Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

Institutional Eligibility and Administrative Requirements - Recordkeeping and Disclosure

AwardYear: 1997-1998
EnterChapterNo: 3
EnterChapterTitle: Institutional Eligibility and Administrative Requirements
SectionNumber: 7
SectionTitle: Recordkeeping and Disclosure
PageNumbers: 155-166


The General Provisions regulations require schools to maintain
records related to their participation in the SFA Programs. These
records must be made available by the school to representatives of
the Department and other specified individuals or organizations in
the course of audits, program reviews, investigations, or other
authorized reviews.

[[NEW]]
The Improving America's Schools Act of 1994 (Public Law 103-
382) amended the General Education Provisions Act to require a
school to keep records for three years rather than five years. Final
regulations published November 27, 1996 implemented this
amendment and also clarified the existing record retention
requirements, consolidated some requirements previously found in
the individual program regulations, and updated the retention
requirements by allowing schools to keep some records in electronic
formats.

Although institutional recordkeeping requirements for all SFA
Programs have been consolidated into the General Provisions
regulations, schools must also comply with all applicable program-
specific recordkeeping requirements contained in the individual SFA
Program regulations.

This section describes recordkeeping and disclosure requirements,
including a discussion of the Family Educational Rights and Privacy
Act (FERPA), which restricts the disclosure of student records to
other parties and requires the school to give a student the opportunity
to review his or her records.

REQUIRED RECORDS

A school must keep comprehensive and accurate program and fiscal
records related to its use of SFA funds. The importance of
maintaining complete and accurate records cannot be
overemphasized. Program and fiscal records must demonstrate the
school's eligibility for participation in the SFA Programs and show a
clear "audit trail" for SFA Program expenditures. Records must be
kept to demonstrate proper administration of SFA Program funds.
For example, records for each SFA recipient must clearly show that
the student was eligible for the funds received, and that the funds
were disbursed in accordance with program regulations.

[[Program records]]
A school must establish and maintain on a current basis any
application the school submitted for SFA Program funds. A school
must also maintain on a current basis program records that document

- the school's eligibility to participate in the SFA Programs,

- the SFA eligibility of the school's programs,

- the school's administration of the SFA Programs,

- the school's financial responsibility,

- information included in any application for SFA Program funds,
and

- the school's disbursement and delivery of SFA Program funds.

Program Records a School Must Maintain

The program records that a school must maintain include, but are
not limited to
- Program Participation Agreement
- Accrediting and licensing agency reviews, approvals, and
reports
- State agency reports
- Audit and program review reports
- Self-evaluation reports
- Other records, as specified in regulation, that pertain to factors
of financial responsibility and standards of administrative
capability

[[Fiscal records]]
A school must keep fiscal records to demonstrate its proper use of
SFA funds. A school's fiscal records must provide a clear audit trail
that shows that funds were received, managed, disbursed, and
returned in accordance with federal requirements. Schools are
required to account for the receipt and expenditure of all SFA
Program funds in accordance with generally acceptable accounting
principles.

A school must establish and maintain on a current basis

- financial records that reflect each SFA Program transaction, and

- general ledger control accounts and related subsidiary accounts
that identify each SFA Program transaction, and separate those
transactions from all other institutional financial activity.

Fiscal Records a School Must Maintain

The fiscal records that a school must maintain include, but are not
limited to
- Records of all SFA program transactions
- Bank statements for all accounts containing SFA funds
- Records of student accounts, including each student's
institutional charges, cash payments, SFA payments, cash
disbursements, refunds, and repayments required for each
enrollment period
- General ledger (control accounts) and related subsidiary ledgers
that identify each SFA Program transaction (SFA transactions
must be separate from school's other financial transactions)
- Federal Work-Study payroll records
- Records that support data appearing on required reports, such as
- Pell Grant Statements of Accounts
- ED Payment Mangement System cash requests and quarterly
or monthly reports
- SFA Program reconciliation reports
- Audit reports and school responses
- State grant and scholarship award rosters and reports
- Accrediting and licensing agency reports

In addition, a school must maintain the following records that pertain
to the general administration of SFA Program funds.

