Program Not to Exceed By More Than 50% State Minimums

Immediate Impact!

Almost twenty years ago, a movie that is classified across multiple genres was released:  Deep Impact.  In this disaster drama, people learn of the impending impact of a comet on earth.  Efforts are made to negate the potential for impact from the point of discovery of the comet and its trajectory, until the comet’s projected arrival about a year later.  Suspense mounts, but there is no initial panic, because, although it would cause devastation, there was still time, and there were options to explore.  While it would create a deep impact, it was not immediate.  Thus, there was less alarm to the average person.

In our professional world, schools must remain vigilant, as well, to what is barreling through the financial aid skies of legislation, regulation, authorization, and guidance.  One more recent celestial body orbiting close in the financial aid exosphere is the U.S. Department of Education’s (ED) focus on compliance with a sometimes overlooked piece of the Program Participation Agreement (PPA).  In the PPA each school’s president or chief executive officer has agreed to comply with the requirements of this portion of the PPA.  And, like in the movie, ignoring the threat will result in a deep impact on schools hit by this requirement.  And, it will not just be a deep impact.  It will also have an immediate impact!  This financial aid celestial body, as it were, as in the solar body known as a comet, may create an extinction level event (ELE) in regard to an institution’s participation in Title IV Federal Student Aid.

Impact of Regulations on Program Length

This sometimes overlooked requirement in the PPA is the stipulation that in order for a Gainful Employment (GE) program to be approved as an eligible Title IV program, the number of clock hours provided in the program may “not exceed by more than 50% the minimum number of clock hours required for training in the recognized occupation for which the program prepares the student, as established by the State in which the program is offered, or as established by any federal agency (if applicable).”[1]  See 34 CFR 668.14(b)(26).  Therefore, this GE program requirement applies to practically all undergraduate programs at a for-profit school, as well as to certificate programs at public and non-profit schools.

Why is there this specific limit to program length?  ED wants students being trained for GE to get into the workforce as soon as possible upon gaining the minimum required knowledge and/or skills.  If there was not such a limit, theoretically, a school could design a program to keep students in school for greatly longer periods of enrollment than necessary to become gainfully employed in the occupation, based upon state and accrediting agency minimum requirements.  If this were to be allowed, students may be tempted to become professional students rather than graduating and joining the professional workforce, all the while, obtaining Federal Student Aid for much longer periods than necessary.

Immediate Impact

In recent months it has been observed that schools are being discovered to have programs which do not meet the regulatory requirement that is also spelled out in the Federal Student Aid Handbook and in the PPA.  This has caused some unexpected issues with schools obtaining ED’s approval of new programs, and/or in an institution’s recertification of approval for continued participation in the Title IV Federal Student Aid programs.  It has an immediate impact on schools!  There are no alternative options to explore as was attempted in the movie we referenced earlier.

A program that exceeds the standards in the regulations, as described above, is subject to non-approval of initial eligibility determination.  And, in the case where an institution has previously awarded and disbursed aid to students in a program that exceeds by more than 50% the minimum number of clock hours required, as stipulated by the state, etc., the program becomes immediately ineligible for any further Title IV aid disbursements. Thus, again, we see that it has potential for a deep—and immediate—impact.

Early Detection and Deflection of Potential Impact

As with most things related to financial aid matters, the sooner a school detects that they may have an issue, the more quickly they can address the concern.  An appropriate analysis and correction may allow for some deflection of the potential negative impact that will surely occur if action is not taken.

It is recommended that all schools review their academic programs currently being offered.  Also, programs the institution anticipates offering in the future should be thoroughly vetted to ensure regulatory compliance.

Below we offer some points for consideration as an institution begins its process of reviewing its academic offerings:

1. An analysis must be done to ensure that all programs offered are in concert with the regulatory requirement of not exceeding by more than 50% the minimum State requirement (and/or accrediting agency requirements, and Federal agency requirements, as applicable) for training in the recognized occupation for which the program prepares the student.
2. Programs that are currently offered (including, potentially, even ones previously approved) that exceed the minimum number of hours the State requires by more than 50% must be modified so that they do not exceed by more than 50% the State’s required minimum threshold. This may require obtaining a new review and approval from the State and/or the accrediting agency of the institution’s modified program (i.e., modified to not exceed the maximum program length allowed by regulation).
3. If a school determines through its self-review and analysis of its academic offerings that a program does not meet the condition of not exceeding by more than 50% the minimum State requirement for training in the recognized occupation for which the program prepares students, the institution must cease making any additional payments of Title IV aid to students in such programs, even if the program was previously deemed “approved.” ED has stated that even if a program was previously approved, but now no longer meets the standards defined in regulation, the institution should know when it has fallen out of compliance and eligibility based upon maintaining awareness of the terms of Title IV regulations, the PPA, and State and accrediting agency requirements.  Failure to cease making payments to students for a program no longer meeting regulatory requirements may result, in some cases, ED requiring complete repayment of any Title IV aid paid to students from the point of the program not meeting regulatory requirements.
4. The institution that has had previously approved programs that currently do not meet the regulatory requirements, but that now has newer programs (or modified programs) that will meet the regulatory requirements, should immediately update its Electronic Application for Approval to Participate in Federal Student Financial Aid Programs (E-App). [One caveat:  unless ED has limited the institution from adding any new programs.]  This would include updating the date any newly determined ineligible program was/is discontinued, as well as listing the new or modified program(s) that the institution wishes to have deemed an “eligible program.”  Updates to the E-App must be made within 10 days of the program changes.
5. Finally, as an institution makes changes to its eligible programs’ data (e.g., adds newly eligible programs and/or determines ineligibility of programs), the institution must update its student information system and/or financial aid system(s) with the most recent and accurate program information. Omitting such important updates may create scenarios where the institution becomes liable for ineligible payments.

Without doubt, no institution wants to be imperiled by a Financial Aid comet, as it were, with its potential for an ELE of Title IV aid at their institution due to the appearance of this “comet” that has entered the more recent telescope view of institutional program reviews.  Schools are wise to do a thorough review of all programs without delay, to avoid the possibility of a deep impact on operations.

Should you have any additional questions regarding this topic, please feel free to contact Customer Service through the Client Solution Center.

[1] 2016-2017 Federal Student Aid Handbook, page 2-20.  Also, 34 CFR 668.14(b)(26)