Overcoming the Top Student Aid Compliance Issues
Complying with the growing and increasingly complex Title IV federal student aid regulations is an ongoing challenge for every campus that administers federal student aid. Performing a word count of student aid regulations in 2000 and 2010 reveals a 40 percent increase over that decade. A recent survey of financial aid administrators shows that increasing regulatory and compliance requirements are causing resource shortages in many financial aid offices.
The National Association of Student Financial Aid Administrators sees these challenges first-hand through its Standards of Excellence (SOE) Review Program, which provides peer reviews of financial aid offices to assess strengths and weaknesses and recommend ways to improve overall operations. Through SOE, experienced aid administrators review aspects of a financial aid office’s operations to identify possible compliance issues. These reviews have shown that four compliance issues regularly present challenges:
- Satisfactory Academic Progress (SAP)
- Return of Title IV Funds (R2T4)
- Administrative Capability
Maintaining compliance in these areas can be tricky because it requires ongoing communication and coordination between the financial aid office and the upper administration, including admissions, student billing, academic affairs, and registrar offices. These offices must know what financial aid regulations depend on their policies and procedures and the financial aid office must keep up to date with their policies and procedures to ensure compliance.
Offices such as admissions, billing, and the registrar must know what financial aid regulations depend on their policies.
In addition, the U.S. Department of Education recently implemented changes to financial aid regulations that went into effect July 1. Administrators in every department on campus must be aware of how their policies and procedures may impact financial aid administration and compliance.
Satisfactory Academic Progress
Federal regulations require higher ed institutions to establish, publish, and apply standards to monitor students’ progress towards completion of a certificate or degree program. SAP is used to define successful completion of coursework—a requirement students must meet to maintain eligibility for financial aid.
Significant communication and coordination between the financial aid office and academic affairs is needed to fulfill the SAP requirements, since satisfactory standards for academic progress don’t always line up perfectly with financial aid SAP standards. The financial aid office must understand and monitor academic standards to ensure they’re in sync with SAP calculations. Academic affairs needs to make sure it is accurately capturing each student’s progress in a way that is useful to the financial aid office.
Those setting academic progress policies and procedures in the academic affairs office should also be aware of the SAP regulations to ensure the financial aid office can determine eligibility. New SAP regulations became effective on July 1. These regulations impose new limits on how long a student can continue to receive Title IV student aid to make up SAP deficiencies and distinguish between warning periods (when the school’s policy can allow a student to continue to receive Title IV aid automatically), and probationary periods (when the student can continue to receive Title IV aid only as the result of a successful appeal).
Only schools that assess SAP at the end of every payment period can apply warning periods. Schools that assess SAP less frequently must require a successful appeal to let any student continue to receive Title IV aid despite failing SAP standards. This could impact counseling for students struggling to meet SAP requirements.
Academic affairs must also notify the financial aid office of any changes to its academic progress policies and procedures to ensure it does not impact the financial aid office’s ability to determine if a student is meeting SAP requirements.
Return of Title IV Funds
R2T4 applies to students who begin and then cease attendance in all classes prior to the scheduled end of the period. These students are entitled to the amount of Title IV funds they earned as of their withdrawal date. Students who earn less student aid than they received must return unearned funds to Title IV programs.
Student financial information verification requires sufficient uninterrupted time to review paperwork.
Determining when students cease attendance requires coordination and communication with academic affairs, the registrar, and the billing office. Institutions must track and report this information back to the financial aid office to determine how much aid was earned. This means training instructors and ensuring departments notify that office when a student stops attending. Financial aid office staff must also understand the institution’s attendance and enrollment policies so they can determine how much aid a student earned and how much must be returned to the federal government.
New R2T4 regulations that became effective on July 1 are more stringent than previous regulations for courses in a program that doesn’t span the entire length of the payment period or period of enrollment. Now students are considered to have withdrawn if they don’t attend all days (for a credit-hour program) or complete all clock hours they were scheduled to attend. Students in nonterm or nonstandard-term programs are considered withdrawn if their next class does not begin within a certain length of time and they do not provide written notification of their intention to attend later in the term. The new regulations also revamp which schools are required to take attendance.
This illustrates why administrators across campus must be aware of student aid compliance requirements. Offices should collaborate with financial aid staff to ensure attendance (and other) policies are in line with federal regulations.
Verification is required to confirm information applicants provide on the FAFSA (Free Application for Federal Student Aid) is accurate. The Department of Education selects some FAFSA applicants for verification, and others are selected by schools.
Verification can be complex and time-consuming; family structures and situations don’t always match the options provided on the form, and families often need personal assistance in properly filling out the form. This limits financial aid offices’ ability to automate the system, making it labor-intensive.
These offices must be provided sufficient resources to effectively verify students’ financial information. This means giving aid office staff sufficient, uninterrupted time—separate from time scheduled to assist students on the phone and other appointments—to review verification paperwork requirements.
The Department of Education has made some significant changes to the verification regulations, which become effective for the 2012-2013 award year to implement a more targeted approach to the process. Officials have said the changes will reduce the administrative burden of verification for financial aid offices, but many have challenged this assertion and maintain that the changes will increase verification workloads—especially at schools that enroll a high number of Pell-eligible students. Institutions may want to play it safe and plan to increase resources for verification to ensure compliance with the new requirements.
To participate in the Federal Student Aid (FSA) programs, an institution must demonstrate it is administratively capable of providing the education it promises and managing the FSA programs and funds. This means adequate resources need to be allocated to ensure compliance with the many regulations for the entire institution, from campus safety to athletics.
A lack of administrative capability can make it difficult for a campus to comply with the many complex student aid regulations. Having financial aid funds on campus for students also means numerous departments must fulfill federal priorities. The financial aid office is responsible for these funds, and it must coordinate information from across the campus to meet reporting and disclosure requirements.
So financial aid professionals need to be involved in planning for new academic programs, campus locations, online degrees, course withdrawal policy revisions, mini sessions or parts of term, study abroad programs, or transfer articulation agreements. This helps ensure sufficient time and resources to maintain adequate administrative capability.
Institutions are also required to separate functions to avoid possible conflicts of interest and create sufficient checks and balances. No matter how small the school is, the same person can’t approve a student for aid and hand him or her a check. The school must have sufficient administrative capability to separate certain functions.
Collaboration and Communication
A lack of communication and collaboration greatly increases the chances of struggling to maintain student aid eligibility. That simple concept can be a challenge in ensuring campus offices understand evolving student aid regulations and how their policies impact student aid eligibility. Institutions with these systems that make Title IV compliance a campuswide responsibility will have an easier time meeting the challenging requirements.
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