct. 1, 2019, through March 31, 2020. 

Earlier this week, NASFAA released its Administrative Capability Task Force report, which contains recommendations that could provide better support for financial aid offices, ensuring they are able to meet administrative capability standards, including researching the issues that lead to placement on HCM in an effort to identify common challenges and possible solutions.

 

Publication Date: 6/3/2020


Peter G | 6/4/2020 9:10:31 PM

While I'm sure this is true as stated, but all of it avoids any analysis of whether HCM (particularly HCM1) is really an effective and appropriate policy tool for the range of these types of cases, or whether it's merely a bludgeon to spur compliance.

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