How to Prepare for a Program Review

An overview of program reviews, what it means for your institution and you can prep should you be selected

Few things create more anxiety than being informed your institution has been selected for a program review. For fiscal year 2018, the Department of Education issued nearly 300 final audit determination or expedited determination letters from program reviews. Every school that participates in student financial aid programs (Title IV) has the possibility of being selected for a program review. 

How Are Schools Selected for a Program Review?

The Department has identified criteria that will prioritize whether a school is selected for a program review.  The following schools are at a higher risk for a program review:

  • Those with high default rates
  • Schools with high annual dropout rates
  • Schools that have been cited by state or accrediting bodies for financial aid issues or had significant fluctuations in Title IV funding

The Department also reviews annual audits to see if schools were cited for administrative capability or failed financial responsibility requirements.  

The Types of Program Reviews

When a school is informed that they have been selected for a program review, the Department will identify whether the review is a general assessment, focused or a compliance assurance review.

General assurance review. This review is the most common one and is conducted to evaluate the school’s overall performance in meeting federal student aid administrative and financial compliance. 

Focused review. The focused review centers on specific areas of federal student aid program compliance. Some focus areas include:

  • Verification
  • high 90/10
  • professional overrides
  • return of Title IV funds (R2T4)
  • late refunds
  • credit balances
  • payment period calculations
  • institutional eligibility or satisfactory progress

Compliance assurance review. The compliance assurance review is the least common type of review. An example may be disclosure requirements to students or clery act requirements.

How are Program Reviews Conducted?

Program reviews are typically done onsite. However, the Department has requested files be sent to their offices with interviews to be conducted over the phone. Regardless of location or type of program review, the reviewers will look at no less than fifteen files. If error rates exceed acceptable limits, then additional files will be requested. A general assessment review can become a focused review if a large error rate occurs in a specific federal student aid compliance area. In addition to file review, the reviewers will conduct interviews of financial aid, registrar, admissions, fiscal as well as academic or education personnel. The reviewers may also request access to students for interviews and may also examine policies and procedures, fiscal records, security reports and consumer information (websites, catalogs, pamphlets, etc.).

How to Prepare for a Program Review

Here are ten things you can do to prepare for or limit your risk for a program review.

  1. Keep your default rate under 10%. We recommend diligent loan counseling and utilizing third parties if necessary, to lower your rate.
  2. Lower dropout rates. We recommend developing an enrollment process that ensures the students are well informed of all the resources the school provides and puts the student in a position to succeed.
  3. Taking immediate corrective action on state, accrediting and annual audits to the Department of Education. Repeat findings and unresolved findings from audits are issues which can trigger program reviews.
  4. Monitor your composite score throughout the year. Poor financial performance has been cited as a leading factor in recent years as to why schools have closed. Maintaining a composite score of 1.5 or higher is essential to not only limiting your exposure to a program review but ensuring the school can operate properly.
  5. Monitor your 90/10 ratio. Schools that rely more on financial aid are more likely to get a program review. A program review centered around 90/10 is an example of a focused review.
  6. Avoid unpaid credit balances and unpaid refunds (R2T4).  These liabilities need to be paid timely. We suggest having a system where two people are responsible calculate and pay with sign offs to document completion.
  7. Systemic reviews of your website and consumer information to stay current on all required disclosures.
  8. Review updates weekly to stay ahead of regulatory updates and changes
  9. Partnering with third parties who work with multiple schools to create best practices in all areas. Auditors, third party servicers, cybersecurity/website administrators, marketing companies, collection agencies and outside consultants are areas to review if you are partnering with industry experts.
  10. Know your regional contacts at the Department of Education and establish relationships. If you add a program, move a location, have an ownership change, are up for recertification or are celebrating a successful accreditation renewal, we suggest knowing your representatives at the department who navigate these areas.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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