Tips for Title IV Authorizations

SFlaherty-100x125The responsibility for collecting and maintaining students’ and parent borrowers’ authorizations for the treatment of their Title IV funds requires collaboration and cooperation among multiple offices. In my role as a consultant, I’ve found that the responsibility for collecting and maintaining these authorizations typically resides in the student accounts office or financial aid office. Less typically, the responsibility resides in the registrar’s office or (gulp) nowhere at all. No matter where the responsibility resides (if your institution awards Title IV funds, it has to reside somewhere), it’s important that the information is collected and maintained with two goals in mind: the process complies with Title IV regulations and the information is easily accessible to whichever offices need it to perform their professional duties.

The 2013-2014 Federal Student Aid (FSA) Handbook, Volume 4 should be your primary guide for ensuring the authorizations for your students and parents are compliant with federal regulations. My goal here is to supplement the Handbook guidance with some practical, real-world advice based upon my experience working in bursar’s offices and as a consultant. You may consider some of the information below as obvious, but I assure you there are institutions that aren’t aware of these points. Take a few minutes and make sure yours isn’t one of them.

You’ll also find a sample student authorization form posted here, which can be downloaded for your school’s use. Whether you use a paper or online process for collecting the authorizations, consider this example only as a starting point for creating a form(s) that is specific to your institution’s needs.

  1. As mentioned above, your institution should have an authorization for students and another for parent PLUS borrowers, or a version that may be used by either the student or the parent. PLUS funds in the parent borrower’s name get treated just the same as any other FSA funds awarded in the student’s name. The only reason you wouldn’t have a parent-friendly authorization is if your institution does not award PLUS. However, if you award PLUS, you need to have a parent-friendly authorization and a process to implement the authorizations indicated on the form.
  2. In my capacity as a consultant, in some cases when I’ve asked to review a client’s existing authorizations, I’ve been told they don’t have any because: “due to our cost, we never have excess funds” or “we never charge anything to student accounts except tuition, fees, room, and board.” My response is: “never say never.” In each instance where I’ve heard these (and many other, similar) rationales for not having the required authorizations, my review of student account data revealed un-refunded credit balances, fines, interest charges, and more; all of which would require student or parent borrower authorizations. These occurrences may be rare, but they do happen and they’re a compliance risk. Unless you’re willing to put your energies into ensuring that your institution truly never uses Title IV funds in a manner that would require prior authorization, you should have the authorizations available and a well-defined process to implement them.
  3. Keep the authorizations simply worded and easy to understand. This makes obtaining and managing the authorizations that much easier. The wording in the example at the link above is meant to convey the ideas behind each type of authorization in a straightforward manner that should require little additional explanation. Some authorizations I’ve reviewed use language that is so convoluted I wouldn’t consent to what’s stated, even though I know what the language is attempting to convey.
  4. I recommend allowing students and parents to accept/reject each type of authorization separately (as shown on the sample form).  Although the 2013-2014 FSA Handbook states that “a school may include two or more of the items that require authorization in one statement” (Volume 4, Chapter 2, p 4-25), I’ve found that it is ultimately easier to keep them separate from one another. When combined, the authorizations often become convoluted, making them harder to understand, which results, understandably, in more questions from students and parents about what they’re authorizing. Keeping the authorizations separate reduces student and parent confusion and allows for clearer implementation of the authorizations by a school. Admittedly, separating the authorizations increases the institutional oversight needed to manage them, but I’ve found that recording the authorizations in this manner is ultimately beneficial to students, parents, and the school. The school’s student information system and its reporting are very important tools to help mitigate the impact of managing the separate authorizations.
  5. Next, make certain the forms include specific information related to how the authorizations may be updated or rescinded. I’ve seen more than a few paper authorizations that state either nothing about how this may be done or simply state: “these authorizations may be updated by contacting the bursar’s office in writing” with no additional instructions about how to do so (i.e., to which email address, postal address or fax number the request should be sent). Online or electronic collection of the authorizations should ideally include a link to an instruction page about how changes may be submitted.

Finally, I reiterate, use the 2013-2014 FSA Handbook, Volume 4 as your primary guide, but keep the above points in mind. Navigating the space between what’s required by regulation and what works in reality can be tricky. Hopefully I’ve helped to bridge the gap here.

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