General Records a School Must Maintain

A school must maintain records for each SFA recipient that
include, but are not limited to
- The Student Aid Report (SAR) or Institutional Student
Information Record (ISIR) used to determine a student's
eligibility for SFA funds
- Application data submitted to the Department, lender, or
guaranty agency by the school on behalf of the student or
parent
- Documentation of each student's or parent borrower's eligibility
for SFA Program funds (e.g., records that demonstrate that the
student has a high school diploma, GED, or the ability to
benefit)
- Documentation of all professional judgement decisions
- Financial aid history information for transfer students
- Cost of attendance information
- Documentation of a student's satisfactory academic progress
- Documentation of a student's program of study and courses in
which enrolled
- Data used to establish student's admission, enrollment status,
and period of enrollment
- Required student certification statements and supporting
documentation
- Documents used to verify applicant data
- Documentation relating to each student's or parent borrower's
receipt of SFA Program funds, including but not limited to
- The amount of the grant, loan, or FWS award; its payment
period; its loan period, if appropriate; and the calculations
used to determine the amount of grant, loan, or FWS award,
- The date and amount of each disbursement or delivery of
grant or loan funds, and the date and amount of each
payment of FWS wages,
- The amount, date, and basis of the school's calculation of any
refunds or overpayments due to or on behalf of the student,
and
- The payment of any refund or overpayment to the SFA
Program fund, a lender, or the Department, as appropriate.
- Documentation of and information collected at any initial or
exit loan counseling required by applicable program
regulations
In addition, a school must maintain records that include, but are
not limited to
- Reports and forms used by the institution in its participation in
an SFA Program, and any records needed to verify data that
appear in those reports and forms
- Documentation supporting the school's calculation of its
completion or graduation rates, and transfer-out rates (see
Section 8)

In addition
- participants in the Perkins Loan Program must follow procedures
in Section 674.19 for documentation of a repayment history for
each borrower for that program (see Chapter 6),

- participants in the FWS Program must follow procedures
established in Section 675.19 for documentation of work,
earnings, and payroll transactions for that program (see
Chapter 7), and

- participants in the FFEL Program must follow procedures
established in Section 682.610 for documentation of additional
loan record requirements for that program (see Chapter 10).

RECORD RETENTION PERIODS

[[Three-year requirement]]
The Improving America's Schools Act of 1994 amended the General
Education Provisions Act to require a school to keep records for
three years rather than five years. The minimum three year retention
requirement was effective October 20, 1994. Final regulations
published November 27, 1996 made conforming changes to the
record retention requirements of the General Provisions regulations.
The regulations are effective July 1, 1997.

[[NEW]]
Schools must retain all required records for a minimum of three
years. However, the starting point for the three-year period is not the
same for all records. For example, some campus-based program
records must be kept for three years from the end of the award year
in which the funds were awarded and disbursed. However, schools
must keep the Fiscal Operations Report (FISAP) and any records
necessary to support its data for three years from the end of the
award year in which the FISAP is submitted. The most current
FISAP, which will contain 1996-97 data, must be submitted during
the 1997-98 award year, will request 1998-99 funds, and has a
submission date of October 1997. Because this FISAP will be
submitted during the 1997-98 award year, records must be kept until
at least June 30, 2001, three years from the last day of the 1997-98
award year.

There are additional exceptions to the general record retention
periods for repayment records for Perkins Loans and records related
to a FFEL or Direct Loan borrower'ss eligibility and participation in
those programs.

The chart on the next page illustrates the required minimum retention
periods for records under the various SFA Programs.

[[The chart "Minimum Record Retention Periods'' on page 3-160 is
currently unavailable for viewing. Please reference
your paper document for additional information.]]

