(GENERAL-23-70) FSA Enforcement Bulletin, August 2023 – Following an Enforcement Investigation, Federal Student Aid Reminds Schools to Ensure Programs are Properly Accredited Before Disbursing Funds

Author
Office of Enforcement
Electronic Announcement ID
GENERAL-23-70
Subject
FSA Enforcement Bulletin, August 2023 – Following an Enforcement Investigation, Federal Student Aid Reminds Schools to Ensure Programs are Properly Accredited Before Disbursing Funds

Under 34 C.F.R. § 600, institutions must be accredited or, in the case of public or non-profit institutions, pre-accredited by a nationally recognized accrediting agency to participate in Title IV programs. Federal Student Aid (FSA) issues this bulletin to remind all institutions in the Title IV programs that Title IV funds may only be disbursed to students who are enrolled in eligible programs that are within the scope of the Department’s recognition of the institution’s institutional accrediting agency. This bulletin is being issued after an FSA Office of Enforcement investigation of Master of Laws (LL.M.) programs at freestanding law schools revealed that five schools improperly disbursed Title IV funds to students enrolled in unaccredited LL.M. programs. On Thursday, Aug. 24, the U.S. Department of Education (Department) announced that each of the five schools signed settlement agreements, some including fines, to resolve the matters. Click here to read the press release.

For law school students to be eligible for Title IV funds, their school must be accredited by an accrediting agency that is recognized by the Department to approve the applicable programs. As an example, almost all law schools have American Bar Association (ABA) accreditation. For freestanding law schools, the ABA is recognized by the Department as a gatekeeper for Title IV funds – but for Juris Doctor (J.D.) programs only. The ABA’s accreditation does not extend to other specific legal education programs like LL.M. programs. In most cases, where a law school is part of larger university system, the LL.M. program approval is provided by the university’s institutional accreditation. The five schools involved here are freestanding law schools, not part of larger university systems with another institutional accreditation. While the ABA accreditation provides institutional accreditation for their J.D. programs, their LL.M. programs are not included in that accreditation. Therefore, before disbursing Title IV funds to students in non-J.D. programs, these schools were required to secure institutional accreditation that covered all programs for which it intended to disburse Title IV funds.

Accreditation is a critical component of the Title IV programs’ regulatory framework, as accrediting agencies serve as reliable authorities regarding the quality of education or training offered by the institutions or programs they accredit. It is widely understood by students and employers to be an indicator that basic quality standards have been met.   

These are not the first instances of an ABA-accredited freestanding law school facing FSA scrutiny for improperly disbursing Title IV funds to students enrolled in an unaccredited LL.M. program. On October 20, 2021, another school notified FSA of its own ineligible disbursements to students enrolled in its unaccredited LL.M. program. FSA opened a program review and assessed liabilities against the school for the improper disbursements. In that case, FSA chose not to impose a fine on the school in recognition of the school’s responsible conduct in self-identifying and self-reporting this violation. 

Schools are responsible for ensuring they have institutional accreditation recognized by the Department that includes any program for which the school intends to disburse Title IV funds. The Department will continue to hold schools accountable if they fail to fulfill this responsibility. 

Reporting Misconduct or Fraud by Institutions

As part of its ongoing effort to identify and respond to misconduct by institutions in the Title IV programs, the Office of Enforcement, in November 2022, began to invite knowledgeable sources to submit tips and information about potential violations. FSA welcomes information from current or former employees, students, vendors, or contractors of postsecondary institutions; third-party servicers; third-party lead generators; and any other individuals with knowledge of potential violations. Knowledgeable sources may submit relevant tips and information by visiting Ed.gov/FSATips or emailing FSATips@ed.gov.