Federal Update 8
July 8, 2009
CONGRESSIONAL DEVELOPMENTS
IU's Efforts to Reduce Federal Financial Aid Regulations May Continue
The number of regulatory requirements imposed on colleges and universities by the U.S. Department of Education (DOE) has ballooned over the past few decades, particularly those schools participating in federal student aid programs. Out of concern that a significant number of these regulations were costly and possibly unnecessary, DOE initiated a program in the mid-1990's to test their effectiveness and utility.
The program, called the Experimental Sites Initiative (ESP), allowed DOE to waive some of the regulatory and reporting mandates imposed on certain schools enrolled in the DOE student aid programs. Instead of having to comply with the federal rules, the selected schools could develop alternatives to the federal requirements using accepted research methodology. The research affirmed that the less burdensome approaches did not diminish the integrity of the aid programs.
Data from the results of these experiments were to be evaluated by DOE. If the alternative approaches were found to be less costly and/or less burdensome and did not reduce the integrity of the program, these methods could be adopted by other schools. Unfortunately, DOE never fully evaluated the data, nor did the agency ever identify any successful experiments, which could be replicated at other universities. Instead, DOE informed all universities participating in the ESP this past January that as of June 30 of this year, the experiments were to be terminated and schools would be required to implement the regulations as promulgated, regardless of the increase cost and manpower requirements.
Four IU campuses -- Bloomington, Indianapolis, South Bend and Kokomo -- have participated in the ESI for more than a decade. On each of those campuses, the financial aid offices were authorized to bypass certain regulatory requirements they deemed ineffective and unhelpful. Instead, they were allowed to act in the best interest of the students and disregard certain federal mandates.
As an example, current DOE regulations require written permission to be obtained from students or parents before an institution may credit Title IV aid to institutional charges (such as athletic tickets and student health center fees). As an ESP, IU is exempt from this requirement and was authorized to allow more than 10,000 students to use federal funds to pay these costs without the time and expense of completing written authorization as required by current regulations. Bypassing the written authorization requirement did not result in any waste or fraud. But, it did allow the process to proceed in a more efficient and less costly way.
While this is just one example, efforts like this to chip away at the bureaucratic mandates imposed on universities should be supported. Fortunately, Congress appears to agree with this notion and directed DOE to allow these experiments to continue through June 30, 2010, and to replace current regulations with experiments which accomplished the same objective at a reduced cost or a reduced manpower need. The IU experiments may continue through next year.