Different retention periods are necessary to ensure enforcement and
repayment of SFA loans. Perkins Loan repayment records, including
cancellation and deferment records, must be kept for three years
from the date on which the loan was assigned to the Department,
cancelled, or repaid. Perkins original promissory notes and original
repayment schedules must be kept until the loan is satisfied or
needed to enforce the obligation (for more information, see Chapter
6). Records relating to a borrower's eligibility and participation in the
FFEL and Direct Loan programs must be kept for three years from
the last day of the award year in which the student last attended the
school.

A school may retain records longer than the minimum period
required. If the school does maintain the records for a longer period
of time and receives a financial aid transcript request (see Chapter 2),
the school is required to provide any information requested from
records the school still maintains.

[[Retention period may be longer than 3 years]]
A school may be required to retain records for longer than three
years if the records are involved in any loan, claim, or expenditure
questioned in any SFA program review, audit, investigation, or other
review (see Section 6 for more information on program reviews and
audits). If the three-year retention period expires before the issue in
question is resolved, the school must continue to retain all records
until resolution is reached.

RECORD MAINTENANCE

A school must maintain all required records in a systematically
organized manner. Unless a specific format is required, a school may
keep required records in

[[Acceptable formats]]
- hard copy
- optical disk
- microform
- CD-ROM
- computer file
- other media formats

Regardless of the format used to keep a record, all record
information (except for the Institutional Student Information Record
[ISIR]) must be retrievable in a coherent hard copy format (for
example, an easily understandable print out of a computer file) or in
a media format acceptable to the Department. The requirement
providing for other media formats acceptable to the Department
allows for the use of new technology as it is developed. The
Department will notify schools of acceptable media formats; schools
should not apply for approval of a media format.

Any document that contains a signature, seal, certification, or any
other image or mark required to validate the authenticity of its
information must be maintained in its original hard copy or in an
imaged media format. This includes tax returns, verification
statements, SARs used to determine eligibility and any other
document when a signature seal, etc., contained on it is necessary for
the document to be used for the purposes for which it is being
retained.

A school may maintain a record in an imaged media format only if
the format is capable of reproducing an accurate, legible, and
complete copy of the original document. When printed, the copy
must be approximately the same size as the original document.

[[NEW]]
[[Special requirements for SARs & ISIRs]]
Special maintenance and availability requirements apply for Student
Aid Reports (SARs) and ISIRs used to determine eligibility because
it is essential that these basic eligibility records be available in a
consistent, comprehensive, and verifiable format for program review
and audit purposes. Because the SAR is a hard copy document, it
must be maintained and available in its original hard copy format or
in an imaged media format. The ISIR, an electronic record, must be
maintained and available in its original format, i.e., as it was supplied
by the Department to the school on a magnetic tape or cartridge, or
as it was archived using EDExpress software supplied to the school.
A school that uses EDExpress has the ability to maintain the ISIR
data that it has maintained during the applicable award year by
archiving the data to a disk or other computer format. A school that
receives ISIRs on magnetic tapes or cartridges may make a copy of
the file received from the Department.

A school is not required to maintain all required records in its
financial aid office. For example, it may be more appropriate for a
school to maintain some records in the business office, the
admissions office, or the office of the registrar. The responsible
administrator in the office maintaining the records should be aware
of all applicable record retention requirements.

If a school closes, stops providing educational programs, is
terminated or suspended from the SFA Programs, or undergoes a
change in ownership that results in a change of control, it must
provide for the retention of required records. It must also provide for
access to those records for inspection and copying by the
Department. For a school that participates in the FFEL Program, the
school must also provide access for the appropriate guaranty agency.

EXAMINATION OF RECORDS

[[CLARIFICATION]]
[[Location]]
The November 27, 1996 final regulations require a school to make
its records available to the Department at an institutional location
designated by the Department. These records must be readily
available for review, including any records of transactions between a
school and the financial institution where the school deposits any
SFA funds. These regulatory requirements reflect longstanding
Department policy.

