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General Institutional Responsibilities

PublicationDate: 7/1/95
ChapterNumber: 2
ChapterTitle: General Institutional Responsibilities
SectionNumber: 6
SectionTitle: Evaluating Your Management of Student Financial Aid Programs
PageNumbers: 42-45

2.6 Evaluating Your Management of Student Financial Aid

Schools should evaluate the way they administer Title IV programs
on a regular basis. This is a priority of the U.S. Department of
Education, as well as of the professional communities of business
officers and financial aid administrators.

((Goals of evaluation))
Evaluating Title IV administration serves many purposes, two
important ones being to ensure that the school is complying with
statutory and regulatory requirements and to identify school policies
and procedures that need updating or revising.

All schools that participate in Title IV financial aid programs must
ensure that their student aid operations, procedures, and policies
remain in compliance with statutory and regulatory requirements.
Failure to do so may have serious consequences:

((Consequences of non-compliance))

- Institutional liabilities--The school will be required to repay any
misused funds to ED.

- Inequitable student aid distribution--Students at the school may be
awarded less or more aid than they are entitled to receive.

- Possible fines, limitation, suspension, or termination--If audits and
program reviews identify serious instances of non-compliance,
inappropriate use of funds, or fraud, the school may be subject to
emergency action by ED and may ultimately lose its eligibility for
federal student aid programs.

- Debarment--Individuals found responsible for fraud or serious
misuse of federal funds may be barred from involvement in any
federal programs.

((Evaluation methods))
The primary methods for evaluating an institution's management of
Title IV programs are:

- self-evaluation,

- peer evaluation,

- ED's Institutional Quality Assurance Program (IQAP),*8*

- federal program reviews and audits,

- compliance and financial audits, and

- State Postsecondary Review Entity (SPRE) reviews.

The last three methods (audits and reviews) are required and are
conducted by third parties. These procedures are discussed in
Chapter 6 of this guide. The following three sections are discussions
of evaluation methods that are strongly recommended; they are not

2.6.1 Self-Evaluation

Institutional self-evaluation provides a way of maintaining internal
quality control and serves as an effective management tool. The
process helps a school detect and correct small problems before they
become potential sources of liability. Self-evaluation also helps the
school prepare for future program reviews and audits. A self-
evaluation might include:

((Components of self-evaluation))
- reviewing a representative sample of student files,

- reviewing written policies and procedures, and

- observing activities such as loan counseling sessions.

A publication that can help schools develop comprehensive
evaluation systems is The Institutional Guide for Financial Aid Self-
Evaluation, published by the National Association of Student
Financial Aid Administrators (NASFAA). The publication provides
a step-by-step outline for reviewing financial aid and fiscal policies,
procedures, and practices. The guide can be ordered by calling
NASFAA at 202-785-0453.

2.6.2 Peer Evaluation

Peer evaluation is another technique for obtaining an independent,
objective review of an institution's administration of Title IV
programs. The peer evaluator can be a financial aid administrator or
fiscal officer from another school or a financial aid consultant.

((Exchange of ideas))
In a peer evaluation, both sides benefit. The school being evaluated
obtains an objective evaluation of its operation from someone at a
similar institution, while the person performing the evaluation gets a
first-hand look at how another school manages financial aid
programs. Comparing notes and exchanging ideas are methods by
which colleagues in financial aid offices and business offices can
share their expertise for the good of all.

2.6.3 Institutional Quality Assurance Program

The Institutional Quality Assurance Program (IQAP) was formally
established by the Higher Education Amendments of 1992. The
program had existed previously only as a pilot project.

Under IQAP, schools establish formal quality-control programs that
are intended to minimize program errors and improve the school's
administration of Title IV programs. IQAP takes a proactive
approach, in that it focuses on preventing problems and improving
existing procedures rather than penalizing institutions for errors and
mismanagement of programs.

Schools that participate in IQAP are exempt from certain ED
reporting and verification requirements if their institutional quality-
control measures duplicate these requirements.

Schools that are interested in participating in IQAP should contact
ED's Performance and Accountability Improvement (PAI) staff at

*8*Please note that Direct Loan schools are required to submit a
separate Quality Assurance Plan that is not part of IQAP.

Last Modified: 06/30/1995