2004 SASFAA Conference February 1518, 2004

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2004 SASFAA ConferenceFebruary 15-18, 2004
Title IV Program Compliance Issues An
Institutional Responsibility
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CASE MANAGEMENTOBJECTIVES

• To provide best in business service to schools
• To promote access to high quality
  
• postsecondary education and lifelong
  learning
• To maintain strong oversight and
  comprehensive partner support

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CASE MANAGEMENT CHALLENGE
1992 Amendments Inefficient Processes Inadequate
Data and Document Control Poor Customer
Service Ineffective Targeting of Institutions for
Monitoring
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Case Management Structure
Direct Loan
Closed
AAAD
Schools
Recertification
Financial Statement
Analysis
State
Quality
Audit Resolution
Agencies
Assurance
Program Review Institutional Improvement
Default
Accrediting
Management
Agencies
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CASE MANAGEMENT PROCESS
OUTPUT
INPUTS
Application for Recertification Deficient
Audits Evaluation of Risk Accrediting
Agencies State Agencies Record of
Compliance Student and Other Complaints
Decision on actions to be taken on schools
Case Team
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Case Management and Oversight
Case Management Process Model
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Case Management ProcessPossible Decisions

• Recertify
• Develop Strategy for Technical Assistance
• Establish Liabilities
• Transfer to Reimbursement
• Require Letter of Credit
• Conduct Program Review
• Recommend for Participation in Quality Assurance
  Program
• No action taken

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THINKING OUTSIDE THE BOX!
INNOVATIONS
IDEAS
UNDERSTANDING
TRADITION
COMMON SENSE
CREATIVITY
ASKING FOR HELP
GOALS
CONSEQUENCES
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Compliance Issues

• Eligibility Issues
• Clock/Credit Hour Conversion
• Verification/Conflicting Documentation
• Professional Judgment
• Pell/Loan Proration (under or over awards)
• Return to Title IV Policy (R2T4)
• Ability-to-Benefit (ATB tests)
• Enrollment Status/Attendance
• Distance Education
• Cash Management (Fiscal)
• Satisfactory Academic Progress Policy (SAP)
• Compliance Audit/Financial Statements

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Non-Degree, Vocational Programs

• Eligible non-degree undergraduate programs
  (certificate/diploma)
• 15 weeks (instruction)
• Must provide training for gainful employment in a
  recognized occupation
• 600 clock hours, 16 semester/trimester hours
  (must contain 480 clock hours if clock/credit
  conversion required), or 24 quarter hours
• May admit students without an associate degree or
  equivalent
• Eligible for all Title IV programs (prorating may
  apply)

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Non-Degree, Vocational Programs

• Short-Term programs (undergraduate)
• Must provide training for gainful employment in a
  recognized occupation
• 10 weeks (instruction)
• 300-599 clock hours (only offer in clock hours)
• Cannot be more than 50 of state required minimum
  hours
• Must have been legally authorized to provide and
  continuously provided the program during the 12
  months preceding the application date
• FFEL and Direct loans only

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Short Term Programs

• Substantiated completion rate of at least 70.
• Substantiated placement rate of at least 70 in
  related job fields,
• Rates must be reported in the annual audit
  (financial/compliance).
• If rates not met, the program is not eligible for
  the next award year.
• Can apply for re-approval of the program once it
  again meets the program eligibility requirements.
• Must get Department approval for each short-term
  program prior to awarding funds

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Non-Degree, Vocational Programs

• Graduate/professional non-degree programs
• 10 weeks (instruction)
• 8 semester, 12 quarter or 300 clock hours
• Admit only students with an associate degree or
  higher

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Eligibility IssuesAdditional LocationsEFFECTIV
E 7/1/2001

• ALL institutions must report to the Department if
  they wish to add an additional location offering
  50 or more of an eligible program
• reporting consists of submitting electronic
  application and required supporting documentation
• However, only schools that meet certain criteria
  have to wait for our approval before disbursing
  IV aid to students at those locations
  (provisionally certified, reimbursement/cash
  monitoring, acquired assets of another school
  that provided education at that location during
  the preceding year, and the other school
  participated in IV, would be subject to loss of
  eligibility due to default rates if location is
  added, or Secretary previously notified school
  that it must apply for approval of additional
  locations)

