1. Program Review Essentials and the Top 10 Compliance Findings
Presented by: Catherine M. Boscher-Murphy NJASFAA Conference March 2017

2. Program Review Essentials

3. What is a Program Review?
Method of oversight
Evaluates compliance with Title IV, HEA statute and regulations
Examination of financial aid, fiscal, and academic records
Interviews with institutional staff and students
Review of consumer information requirements
Identifies errors in compliance and liabilities owed
Tool to improve future institutional capabilities
Two parts – Program Review process and Compliance Audits
2009 Program Review Guide available on IFAP - There is a new PR Guide in the works but not published yet
Also information in the FSA Handbook – Vol. 2 Ch. 8
Check compliance requirements, financially solvent and administratively capable
Ensure files are in order
Reconcile monthly
Clear audit trail
Regulatory guidance – stay up to date

4. Why are Program Reviews Conducted?
Secretary of Education mandated by law under Section 498A of the Higher Education Act of 1965, as amended (HEA), 20 U.S.C. §1099c to conduct program reviews at institutions of higher education participating in the Title IV, HEA programs:
(a) GENERAL AUTHORITY - In order to strengthen the administrative capability and financial responsibility provisions of
this title, the Secretary -
(1) shall provide for the conduct of program reviews on a systematic basis designed to include all institutions of higher education participating in programs authorized by this title…
Written into federal law
Mechanism to ensure properly administration of taxpayer dollars

5. Who Conducts Program Reviews?
Federal Student Aid
Program Compliance
School Eligibility Service Group (SESG)
School Participation Division
Program Review Team
The Secretary of Education has delegated responsibility of conducting program reviews
8 regional FSA offices with HQ in DC
Program Compliance is one of the business unit of the regional offices
SESG – division within program compliance
SPD – formalizes PR teams – typically 2-3 people on team (can be from neighboring regions)
Institutional review specialists
Eligibility actions
Technical assistance
Program reviews

6. How Are Institutions Selected?
20 U.S.C. 1099c-1 (a)(2): (The Secretary) shall give priority for program review to institutions of higher education that are institutions with-
High cohort default rate or dollar volume of default (25%+)
– Direct or Perkins loans
Significant fluctuations in Federal Pell Grant or loan volume
Reported deficiencies or financial aid concerns by the state or accrediting agency
High annual dropout rates
Deficient Audits
Student complaints

7. How Are Institutions Selected?
Knowledge of fraud and abuse
Exceeding 90/10 ratios (proprietary)
Reconciliation issues or
Any other institution the Department determines may pose significant risk of failure to comply with administrative capability or financial responsibility requirements
Case management system to determine if Program Review is warranted

8. Preparation for Program Review
Receiving Notification of Program Review
Advance Notice Review
Short Notice Review
Third-Party Servicer Notification
Responding to Announcement Letter
Program Review notification is always in writing
Advance review is telephone notification 30 days prior
Short Notice Review is unannounced the day of – based on concerns of fraud and abuse or complaints – less common
Typically the scope is current AY and most recent completed award year
School must contact 3rd party servicer
Provide documentation prior to visit

9. Entrance Conference On-Site Program Review Off-Site Program Review
Introductions
Reason for Program Review and Scope
Overview of Program Review Process
Required Documents and Time Frames
Schedule Exit Conference
Getting Started
Off-Site Program Review
Conference Call
Usually Limited Scope
Program Review Process
Scope may expand during review with additional info request
List of students and required documentation provided at this time
Document student files as being reviewed under FERPA – statement is in Appendix E of PR Guide

10. Review of Institutional Processes and Data
Review Institutional Documents Collected
Catalog/Brochure/Handbook
Policies and Procedures
Published Campus Security Information
Student Consumer Publications
Online Student Consumer Information
Institutional Forms, Applications, and Worksheets
Many of the items here are submitted before the Review
Must provide unrestricted and timely access to institutional records

11. Review of Institutional Processes and Data
Review of Institutional Critical Elements
Three criteria for financial aid
Eligible Institution – eligible locations
Program Eligibility
Eligible Student
Appropriate accreditor approvals
Administrative Capability
Knowledgeable staff
Consumer Information
FSA Assessments – Consumer Information requirements

