Beware of Doing This Without Help
I used to attend monthly meetings of The Dean’s Roundtable, a meeting of academic deans of universities in Southern California. You would be familiar with several of the schools represented there. At one meeting, one of the deans said something like this:
I have something to tell you. I couldn’t talk about it while we were going through it, but now I can. Until a surprise visit by the Department of Education [DOE], we thought everything was fine in our financial aid office. It was not. The DOE found a number of violations. What was so awful was not the huge fines they were ready to impose. More terrible was that they were threatening to take away our authorization to distribute federal student financial aid. We have had financial aid for years. Most of our students receive it. If we had lost our authorization, we might have gone out of business.
When this dean finished, another dean raised his hand and said the same thing happened at his school. I took this to heart as a lesson learned.
Having seen how even experienced schools can get in trouble, serious trouble, with the DOE, Agron & Associates, Inc. recommends that a school applying to distribute Federal Student Financial Aid work with a “Third-Party Servicer,” such as FAME, Inc.
We further recommend that the school take advantage of the Third-Party Servicer’s ongoing training. Keep in mind that the regulations are complex, detailed, and constantly changing. Your school may have trouble keeping up to date, so the experience and expertise these companies offer are quite necessary.
When Can You Apply?
In short, candidate membership in the ABHE or TRACS qualifies schools to apply to the US Department of Education for distributing Federal Student Financial Aid. With ATS, institutional accreditation is required.
|Upon achieving candidacy, ABHE’s status with the US Department of Education allows their schools to qualify to distribute Federal Student Financial Aid (FSFA) to bachelor students and graduate students. The Department of Education authorized the ABHE to distribute aid to graduate students in 2020.||ATS’ status with the US Department of Education allows their institutionally-accredited schools to qualify to distribute Federal Student Financial Aid (FSFA) to Master or Doctoral students. But, this does not include candidate members or programmatically-accredited schools.||Upon achieving candidacy, TRACS’ status with the US Department of Education allows their schools to qualify to distribute Federal Student Financial Aid (FSFA) to Bachelor students and graduate students.|
How to Gain Access to Federal Funding for Your Students
To provide Federal financial aid (Title IV) funding to your students, you must meet institutional eligibility requirements with the US Department of Education.
The first step is to apply for an OPE (Office of Postsecondary Education) ID number at eligcert.ed.gov. This will be your institution’s identification number relative to the Department of Education and accessing Title IV funding and reporting.
Once you receive an OPE ID number, you can apply to participate in the Federal Student Financial Assistance Programs. However, there are several criteria an institution must meet prior to approval.
To apply, the institution must have
- Taxpayer Identification Number (TIN),
- Dun & Bradstreet (DUNS), and
- two years of teaching students with continuous enrollment for each program submitted prior to the date of application to participate. You can’t combine short programs to make a longer eligible program.
And there are minimum program lengths:
- Pell Grant eligible programs must be at least 15 weeks in length and provide instructional time equal to at least 600 clock hours, 16 semester credits, or 24 quarter credits (allows for partial Pell and Direct Loan eligibility).
- Pell Grant eligible programs that are at least 900 clock hours and 26 weeks in length, or 24 semester or 30 quarter credits and 30 weeks in length (allows for a full annual Pell and Direct Loan eligibility, depending upon student eligibility).
- Programs at least 10 weeks in length and that offer at least 300–599 clock hours of instructional time are Direct Loan eligible only, but they must meet the 70% placement and 70% completion rule for the 12-month period ending June 30 of the most recently completed Federal financial aid award year. The calculation for both rates must have an auditor’s attestation.
The institution must also have
- less than a 33% withdrawal rate of all regular enrolled students for the last completed award year (July 1–June 30);
- an approved accrediting status, which means at least having candidate membership with an agency approved by the US Department of Education (Agron & Associates, Inc. can help you achieve that status); authorization that approves the school as a postsecondary institution;
- a method for grievances to be reported to the state;
- two years of audited financial statements in accordance with GAAP and GAGAS accounting standards. If you do not meet the 1.5 ratio on the most recent financial statement you will be required to put up a letter of credit equal to 50% of the estimated total of Pell and Direct Loans based on the estimate of the number of students that are entered on the Eligibility application (E-App); and
- several specific written policies for Admissions, Institutional Refunds, Satisfactory Academic Progress (SAP), and Return to Title IV (R2T4) funds. ED may ask for additional information during the approval process. Many institutions also utilize a Third-Party Servicer to assist them in writing acceptable policies and procedures to ensure they meet regulatory standards as well as complete the initial application for the institution.
Though the requirements for offering Federal Student Financial Aid may seem daunting, the accreditation professionals at Agron & Associates, Inc. as well as the financial aid experts at FAME, Inc. are available to help.