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Eligibility References

• www.eligcert.ed.gov (electronic application)
• 2003-2004 FSA Handbook, Vol. 2, pages 2, 306-312
• Dear Colleague Letter - GEN-97-6
• 34 CFR 600.10
• 34 CFR 600.20-21
• 34 CFR 668.8 (programs)

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Adding New Programs

• Report the new programs through EAPP within 10
  calendar days of the change
• Must always have state and accrediting agency
  approval
• make certain that the program is included under
  the notice of accreditation from a nationally
  recognized accrediting agency (unless the agency
  does not require that particular program be
  accredited)
• Eligibility of an added educational program must
  be determined by the Department before the FSA
  program funds can be awarded
• A revised ECAR and Approval Letter is issued for
  the school, and the school is eligible as of the
  date of the Departments determination.

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Adding New Programs

• May add a new program and disburse FSA funds
  without Dept. approval if -
• the added program leads to an associate,
  bachelors, professional, or graduate degree (and
  the school has already been approved to offer
  programs at that level) or
• the added program provides at least a 10-week (of
  instructional time) program of 8 semester hours,
  12 quarter hours, or 600 clock hours, and
  prepares students for gainful employment in the
  same or related recognized occupation as an
  educational program that the Secretary already
  has designated as an eligible program at the
  school.
• must have received both the required state and
  accrediting agency approvals.

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Clock/Credit Hour Conversion (03-04 FSA Hdbk,
Vol.2, pages 18-21, 668.8(k)(l))

• 1 semester or trimester credit hour must include
  at least 30 hours of instruction
• 1 quarter credit hour must include at least 20
  hours of instruction
• Example
• - 900 clock hours 30 semester hours
• 30
• - 1500 clock hours 75 quarter hours
• 20
• Applies to undergraduate vocational education
  programs (even if always offered in credit hours,
  need to determine the number of clock hours in
  program)

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Clock/Credit Hour Conversion

• Exceptions
• (1) program is at least 2 academic years in
  length and provides an associate, bachelors or
  professional degree (must be defined by
  state/accrediting body as a degree program) OR
• (2) each course within the program is acceptable
  for full credit towards that institutions
  associate, bachelors or professional degree
  (Federal Register 7/23/1993, Vol. 58, No. 140,
  page 39619) OR
• (3) a public or private nonprofit hospital-based
  school of nursing that awards a diploma at the
  completion of the schools program of education

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Clock/Credit Hour Conversion

• (1) Program eligibility
• - program providing at least 16 semester or
  trimester credit hours or 24 quarter credit hours
  must include at least 480 clock hours of
  instruction (at least 15 weeks in length)
• (2) Number of credit hours for Title IV purposes
• - determine the maximum number of credit hours
  you can pay a student for (conversion credit
  hours may be less than original number - may
  decrease Title IV funding)
• The resulting number of credit hours may not be
  rounded upward.

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Clock/Credit Hour Conversion(34 CFR 600.2)

• A clock hour is based on an actual hour of
  attendance (60-minute period), though each hour
  may include a 10-minute break.
• A school may not schedule several hours of
  instruction without breaks, and then count clock
  hours in 50-minute increments
• - cannot say 7 hours of instruction 8.4 clock
  hours (420 minutes divided by 50 minutes 8.4)
• - 7 real-time attendance hours 7 clock hours

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Clock/Credit Hour Conversion

• ED will only approve credit hours up to the
  amount that is approved by the state and
  accrediting agencies (and schools, if applicable)
  AND meets our clock to credit hour formula.

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Verification/Conflicting Documentation03/04 FSA
HDBK, App./Verification Guide, Ch. 3 4 34 CFR
668.36, 51-61

• Verification the process of checking the
  accuracy of information supplied on the Free
  Application for Federal Student Aid (FAFSA) used
  to reduce fraud and abuse handled by the
  financial aid office
• Verification items
• Household size
• Number enrolled in college
• Adjusted Gross Income (AGI)
• U.S. income tax paid
• Certain untaxed income and benefits (social
  security benefits, child support, EIC, IRA/Keogh
  deductions, foreign income exclusion, interest on
  tax-free bonds)

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Verification/Conflicting Documentation

