In October 2023, the Biden-Harris Administration released final rules that are aimed to strengthen oversight and monitoring of colleges and universities, and to strengthen consumer protection for student borrowers.
The changes of the Department of Education’s (Department) final regulation are centered around four areas:
Financial Responsibility
Key changes to financial responsibility standards include:
- Amendments to conditions that require an institution to post financial protection if certain events occur. These mandatory triggers are external events and circumstances that might not yet be reflected within the institution’s financial statements or composite score. A few examples follow:
- High cohort default rates or failing the 90/10 revenue requirement
- An institution taking steps to manipulate its composite score, such as by reporting a contribution before year-end and then taking a distribution after the fiscal year has ended
- Declaration of financial exigency
- Amendments to conditions that might require an institution to post financial protection if certain events occur. These discretionary triggers are external events and circumstances that might not yet be reflected within the institution’s financial statements or composite score. A few examples follow:
- Adverse actions by an accreditor, states or federal agencies.
- Significant fluctuations in federal student aid volume.
- Closing programs or locations that enroll significant shares of students.
- Institutions will now have 21 days to report triggering events and, as part of the reporting, will be able to show that mandatory triggering events have been resolved.
Administrative Capability
Administrative capability rule changes will strengthen how the Department administers the requirement that institutions must demonstrate that they are capable of administering Title IV programs. Changes include that:
- Institutions must provide adequate financial aid counseling and communications to students, including information on costs of attendance and financial aid available to them.
- Institutions must provide geographically accessible clinical or externship options that are required to complete the credential or licensure in a recognized occupation within 45 days of the completion of other required coursework.
- Institutions must provide adequate career services to eligible students who receive Title IV and HEA assistance.
Certification Procedures
Certification procedure changes are included within the update and are aimed to assist the Department’s ability to monitor institutions that exhibit concerning signs and mitigate the risks in those situations. These changes include, among other items, the following:
- Institutions will be prevented from withholding transcripts for credits paid with Title IV aid.
- Institutions will be prohibited from maintaining policies and procedures that encourage or condition institutional aid or student benefits in a manner that induces the student to limit the amount of federal student aid that the student receives. (Exceptions for certain scholarships from the institutions do exist.)
- The number of hours in a program must be limited to the greater of the required minimum number of clock hours, credit hours, or equivalent required for training in the recognized occupation for which the program prepares the student.
Ability to Benefit
The ability to benefit from amendments will impact the eligibility requirements for individuals who do not have a high school diploma or a recognized equivalent. These changes include, among other items, the following:
- Codifying a definition of eligible career pathway program.
- Clarifying the differences between Title IV and HEA aid eligibility of non-high school graduates who are enrolled in eligible programs, pre and post July 1, 2012.
- Amends monitoring requirements to provide an institution that has failed to achieve the 85% success rate up to three years to achieve compliance.
Next Steps
Although the above presents a high-level overview of several key changes, there are further changes and amendments brought about by this final regulation that will be effective on July 1, 2024. Evaluating how these changes impact your institution will be critical to ensuring continued compliance in the continuously changing world of higher education.
The final regulation published by the Department is available to the general public, but additional resources are published by the Department, such as this fact sheet that summarizes the final rule.
About Schneider Downs Higher Education Services
The Schneider Downs Higher Education industry group is a dedicated team of experienced professionals specializing in serving institutions from high schools to universities. Our experience in audit and assurance, tax advisory, technology and data and more allow our professionals to stay ahead of the latest trends, developments and challenges within the education sector and provide timely and practical solutions to our clients.
To learn more, visit our Higher Education Industry Group page.
