Overview of the Amended Title IV Regulations

The amended Title IV regulations went into effect on July 1, 2024. If your higher education institution receives Title IV funds, we recommend that you familiarize yourself with these regulations now to ensure compliance.

The U.S. Department of Education (ED) amended the Title IV regulations to strengthen its ability to promptly identify high-risk events. The amended regulations relate to four areas:

• Financial responsibility
• Administrative capability
• Certification procedures
• Ability to Benefit (ATB)

While all four areas are important to understand, this article focuses on financial responsibility.

Amended Financial Responsibility Regulations

With the Free Application for Federal Student Aid (FAFSA) delays, institutions’ enrollment numbers and related net tuition and housing income are at risk. This can create challenges for many institutions, especially alongside ongoing inflation, higher interest rates, and uncertainty about donor contributions and state and federal funding.

It is not surprising that ED is seeing an increase in the number of institutions closing with little warning. We serve higher education institutions across the U.S. and have observed a downward trend in ED composite scores over the years, especially post-CARES Act funding. ED’s oversight is necessary not only to secure the federal loans issued but, more importantly, to protect students from a sudden closure of their institution, which can affect students’ ability to complete their intended degrees.

The amended regulations enable ED to monitor institutions’ ability to meet:

• Four specific financial and administrative obligations;
• 14 mandatory triggers; and
• 14 discretionary triggers.

If ED deems an institution is not financially responsible, it can require the institution to provide financial protection, often in the form of a letter of credit. Multiple letters of credit may be required if ED determines that there are differing instances of noncompliance.

Notification Requirements

Institutions must notify ED no later than 21 days after any of the following events occur.

Ability to meet financial or administrative obligations if an institution:

• Fails to make repayments for any debt (or liability) arising from its participation in Title IV.
• Fails to make a payment regarding an undisputed financial obligation for more than 90 days.
• Fails to satisfy payroll obligations.
• Borrows funds from retirement plans or restricted funds without authorization.

Mandatory and discretionary triggers:

See our summary here. The ED Office of Federal Student Aid (FSA) has provided a summary of changes with additional information.

If any of the mandatory or discretionary triggers are applicable to your institution, refer to this FSA announcement for further guidance on the documentation requirements.

Triggering events must be reported by:

• Using the Document Center on the Common Origination and Disbursement (COD) website to submit the required information and documentation; and
• Emailing the FSA Financial Analysis Division at [email protected].

Please see this FSA announcement for the steps to submit triggers using the COD Document Center, the subject line naming convention, and other information required for email submissions.

Taking steps to prepare for the amended regulations can help your institution be proactive and avoid noncompliance issues, which can be costly and time-consuming. Contact our higher education professionals with questions or to discuss how we can support your institution.