[[Cooperation with agency representatives]]
A school that participates in any SFA Program, and the school's third
party servicers, if any, must cooperate with the agencies and
individuals involved in conducting any audit, program review,
investigation, or other review authorized by law. This cooperation
must be extended to the following individuals and their authorized
representatives: an independent auditor, the Secretary of the
Department, the Department's Inspector General, the Comptroller
General of the United States. A school must also provide this
cooperation to any guaranty agency in whose program the school
participates, and the school's accrediting agency.

[[Timely access]
A school must cooperate by providing timely access to requested
records, pertinent books, documents, papers, or computer programs,
for examination and copying by any of the agents listed above. The
records to which timely access must be provided include, but are not
limited to, computerized records and records reflecting transactions
with any financial institution with which the school or servicer
deposits or has deposited any SFA Program funds.

[[Reasonable access to personnel]]
A school must also provide reasonable access to all personnel
associated with the school's or servicer's administration of the SFA
Programs so that any of the agents listed above may obtain relevant
information.

A school or servicer has not provided reasonable access to personnel
if the school or servicer

- refuses to allow those personnel to supply all relevant information,

- permits interviews with those personnel only if the school's or
servicer's management is present, or

- permits interviews with those personnel only if the interviews are
tape recorded by the school or servicer.

[[SFA recipient information]]
If requested by the Department, a school or servicer must provide
promptly any information the school or servicer has respecting the
last known address, full name, telephone number, enrollment
information, employer, and employer address of a recipient of SFA
Program funds who attends or attended the school. A school must
also provide this information, upon request, to a lender or guaranty
agency in the case of a borrower under the FFEL Program.

DISCLOSING STUDENT INFORMATION

[[FERPA]]
To protect the privacy of students and families, federal law sets
certain conditions on the disclosure of personal information from
records kept by schools that participate in the SFA Programs. The
relevant law is the Family Educational Rights and Privacy Act of
1974 (FERPA); do not confuse FERPA with the Privacy Act of
1974, which governs the records kept by government agencies,
including the application records in the federal processing system.

FERPA restrictions on disclosure of records that are created and
maintained by campus law enforcement units (for law enforcement
purposes) are discussed in Section 8.

Department regulations set limits on the disclosure of personally
identifiable information from school records, define the
responsibilities of the school, and define the rights of the student in
reviewing the records and requesting a change to the records. A
school must give the student the opportunity to inspect and review
his or her educational records, but does not have to provide copies of
the records unless the requirement that the student come to the
school to inspect and review the records would effectively deny
access to the student. While the school may not charge a fee for
retrieving the records, it may charge a reasonable fee for providing
COPIES of the records, provided that the fee would not prevent
access to the records.

The box to the right notes several important elements of the school's
responsibilities and the rights of the student or parent. The
regulations apply to ALL education records the school keeps,
including admissions records (only if the student was admitted) and
academic records as well as any financial aid records pertaining to
the student. Therefore, the financial aid office is not usually the
office that develops the school's FERPA policy or the notification to
students and parents, although it may have some input.

A school is required to --
- DEVELOP A WRITTEN POLICY listing the types and
locations of education records maintained by the school, and
stating the procedures for parents and students to review the
records.
- NOTIFY PARENTS AND STUDENTS of their rights with
respect to educational records.
- DOCUMENT THE STUDENT'S FILE each time personally
identifiable information is disclosed to persons other than the
student.
A student has the right to --
- INSPECT AND REVIEW education records pertaining to the
student.
- REQUEST AN AMENDMENT to the student's records.
- REQUEST A HEARING (if the request for an amendment is
denied) to challenge the contents of the education records, on
the grounds that the records are inaccurate, misleading, or
violate the rights of the student.