• Conflicting documentation (668.16(f))
• adequate system to resolve discrepancies in the
  information received from different sources with
  respect to a students application for IV
  financial aid.
• Problems/Issues (incomplete verification)
• missing documentation (tax return, verification
  worksheets, etc.)
• missing signatures (student, parent, preparer)
• 30 verification not met
• ISIR not reprocessed
• Verification Selection Process Improved
• Target applicants likely to have made errors on
  FAFSA significantly affecting aid (especially
  Pell recipients)
• Schools may see change in number selected for
  verification
• ED will encourage verification of all selected
  applicants

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Professional Judgment (PJ) (03/04 FSA HDBK, AVG,
page 28-29, 62 GEN-03-07)

• Adjusting data elements used to calculate EFC
• Dependency Overrides
• Adjusting Cost of Attendance
• Reasonable decisions on a case-by-case basis
• Adequate Documentation supporting unusual
  circumstances
• Examples include high medical expenses,
  unemployment, high child care costs
• Unreasonable judgment includes reducing income
  based on vacation expenses or tithing
• However, none of the conditions listed below,
  singly or in combination, qualify as unusual
  circumstances or merit a dependency override
• 1) Parents refuse to contribute to the students
  education
• 2) Parents are unwilling to provide information
  on the application or for verification
• 3) Parents do not claim the student as a
  dependent for income tax purposes
• 4) Student demonstrates total self-sufficiency.

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Pell and FFEL/DL Prorations (03/04 FSA
HDBK, Vol. 3, page 44 Vol. 8, page 26 34 CFR
682.204, 685.203, 690.63)

• Pell (Formula 4 clock hour nonterm credit
  hour)
• Weeks when majority of your full-time students
  complete hours in the program or academic year
  more quickly than the weeks defined in the
  academic year definition
• Hours when the program/ remaining period is
  shorter than an academic year
• Loans (all schools - no more fixed prorations as
  of 10/1/98)
• 1. Final period of study (end of which a student
  completes the program) that is shorter than an
  academic year
• maximum loan amount x of credit or clock
  hours enrolled
• of hours in academic year
• 2. Program of study that is less than a full
  academic year in length, the lesser of
• the above calculation
• OR
• maximum loan amount x of weeks in
  program
• of weeks in academic year

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Return to Title IV Policy (R2T4)

• Effective October 7, 2000
• New written policy explaining R2T4 (including
  official withdrawal procedures)
• Unofficial withdrawal procedures
• Explain all other refund policies (state,
  institutional, accrediting, etc.)
• Ability to identify withdrawn students
• Calculations performed properly (optional
  Department worksheets and software)
• Downside adjustments reported to Dept. (Pell
  System, COD)
• Reconciliation

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Return to Title IV Policy (R2T4)

• Was money returned? (offset, elec. refund,
  check)
• Timeframes
• Late Refunds (Program Reviews/Audits)
• Within 30 days of date of determination
• www.fsadownload.ed.gov - software/R2T4
• 2003-2004 FSA Handbook, Vol. 2, Chapter 6 June
  2001 Blue Book DCL - GEN-00-24 Federal
  Registers - 8/6/99 nprm 11/1/99 final 34 CFR
  668.22 Return of Title IV worksheets

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Ability-to-Benefit Tests (ATB) 34 CFR 668,
Subpart J Federal Register Sept. 4, 2002

• Test Administrators
• - Assessment Centers
• - Independent (no affiliation with school or
  personnel)
• - certified by test publisher
• - publisher scores test
• Approved Tests (scale scores)
• - must be administered in accordance with
  procedures set by publisher (retest, time limits,
  etc.)
• Documentation
• - type of test, date taken, approved scores,
  test administrator info.
• Eligibility
• - cannot have more than 50 of regular enrolled
  students admitted without a H.S. diploma/GED,
  unless offer at least a 2-year degree

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Enrollment Status(34 CFR 668.21, 164 674.9
675.9, 676.9 682.604-605 690.75)

• Enrollment status can impact students Title IV
  eligibility
• Student must attend at least one day of class
• R2T4 calculation required for 60 or less
  attendance
• Grade Levels (1st, 2nd, etc.)
• Half-time requirement for FFEL and DL loans
• Pell recalculations (required/optional)
• Satisfactory Academic Progress
• What are schools procedures to identify
  enrollment status (especially prior to disbursing
  aid)