12. Review of Institutional Processes and Data
Campus Security
Documentation and reporting
Financial Responsibility
Financially healthy - Current on debt payments
Separation of duties
Fiscal Review
Cash management
Timely refunds
G5 activity
FISAP
FSA Handbook Vol. 2 Ch. 2 for Eligibility Requirements

13. Review of Student Level Information
Review of Student Critical Elements
Student Eligibility
Attendance
Cost of Attendance
Credit Balances
Enrollment Status
Dependency Overrides/Professional Judgment
Return of Title IV Funds
Satisfactory Academic Progress
Verification
Calculations/Disbursements
Entrance and Exit Counseling
Attendance at clock hour schools – complete hours in payment period before next payment
Credit balances – timely manner – 14 days
Disbursements based on enrollment status
Ensure documentation is in files for D/O’s and PJs
R2T4 – calculations accurate and refunds made timely
SAP met – review transcripts
Verification complete and adequate documents
Confirm EI and Exits

14. Review of Student Level Information
Records Reviewed in Student Files
Admissions
Academic
Financial Aid
Student Account Ledger
Student Records Compared to Department Data
NSLDS
COD
CPS
Student and Staff Interviews
NSLDS – defaults/overpayments, enrollment reporting, LEU for Pell
COD – disbursement dates, loan periods, academic year
CPS – eligibility issues, C Codes, Pell paid based on correct transaction

15. Exit Conference On-Site Program Review
Field Work Substantially Completed
Required Actions
Systemic issues – specific file review
Outstanding Items
Submit within 1 week of departure
Explain Preliminary Findings
Might mention liabilities
May be paid in advance but this negates your ability to appeal
Next Steps

16. On-Site Program Review Completed
Possible Outcomes
Additional Information Requested
Expedited Determination Letter (EDL) Issued
Program Review Report (PRR) Issued

17. Request For Additional Information
Institution requested to send documentation
Short time frame to provide information
Within 30 days
Possible outcomes if information not provided
Visit scheduled to review documents on-site
PRR includes findings otherwise omitted
PRR includes Lack of Administrative Capability finding
If documentation not provided, could lead to referral to Administrative Action

18. Expedited Determination Letter
EDL issued
No instances of non-compliance (findings) or only minor (non-systemic) findings identified
Any findings corrected prior to issuance of EDL
Any liabilities were paid/collected prior to issuance of EDL
Three standard sections
Scope of Review and Disclaimer
Findings, if applicable
Recommendations, if applicable
Sample template in Program Review Guide
EDL’s are less common that a report

19. Program Review Report
Identifies preliminary findings with regulatory citations
Actions required by institution
Standard sections
Cover page
Table of Contents
Institutional Information
Scope of Review and Disclaimer
Preliminary Findings and Required Actions
Recommendations, if applicable
Appendices and Enclosures
Sample template in Program Review Guide
Within 75 days of visit
May have additional findings after the reviewers work through their documents

20. Institution Responds to PRR
Written response
Submitted by due date
Concur or disagree with any PRR conclusions
Document Required Actions from PRR
Correct policy or procedure
Correct student-specific error
File review conducted
Provide information to quantify liability
Request extension of time for good cause
Within days
All findings addressed and back-up documentation submitted
If you disagree with any finding, must submit supporting documentation
If request extension, must be in writing with a reason why…will receive new due date if granted
in our case, we requested an extension for the file review only and submitted all other responses by initial date

21. Final Program Review Determination Letter (FPRD)
Department’s final determination for each finding
Identifies liabilities and provides payment instructions
Closes Program Review, if appropriate
State authorizing and accrediting agencies receive copies
Subject to FOIA (student specific info is not released)
Two types:
No further action required
Further action required for payment of liabilities
Sample template in Program Review Guide
Finalized PR reports are posted on a website.
COD or G5 adjustments may have to be made