The FERPA regulations also establish rules governing the disclosure
of student information to parties other than the student. The
regulation lists 13 conditions under which "personally identifiable
information" from a student's education record may be disclosed
without the student's prior written consent. Several of these
conditions are of particular interest to the financial aid office:

- DISCLOSURE MAY BE MADE TO AUTHORIZED
REPRESENTATIVES OF THE U.S. DEPARTMENT OF
EDUCATION, THE OFFICE OF INSPECTOR GENERAL, OR
STATE AND LOCAL EDUCATION AUTHORITIES. These
officials may have access to education records as a part of an audit
or program review, or to ensure compliance with SFA Program
requirements.

(Representatives of the Department include research firms that are
under contract with the Department to conduct studies of financial
aid procedures, using student information provided by the schools
selected for the study. The term also includes the SFAP public
inquiry contractor.)

- DISCLOSURE MAY BE MADE IF IT IS IN CONNECTION
WITH FINANCIAL AID THAT THE STUDENT HAS
RECEIVED OR APPLIED FOR. For instance, the school may
receive a request from the Immigration and Naturalization Service
(INS) or the Federal Bureau of Investigation (FBI) for access to a
student's records. Such a request may only be granted if the
student information is needed to determine the amount of the aid,
the conditions for the aid, the student's eligibility for the aid, or to
enforce the terms or conditions of the aid.

- DISCLOSURE MAY BE MADE TO THE STUDENT'S
PARENT, IF THE STUDENT IS A DEPENDENT OF THE
PARENT, AS DEFINED BY THE INTERNAL REVENUE
SERVICE (IRS). If the student receives more than half of his or
her support from the parent, under the IRS definition, the student
is a dependent of the parent. (Note that the IRS definition is quite
different from the rules governing dependency status for the SFA
Programs.)

- DISCLOSURE MAY BE MADE TO ORGANIZATIONS THAT
ARE CONDUCTING STUDIES CONCERNING THE
ADMINISTRATION OF STUDENT AID PROGRAMS ON
BEHALF OF EDUCATIONAL AGENCIES OR
INSTITUTIONS.

[[Disclosure requests for information]]
Schools are required to keep a record of each request for access and
each disclosure of personally identifiable student information. The
record must identify the parties who requested the information and
their legitimate interest in the information. This record must be
maintained in the student's file as long as the educational records
themselves are kept.

[[Sample disclosure statement]]
If student records are requested by Department reviewers in the
course of a program review, for instance, the school must document
in each student's file that the student's records were disclosed to
representatives of the Department. The easiest way for the school to
do this is to photocopy a statement to this effect and include it in
each student's file. A statement such as the following would be
appropriate for a review of the SFA Programs conducted by a
Department regional office: "These financial aid records were
disclosed to representatives of the U.S. Department of Education,
Region __, on (Month/Day/Year) to determine compliance with
financial aid requirements, under 34 CFR Part 99.31(a)(4)."

[[Redisclosure to other authorized parties]]
When student information has been disclosed to one of the parties
listed above, that party may redisclose that information to additional
parties who are authorized to receive the information without prior
written consent, provided that such redisclosure is included in the
statement in the student's file. For instance, if a program review finds
evidence that a student may have fraudulently obtained aid, this
information may be redisclosed to the Department's Office of
Inspector General (OIG) by the regional office. (Thus the OIG would
not have to make a separate request to the school for the same
information.) When redisclosure is anticipated, the additional parties
to whom the information will be disclosed must be included in the
record of the original disclosure. For instance, to continue the
example for an SFA program review, the following statement might
be added: "The Institutional Review Branch may make further
disclosures of this information to the Department's Office of
Inspector General, and to the U.S. Department of Justice, under 34
CFR 99.33(b)." You should check with the program review staff to
find out if any redisclosure is anticipated.

As mentioned earlier, the financial aid office is usually not
responsible for developing the school's FERPA policy. However, if
you are involved in developing your school's policy and would like a
copy of the Department's model policy for postsecondary schools,
you may write to the following address:

Family Policy and Compliance Office
U.S. Department of Education
600 Independence Avenue, SW
Washington, DC 20202-4605

Last Modified: 07/28/1998