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Distance Education

• Telecommunication vs. correspondence courses
• 50 limitations telecommunication/correspondence
  courses offered and number of correspondence
  students
• Consequences of offering no degrees or less than
  50 of your programs lead to a degree
• Limitations on contracting out distance education
  courses
• Telecommunication program must be at least one
  academic year in length
• 03/04 FSA HDBK, Vol. 2, Chapter 12

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Cash Management

• Bank account notification (federal funds)
• Interest bearing
• Required for Perkins for DL, Pell, FWS and FSEOG
  only if over 3 million drawndown
• Interest over 250 must be returned to the
  Department
• Early/late disbursements
• 10 days prior to start of class (calendar
  mid-points, starting new payment period
• 30 days for first-time, first-year borrowers
• FSA Credit balances (14 days)
• Required school notifications
• holding credit balances, prior-year charges,
  crediting FWS funds, loan cancellations,
  crediting loan funds, etc.)

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Cash Management

• Excess cash (3 day rule tolerance levels)
• Matching requirements (campus-based)
• Perkins (ICC 1/3 of FCC), FWS (ICC 25),
  FSEOG (ICC 25)
• Reconciliation
• How often (monthly?)
• Balance year-end totals
• Compare Dept. reports, bank statements, school
  ledgers
• Clear audit trail
• Trace individual drawdowns (which programs,
  students)
• Trace funds returned to the Dept.
• 2003-2004 FSA Handbook, Vol. 2, chapter 5 Vol.
  4
• June 2001 Blue Book January 2000 Audit Guide
• 34 CFR 668.161-167 (subpart K)

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Satisfactory Academic Progress Policy (SAP)

• develop, publish and monitor SAP policy
• as strict or stricter than non-IV students
• applied consistently to all students within
  categories
• contain all required components
• qualitative measure (GPA)
• quantitative measure (maximum time frame)
• appeal procedures
• reinstatement of eligibility
• probationary periods (optional)
• class completion issues (remedial courses, etc.)
• 03/04 FSA Hdbk., Vol. 1, pages 8-12 Vol. 2,
  pages 57-58
• 34 CFR 668.16(e) 668.32(f) 668.34

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Compliance/Financial Audits and A-133 Audits

• Proprietary Schools
• Both audits must be submitted simultaneously
  within 6 months of the end of the schools fiscal
  year (single packet).
• Public and Private, Non-Profit Schools
• Must be submitted within 9 months of the end of
  the schools fiscal year (subject to Single Audit
  Act deadlines).
• Submitted to Federal Audit Clearinghouse
• Bureau of the Census
• PO Box 5000
• Jeffersonville, IN 47199-5000

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eZ-Audit

• eZ-Audit will provide schools with a paperless
  single point of submission for financial
  statements and compliance audits through the web
• ALL schools must submit audits due on or after
  6/16/03
• Temporary postponement for A-133s until after
  3/1/04
• A-133 schools must still send copies to the
  Clearinghouse
• A designee from your school will simply sign on
  to eZ-Audit (www.ezaudit.ed.gov), enter summary
  audit and financial data directly from your
  report into a web form, attach an electronic
  version of the report, and submit
• Electronic Annc. 1/21 3/5 3/20, 4/7, 6/3,
  9/15, 12/12
• eZ-Audit User Guide (Elec. Ann. 3/31/03)
• Federal Register - May 16, 2003, Vol. 68, No. 95
• Questions - 1-877-263-0780 fsaezaudit_at_ed.gov

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NEXT STEPS

• Where do you go from here?

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Communication

• Internal
• Within offices
• Between offices (periodic meetings, workshops,
  etc.)
• With students/parents
• External
• Between schools
• U.S. Department of Education
• Accrediting Agencies
• State Agencies
• Guaranty Agencies and Lenders

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Adequate Staff

• 668.16 Standards of administrative capability
• b)(1) Designates a capable individual to be
  responsible for administering all the Title IV,
  HEA programs in which it participates and for
  coordinating those programs with the
  institution's other Federal and non-Federal
  programs of student financial assistance The
  Secretary may consider other factors in
  determining whether an individual is capable,
  including, but not limited to, the individual's
  successful completion of Title IV, HEA program
  training provided or approved by the Secretary,
  and previous experience and documented success in
  administering the Title IV, HEA programs
  properly

