It takes a village to stay in compliance with the provisions governing federal student financial aid programs. Here are six ways financial aid compliance impacts other offices at your institution that you can share with your colleagues.
Enrollment management initiatives are essential at a growing number of institutions, and financial aid plays a key role in meeting those goals. But institutions also must adhere to numerous federal regulations to remain eligible to participate in the federal financial aid programs. Schools may want to implement practices to achieve enrollment management goals that do not comply with financial aid rules. While the regulations allow flexibility in some areas, others are more rigid. Ensuring that your school's practices align with its mission and goals, while staying in compliance with established rules and published guidance, will help you meet your enrollment management objectives.
Public focus on higher education is on the rise, which means there is more at stake when something negative happens at your school. When the U.S. Department of Education (ED) conducts a program review, it must publicly disclose the outcomes of that evaluation, including any areas where the school did not comply with established rules and the corresponding financial liabilities and fines. In some cases, the government will publish a press release if the findings are egregious enough to warrant further publicity. These reports also may come up in online searches about your school. Remaining in compliance with laws and regulations will keep you out of the negative spotlight and help maintain your school's positive reputation.
Not complying with the rules and regulations governing federal financial aid programs can be an expensive mistake. When ED performs a program review, it can assess fines and liabilities. Fines typically occur due to egregious violations of established policy, such as not disclosing information about campus safety and security required by the Clery Act. The maximum fine per violation is $59,017, so the costs can add up quickly. A school is subject to liabilities when it must repay funds to ED due to a mishandling of funds, such as disbursing aid for an ineligible program. There is no limit to the amount of liabilities ED may assess based on the school's errors. The best way to prevent these fines and liabilities is to ensure your school complies with established provisions.
Federal regulations allow for some flexibility in the method and timing of disbursing financial aid to students. This flexibility means schools may have more control over when these funds come into the institution to pay a student's charges. Strategically using the disbursement flexibilities allowed, while remaining in compliance with the rules, can sustain and protect your school's cash flow.
Access to financial aid funds can be a defining factor in a student's decision to pursue higher education at your institution. Certain school policies, however, may present barriers to matriculation and retention. In some cases, these policies are the result of long-standing processes that may be outdated or unnecessary; others, however, are required by federal law. Identifying potential obstacles may certainly assist with recruiting and retaining students, but schools also must remain in compliance with established rules and regulations. Distinguishing the required policies and procedures from the optional ones will ensure your school provides numerous avenues for students to attend, and remain, at your institution.
When schools fail to comply with the laws and regulations governing federal financial aid programs, they may be at risk of losing eligibility to participate. According to regulations, ED may limit or suspend a school's participation prior to termination, but it also has the authority to immediately terminate participation under emergency action provisions. IPEDS reports that more than 95% of postsecondary schools in the U.S. participate in federal financial aid programs, and the limitation, suspension, or termination of an institution's eligibility could be devastating to the school, students, and even the local community. By ensuring your school fully complies with all federal financial aid provisions, you also ensure your continued eligibility to participate in these programs.
Blue Icon Advisors provides a wide range of services — such as compliance operational reviews and policies and procedures services — to help ensure critical compliance issues are not putting your school at risk. Contact Blue Icon for more information about how our services can help your school remain in compliance.