22. FPRD Closeout Letter or Appeal of Monetary Liabilities
Issued after satisfactory response to FPRD
Not issued if institution files appeal
Appeal of Monetary Liabilities
Filed within 45 days
Collection efforts deferred on appealed liability amount
Non-appealed liabilities must be paid
Billing resumes if decision in Department’s favor
Not issued if you file an appeal for any finding

23. Top 10 Audit and Program Review Findings

24. Top Audit Findings Repeat Finding – Failure to Take Corrective Action
From annual audits/ A133’s
NSLDS Roster Reporting – Inaccurate/Untimely Reporting
Return to Title IV (R2T4) Calculation Errors
Return to Title IV (R2T4) Funds Made Late
Verification Violations
Listed by number of occurrences, not liabilities

25. Top Audit Findings 6. Pell Grants - Overpayment/Underpayment
7. Qualified Auditor’s Opinion Cited in Audit
8. Entrance/Exit Counseling Deficiencies
9. Student Credit Balance Deficiencies
10. Improper Origination of Direct Loans (new to list)
Borrower eligibility and correct student data

26. Top Program Review Findings
Crime Awareness Requirements Not Met (moved from # 5 spot)
Verification Violations
Return to Title IV (R2T4) Calculation Errors
Student Credit Balance Deficiencies
Drug Abuse Prevention Program Requirements Not Met
NSLDS Roster Reporting – Inaccurate/Untimely Reporting

27. Top Program Review Findings
7. Entrance/Exit Counseling Deficiencies
8. Consumer Information Requirements Not Met
Satisfactory Academic Progress Policy Not Adequately Developed/Monitored
10. Inaccurate Recordkeeping

28. Findings on Both Lists Return to Title IV (R2T4) Calculation Errors
NSLDS Reporting – Inaccurate/Untimely Reporting
Verification Violations
Student Credit Balance Deficiencies
Entrance/Exit Counseling Deficiencies

29. Panelist Review of Top 10 Findings

30. Verification Violations
Often due to human error
Verification documentation
Missing or incomplete
Incorrect or conflicting information
Untaxed income not verified
Conflicting data not resolved
Required corrections not processed
Regulations: 34 C.F.R. §§ and (f)
Stay current with federal regulations
Use FSA Assessments
FSA Handbook
Develop and maintain a PPM
Staff training

31. Student Credit Balance Deficiencies
Credit balance not released to student within 14 days
No process in place to determine when credit balance has been created
Non-compliant authorization to hold Title IV credit balances
Credit balances not released by end of loan period or award year
Regulations: 34 C.F.R. §§ (e) and (b)
Train across departments
Double check your timelines from student ledgers
7/1/16 Regulations - prohibit using student authorization forms unless you are HCM1 or HCM2 31

32. R2T4 Funds Made Late
Returns not made within 45-day allowable timeframe
Inadequate system in place to identify/track official and unofficial withdrawals
School’s policy and procedures not followed
No system in place to track number of days remaining to return funds
Regulations: 34 C.F.R. §§ (j) and (b)
Failure to make R2T4 payments demonstrates lack of administrative capability and constitutes a violation of regulation. Congress considers failure to make refunds a very serious matter and can lead to criminal penalties.
If required to submit a LOC letter of credit from a bank – financial instrument moderates risk of school – allows school to continue in Title IV programs

33. NSLDS Roster Reporting Inaccurate/Untimely Reporting
NSLDS Roster file (formerly called Student Status Confirmation Report [SSCR]) not submitted timely to NSLDS
Sent every 60 days – report within 15 days of receipt
Failure to provide notification of last date of attendance/changes in student enrollment status
Must be reported within 30 days or can wait if next roster is expected within 60 days
Failure to report accurate enrollment types and effective dates
Regulation: 34 C.F.R. § (b)
Hot topic with ED
Protects rights of borrowers – ensuring Interest subsidies are accurate
Repayment dates accurate
Automatic in school deferments granted
Critical data to USED regarding completion
Make sure your 3rd party servicer reports in timely manner – DCL GEN – this is a finding if not
Length of time = effective date (status change) and certification date – no more than 60 days
Does LDA conflict between attendance record or transcript
Changes in enrollment status updated
Is enrollment status accurate in NSLDS
solution – make sure someone on staff has on-line enrollment capabilities to make immediate revisions

