The purpose of this section is to acquaint readers with The Blue
Book--its purpose, content, and format--so that they can make the
best possible use of The Blue Book as a resource tool.
The Blue Book
The Federal Student Financial Aid Handbook
Purpose of The Blue Book
The primary purpose of The Blue Book is to provide guidance to
school business office personnel who handle fiscal recordkeeping,
accounting, and reporting functions for Title IV financial aid
programs. However, it also provides general information about Title
IV programs, policies, and procedures that will be useful to other
institutional personnel involved in administering and managing Title
When an institution signs a Title IV Program Participation
Agreement (PPA), it accepts responsibility for various accounting,
recordkeeping, and reporting responsibilities related to Title IV
programs. Some procedures discussed in The Blue Book are
recommended ones that will help an institution meet these fiscal
responsibilities, while other procedures are required by federal laws
((Manual and automated systems))
The procedures outlined in The Blue Book can be used by small or
large institutions and by institutions that use manual and/or
automated systems to manage fiscal operations. However, given that
many postsecondary institutions, as well as the U.S. Department of
Education (ED), have moved into the "information age," this edition
of The Blue Book gives special emphasis to electronic management
of Title IV programs. ED now requires that schools use automated
methods to meet certain Title IV reporting requirements, such as for
the Fiscal Operations Report and Application to Participate (FISAP).
Other required reports, such as Federal Pell Grant payment reports,
will soon be fully automated as well.
((ED training programs))
ED encourages schools that have not yet automated their fiscal and
financial aid operations to do so in the near future. ED offers
training for many of the electronic systems and programs it
administers, such as the Electronic Data Exchange (EDE) and the
software that supports the William D. Ford Federal Direct Loan
Program; schools should take advantage of these training
opportunities as they arise. Notices of ED-provided classroom
training programs and videoconferences are sent to school financial
aid offices and fiscal offices on a regular basis.
The goals of any information-management system, be it manual or
automated, are to maintain accurate, well-organized records; submit
required reports in an accurate and timely manner; comply with
federal laws and regulations; and provide quality service to students.
The Blue Book is designed to help schools achieve these goals.
Contents of The Blue Book
The Blue Book may be used by both novice and experienced fiscal
officers. It is recognized that the level of expertise of school
personnel using the book will vary with their knowledge of
accounting and Title IV programs. For this reason, The Blue Book
provides a basic overview of Title IV programs, institutional
responsibilities, and general fiscal procedures, as well as detailed
information on accounting functions, cash management, and
reporting requirements. The flowchart on page 6 summarizes the
contents of The Blue Book.
CHAPTER 1 provides an overview of Title IV programs. It begins
with a discussion of Title IV of the Higher Education Act of 1965, as
amended (HEA) and related issues, then summarizes each Title IV
program. Chapter 1 also addresses the fiscal calendar and defines
related terms such as "academic year" and "award year."
CHAPTER 2 discusses general institutional responsibilities related to
managing Title IV programs. It includes topics such as financial
responsibility, administrative capability, responsibilities of school
offices, information disclosure requirements, refunds and
repayments, and record maintenance and retention.
CHAPTER 3 addresses fiscal procedures unique to managing Title
IV campus-based programs. It explains how schools apply for and
receive campus-based funds, how they may use these funds, and how
they must manage them.
CHAPTER 4 provides a comprehensive discussion of obtaining,
managing, and returning Title IV funds. It deals with much of the
day-to-day work of the fiscal office. Its topics include projecting
cash needs, drawing down funds, and disbursing funds to students.
In addition, this chapter covers much of the information contained in
the comprehensive cash management regulations issued in December
1994 that became effective July 1995.
CHAPTER 5 describes specific accounting procedures used to
manage Title IV program funds. The chapter uses a fund accounting
approach to explain how schools should establish, maintain, and
reconcile Title IV program accounts.
CHAPTER 6 addresses Title IV reporting requirements. It begins
with a discussion of specific reports required by non-campus-based
Title IV programs, then gives an overview of the FISAP (the report
schools use to apply for and report on Title IV campus-based funds).
The Department of Education Payment Management System
(ED/PMS) is also covered, and the chapter closes with a discussion
of audits and program reviews.
The appendices are designed to supplement the information
presented in the main chapters of The Blue Book:
- Appendix A is a comprehensive glossary of terms related to Title
IV accounting, recordkeeping, and reporting requirements.
- Appendix B provides a list of commonly used acronyms.
- Appendix C lists published information sources that supplement
and support the information provided in The Blue Book.
- Appendix D tells fiscal officers who to contact for technical
- Appendix E provides detailed descriptions of each Title IV
program--how students apply for funds, how awards are
determined, and how funds are disbursed.
- Appendix F is an "accounting primer" for non-Title-IV specialists,
designed to help novice fiscal officers understand how basic
accounting principles apply in managing Title IV program funds.
Format of The Blue Book
The format of this edition of The Blue Book was conceived with a
single goal in mind--to make The Blue Book a user-friendly
publication. The book is designed so that section headings stand out,
and information mapping (margin notes) helps readers locate topics
Each chapter begins with an Executive Summary that gives an
overview of the chapter. It is followed by a list of Key Terms
covered in the chapter. Readers can use these devices to help
determine if a particular chapter contains the reference information
they need. In addition, margin notes help lead readers directly to
needed information. Ample white space is provided in the outer
margins of pages so readers can make notes or record questions.
All forms, charts, tables, and other samples are located at the ends of
the chapters where they are discussed. This organization simplifies
finding a form or chart needed only for reference.
The Blue Book has been designed as a loose-leaf publication so that
users can add their own related information, such as institutional
policies and forms.
Using The Blue Book at Your School
The Blue Book can perform a number of different functions for a
school. For example, it can:
- be used as a training guide for new employees,
- serve as a reference manual, and
- form the basis for a school's fiscal policies and procedures
Regardless of the way(s) in which schools use The Blue Book, they
must remember that it is only a guide and does not replace federal
laws, regulations, or generally accepted accounting principles
(GAAP). School personnel are still responsible for familiarizing
themselves with all relevant primary source documents.
((The Federal Student Financial Aid Handbook))
The Blue Book's companion publication is The Federal Student
Financial Aid Handbook (the Handbook); it is referenced frequently
throughout The Blue Book. The Handbook is published by ED each
year, and the new edition is mailed to school financial aid offices
each June or July. Fiscal office personnel should know where to
locate their school's copy of the Handbook, and they might want to
copy pertinent sections for their own use.
Another ED publication that is vital to the work of a fiscal officer is
the Department of Education Payment Management System
(ED/PMS) Recipient's Guide (the most recent edition was published
October 1993), which provides information on systems operations
and procedures for federal funds paid to schools through
ED/PMS.*1* The Recipient's Guide helps schools understand their
responsibilities in expediting payments, completing forms and
reports, and controlling federal cash received through ED/PMS.
These and other publications and printed materials of interest to
fiscal officers, and information on how to order them, are listed in
Appendix C, "Key Resources," of this book.
This edition of The Blue Book is written on the basis of laws,
regulations, policies, and procedures enacted, issued, or published by
December 1, 1994 and effective for the 1995-96 award year.
Schools should be aware, however, that laws, regulations, policies,
and procedures are subject to change. It is a school's responsibility
to keep abreast of such changes so that it remains in compliance with
[[The graphic, entitled "Overview of The Blue Book," on page 6 is
not currently available for viewing. Please reference your paper
copy for additional information.]]
*1* Please note that after the October 1993 edition of the Recipient's
Guide was published, ED issued replacement pages for Chapter 3
and a new appendix on the Automated FEDWIRE System (Appendix