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Adequate Staff cont

• (2) Uses an adequate number of qualified persons
  to administer the Title IV, HEA programs in which
  the institution participates. The Secretary
  considers the following factors to determine
  whether an institution uses an adequate number of
  qualified persons --
• (i) The number and types of programs in which the
  institution participates
• (ii) The number of applications evaluated
• (iii) The number of students who receive any
  student financial assistance at the institution
  and the amount of funds administered
• (iv) The financial aid delivery system used by
  the institution
• (v) The degree of office automation used by the
  institution in the administration of the Title
  IV, HEA programs
• (vi) The number and distribution of financial aid
  staff and
• (vii) The use of third-party servicers

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Computer EquipmentFederal Register, 12/22/2000
34 CFR 668.16(o)

• Minimum hardware and software - effective
  1/1/2002
• 800MHz Processor, 128 MB RAM, 20 GB hard drive,
  56K modem, monitor and video card for SVGA, 24x
  CD-ROM, Windows 98, 2000 or NT 4.0, dedicated
  phone line, etc.
• Institutions should be aware that capacity
  requirements (processor speed, available memory,
  hard drive storage, etc.) are greatly affected by
  specific factors at each institution, including
  which EDExpress and other Departmental functions
  the institution uses, the number of records
  processed, and institutional database interfaces.
• Since the Title IV, HEA program delivery system
  will continually to be upgraded, we recommend
  that institutions include in their automated data
  processing budgets, on a regular basis, plans for
  appropriate hardware and software upgrades and
  enhancements.

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Training and Technical Assistance

• Why?
• Knowledge (refresh, improve, increase)
• Changes (new procedures, policies, technology
  upgrades)
• Back-up personnel, cross-training, succession
  planning
• How?
• Associations, conferences, workshops
• Guaranty Agencies, Accrediting Bodies, State
  Agencies, Servicers
• U.S. Department of Education Training
• www.ed.gov/offices/OSFAP/training/index.html
• FSA Coach (Computer Tutorial)
  www.fsacoach.ed.gov
• FSA Assessments self-evaluation compliance tool
• ifap.ed.gov tools for schools
• Atlanta Case Management Team
• Management Assessment or technical assistance
  visits

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Pell and Campus-BasedAdministrative Cost
Allowance (ACA)

• If your school receives an ACA, the ACA
  should only be used to help pay the costs of
  administering the Pell and Campus-Based
  programs. 
• Help offset administrative costs, such as
  salaries, furniture, travel, supplies, and
  equipment
• Use for service fees for maintaining bank
  accounts
• Computer costs associated with Perkins Loan
  billing
• Cover expenses for carrying out the student
  consumer information services requirements.
• Use up to 10 of the ACA attributable to the
  schools FWS Program expenditures to offset
  expenses incurred for its community service
  program.
• (03/04 FSA HDBK, Vol.3, page 72, Vol.4 page 6
  34 CFR 673.7, 690.10)

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Resources, References Contacts

• www.ifap.ed.gov (informational resource center)
• Audit Guides, Blue Book, FISAP Instructions,
  Common Origination and Disbursement
  (COD)materials, Counselors Handbooks, Dear
  Colleague/Partner Letters, Default rate guide,
  Direct Loan Bulletins, EDE Technical Reference,
  Electronic Announcements, FAFSAs, Federal
  Registers, Federal Student Aid Handbooks, NSLDS
  Reference Materials, 2001 Program Review Guide,
  Regulation Compilations
• Websites
• NSLDS, FISAP, COD, Direct Loan, schools portal,
  students portal, SAIG enrollment, FSA Tech,
  GAPS, FAA Access on the Web
• U.S. Department of Education Contacts
• - Sources of Assistance for Schools
  www.fsadownload.ed.gov

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Contacts

• Joe Kern (Philadelphia) VA
  215-656-8566 joe.kern_at_ed.gov
• David Bartnicki (Atlanta) -
  AL, FL, GA, MS, NC, SC
  404-562-6290 david.bartnicki_at_ed.gov
• Tom Beckerle (Kansas City) KY, TN 816-268-0418
  tom.beckerle_at_ed.gov