Department of Education Releases List of Schools Under Financial Sanctions
Posted By Candace Talmadge on April 24, 2015 at 9:30 am
The U.S. Department of Education’s previously secret and much-discussed financial scrutiny list should not be a major factor when students and their parents make the decision to apply to a school, according to experts familiar with the issue.
The federal education agency has made public for the first time the names of about 560 colleges and universities it has placed on two levels of heightened cash monitoring as of March 1, 2015. The department has restricted the schools’ access to federal student aid dollars because of concerns that could include accreditation issues, late or missing annual financial statements and/or audits, outstanding liabilities, denial of re-certifications, questions about administrative capabilities, financial responsibility issues, and possibly severe findings uncovered during a program review.
Not a concern for families
Experts say that the heightened cash monitoring should not be a major concern for students and their families. “I wouldn’t get too worried about whether a school is going to survive merely because it appears on this list,” said Mark Kantrowitz, Edvisors.com publisher and author of Filing the FAFSA. “It’s much more important to look at things like the graduation rate of the school, the default rate on student loans of students who graduated from that school, and whether it has proper accreditation.”
“Just because you tell me a school is on heightened cash monitoring does not necessarily mean anything’s wrong,” said Dennis Cariello, an attorney who heads the education practice at Hogan Marren Ltd. in New York. “Students and parents should be looking at the things they have historically looked at.”
Cariello explained that the federal education agency has wide discretion over whether it places schools on the list. While this is good stewardship over taxpayer dollars, it makes it difficult to understand the true status of a school on the list. “That’s the problem with this metric,” he said. “It doesn’t tell a consumer a heck of a lot because there are so many ways an institution can be put on this list.”
Cariello added that none of his client institutions have told him about any questions about their HCM status, most likely because the list has not been public for very long. He has advised his clients to be prepared to explain their status should prospective students or their families ask about it.
What does heightened cash monitoring mean?
Under both levels of scrutiny, the institution must first disperse loans and grant money and then apply for federal reimbursement. Under HCM2, however, the institution must supply detailed information on each aid recipient before it obtains federal dollars, and may be under some form of review or investigation. Institutions not on the list receive federal aid dollars before handing it out to students. Last year, for-profit Corinthian Colleges, Inc. had to sell its assets after the education department placed it on HCM1 with an additional 21-day delay in reimbursement requirement, and the college lacked the cash to weather the gap.
The majority of colleges on the list are private, for-profit schools. But there are also public, non-profit, private non-profit, and non-U.S.-based institutions in the mix, too. One unexpected name on the HCM1 list is a private college with a good reputation, San Francisco Conservatory of Music. Additionally, eight of the roughly 100 historically black colleges and universities in the United States are on the list – that near-8 percent proportion is almost four times the overall 2 percent rate of colleges and universities on heightened cash monitoring.
This article was contributed to GoodCall by Candace Talmadge. Candace has been a professional writer since 1976. She has been on staff or reported and written freelance for media that includes Adweek, Advertising Age, BusinessWeek, the Dallas Times Herald, the International Herald Tribune, The New York Times, and Reuters America. Under the pen name C.L. Talmadge, she is the author of the Green Stone of Healing® speculative fiction series and in late spring is publishing her second nonfiction book, The Afterlife Healing Circle.
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