34. SAP Policy Not Adequately Developed/Monitored
One or more missing required components in Satisfactory Academic Progress (SAP) policy
Qualitative, pace of completion, maximum timeframe, reestablishing aid eligibility (are these included in your policy?)
Improper use of financial aid warning, appeals, probation, and academic plans in SAP policy
Use terminology within regulation
Failure to consistently or adequately apply SAP policy
Aid disbursed to students not meeting SAP standards
Insufficient or missing documentation to support SAP
Regulations: 34 C.F.R. §§ (e), (f) &
Do you have an effective policy and do you monitor it?
7/1/11 SAP policy
Do you have all the components – incompletes, repeats, transfer credits, changes in major, etc.
As strict or stricter than academic policy
Not meeting standards:
Schools not having student appeal
Inadequate reasons for appeal
Insufficient documentation
Must state reason for poor performance AND the solution to get back on track (tutoring, counseling, etc.)
Is the reason for appeal outside of the control of the student?
Use SAP checklist, conduct random file reviews of SAPs

35. Pell Grant Overpayment/Underpayment
Incorrect Pell Grant formula - tends to be newer schools
Inaccurate calculations
Proration – often at clock hour schools
Incorrect EFC – disbursing based on wrong EFC
Incorrect number of weeks/hours – clock hour
Change in enrollment status
revise award between terms
Policy regarding changes within term (optional) – many schools use the Add/Drop period to define enrollment status
For clock hour schools, changes in enrollment not an issue because payment is based on completed hours
Regulations 34 C.F.R. §§ , , , &
Solutions:
Document your awarding and disbursement policies
Adjustment policies
Disburse after determining enrollment status

36. R2T4 Calculation Errors Institutional charges incorrect
Educational fees only – not library or parking fines
Actual clock-hours used instead of scheduled hours
Incorrect number of days used in term/payment period
Breaks of 5 days must include weekend before and after (9 days) if a M-F break
Include finals week if on calendar
Incorrect withdrawal date
Unofficial withdrawals – use mid-point or LDA
If use LDA, must document
Incorrect aid used as “could have been disbursed”
Was student eligible at time of withdrawal?
Regulation: 34 C.F.R. § (e) and (f)
R2T4 errors are very common
Solutions: QC sampling
Train staff
Use the FSA formula – if using a system (Banner/Colleague) – make sure the set up is accurate
Findings here are dollar to dollar for Pell and loans

37. Drug Abuse Prevention Program Requirements Not Met
Failure to conduct or establish biennial review
Looking at effectiveness of methods, data and results of programs
Disciplinary actions, counseling, campus police reports
Survey students
Failure to distribute annual written information to students and employees
Can with hyperlink
Missing description of health risks, counseling/treatment facilities, and legal sanctions imposed by jurisdiction
Missing statement of standards of conduct regarding institutional disciplinary actions and unlawful possession
Differential due to student type (athletes, etc.)?
Regulation: 34 C.F.R. §
Clery findings – fairly systemic at all schools
Have a qualified member of staff fun the drug/alcohol program
Findings are referred to Clery group for review – if findings stand, there will be fines
there is a dollar value for each incidence 37

38. Crime Awareness Requirements Not Met
Campus security policies and procedures not adequately developed
Annual report not published and/or distributed
Annual report missing required components
Violence Against Women Act (VAWA) requirements not met
Effective 2014
Regulations: 34 C.F.R. §§ , (c) &
# 1 finding
Very comprehensive requirements
Establish policies and procedures
Notifications: By 10/1 each year – students and staff; must provide to any new staff or student if after 10/1 – distribute each term and any new hire
Requires lots of statistics – many categories (report 0 if 0 but do not exclude)
locations – dorms, additional locations, non-campus places where students meet, adjacent and accessible public properties
May have to work with local police agencies – at MSU – three town…
Programs for preventions, timely warnings, fire safety if you have dorms

39. Repeat Finding – Failure to Take Corrective Action
Based on your annual audits
Failure to implement Corrective Action Plan (CAP)
CAP did not remedy the instances of noncompliance
Ineffective CAP used from previous year(s)
Internal controls not sufficient to ensure compliance with FSA guidelines
Regulations: 34 C.F.R. §§ and (a)

40. QUESTIONS?

41. SCHOOL ELIGIBILITY SERVICE GROUP (SESG)
Ron Bennett - Director, School Eligibility Service Group, Washington, DC (202) School Eligibility Service Group General Number: (202) or Or call the appropriate School Participation Division manager below for information and guidance on audit resolution, financial analysis, program reviews, school and program eligibility/recertification, and school closure information.
Atlanta School Participation Division
Alabama, Florida, Georgia, Mississippi, North Carolina,
South Carolina
Christopher Miller, Director (404)
David Smittick – Atlanta (404)
Vanessa Dillard – Atlanta (404)
Dallas School Participation Division
Arkansas, Louisiana, New Mexico, Oklahoma, Texas
Cynthia Thornton, Director (214)
Jesus Moya – Dallas (214)
Kim Peeler – Dallas (214)
Kansas City School Participation Division
Iowa, Kansas, Kentucky, Missouri, Nebraska, Tennessee
Ralph LoBosco, Director (816) Dvak Corwin – Kansas City (816)
Jan Brandow − Kansas City (816)
Angela Beam – Kansas City (816)
New York/Boston School Participation Division
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, New Jersey, New York, Puerto Rico, Virgin Islands
Betty Coughlin, Director (646)
Tracy Nave – Boston (617) Jeremy Early – Washington, DC (202) Chris Curry – New York (646)
Philadelphia School Participation Division
District of Columbia, Delaware, Maryland, Pennsylvania, Virginia,
West Virginia
Nancy Gifford, Director (215)
John Loreng – Philadelphia (215)
Sherrie Bell– Washington, DC (202)
Multi-Regional and Foreign Schools Participation Division
Michael Frola, Director − Washington, DC
(202)
Barbara Hemelt − Washington, DC (202)
Joseph Smith − Washington, DC (202)
Mark Busskohl – Washington, DC (202)
Michelle Allred – Dallas (214)
Chicago/Denver School Participation Division
Illinois, Minnesota, Ohio, Wisconsin, Indiana, Colorado, Michigan, Montana, North Dakota, South Dakota, Utah, Wyoming
Douglas Parrott, Director (312)
Earl Flurkey – Chicago (312)
Brenda Yette – Chicago (312)
Sarah Adams − (312)
San Francisco/Seattle School Participation Division
American Samoa, Arizona, California, Guam, Hawaii, Nevada, Palau, Marshall Islands, North Marianas, State of Micronesia, Alaska, Idaho, Oregon, Washington
Martina Fernandez-Rosario, Director
(415)
Gayle Palumbo − San Francisco (415)
or Seattle (206)
Dyon Toney − Washington, DC (202)
Erik Fosker – San Francisco (415)

42. Top 10 Resources for Compliance Solutions

43. Top 10 Resources FSA Assessments
Consumer Information/Campus Security
Return of Title IV Funds
Institutional Eligibility
Satisfactory Academic Progress
Verification
Fiscal Management

44. Top 10 Resources FSA Training http://fsatraining.info/
Fundamentals of Federal Student Aid Administration
FSA Coach
Consumer Information
Satisfactory Academic Progress
Institutional Eligibility
Recorded Webinars

45. Top 10 Resources Federal Student Aid (FSA) Handbook
Application and Verification Guide
Chapter 4: Verification, Updates, and Corrections
Chapter 5: Special Cases
Volume 1 (Student Eligibility)
Chapter 1: School-Determined Requirements
Volume 2 (School Eligibility and Operations)
Chapter 6: Consumer Information & School Reports

46. Top 10 Resources FSA Handbook
Volume 4 (Processing Aid and Managing FSA Funds)
Chapter 2: Disbursing FSA Funds
Chapter 3: Overawards and Overpayments
Chapter 5: Reconciliation in the Pell Grant and Campus-Based Programs
Chapter 6: Reconciliation in the Direct Loan Program
Appendix A: Accounting Systems
Volume 5, Chapter 1
(Withdrawals and the Return of Title IV Funds)

47. Top 10 Resources Code of Federal Regulations Title 34, Education
Part 84 (Drug Free Workplace)
Part 86 (Drug and Alcohol Abuse Prevention)
Part 99 (Family Education Rights and Privacy)
Part 600 (Institutional Eligibility under the Higher Education Act of 1965, as amended)
Part 668 (Student Assistance General Provisions)
Parts 673 – 676 (Campus-Based Provisions)
Part 685 (William D. Ford Federal Direct Loan Program)
Part 686 (TEACH Grant Program)
Part 690 (Federal Pell Grant Program)

48. Top 10 Resources Campus Security
Entrance/Exit Counseling
Return of Title IV (R2T4) on the Web
School Data on StudentAid.gov
Direct Loan School Guide ( )

49. Resources by Top 10 Findings

50. Resources by Top 10 Findings
Repeat Finding (Audit)
Regulations: 34 C.F.R. §§ and (a)
NSLDS Reporting – Inaccurate/Untimely Reporting
Regulation: 34 C.F.R. § (b)
Dear Colleague Letter: GEN-12-06
NSLDSFAP website - newsletter updates
“News & Events” along top of home page

51. Resources by Top 10 Findings
R2T4 Calculation Errors and R2T4 Made Late
Regulations: 34 C.F.R. §§ (e) and (f); (j) and (b)
FSA Assessments: Schools - R2T4
R2T4 Worksheets
Electronic Web Application (
Paper (FSA Handbook, Volume 5, Chapter 1)
Verification Violations
Regulations: 34 C.F.R. §§ ̶ (Subpart E) and (f)
FSA Assessments: Students - Verification
FSA Handbook, Application & Verification Guide, Chapters 4 and 5

52. Resources by Top 10 Findings
Pell Grants Overpayment/Underpayment
Regulations: 34 C.F.R. §§ , , , &
FSA Handbook, Volume 4, Chapter 3
Qualified Auditor’s Opinion Cited in Audit
Regulation: 34 C.F.R. § (d)(1)
FSA Coach
FSA Assessments
FSA Handbook, Volume 4, Chapters 5 and 6; Appendix A

53. Resources by Top 10 Findings
Entrance/Exit Counseling Deficiencies
Regulation: 34 C.F.R. §
FSA Coach, Lesson B-404: Direct Loan Entrance Counseling and
Lesson B-603: Exit Loan Counseling
FSA Handbook, Volume 2, Chapter 6
Student Credit Balance Deficiencies
Regulations: 34 C.F.R. §§ (e) and (b)
FSA Handbook, Volume 4, Chapter 2
Improper Origination of Direct Loan
Regulations: 34 C.F.R. §§
FSA Handbook,Volume 3, Chapter 5

54. Resources by Top 10 Findings
Crime Awareness Requirements Not Met and Consumer Information Requirements Not Met
Regulations: 34 C.F.R. Parts 86 and 99
Regulations: 34 C.F.R. §§ 668.6, (Subpart D)
Higher Education Act of 1965, as amended, Sec. 485
FSA Handbook, Volume 2, Chapters 6 and 7
Consumer Information Training
(Training by Topics)
FSA Assessments: Schools - Consumer Information
Consumer Information Disclosures At-A-Glance
The Handbook for Campus Safety and Security Reporting

55. Resources by Top 10 Findings
Drug Abuse Prevention Requirements Not Met
Regulation: 34 C.F.R. Part 86
FSA Assessments: Schools - Consumer Information
Consumer Information Disclosures At-A-Glance
FSA Handbook, Volume 2, Chapter 6
Inaccurate Recordkeeping
Regulations: 34 C.F.R. §§ and (b)
FSA Handbook, Volume 2, Chapter 7

56. Resources by Top 10 Findings
Satisfactory Academic Progress Policy Not Adequately Developed/Monitored
Regulations: 34 C.F.R. §§ (e), (f) &
FSA Assessments: Students - Satisfactory Academic Progress (SAP)
FSA Handbook, Volume 1, Chapter 1
Satisfactory Academic Progress Training
(Training by Topics)