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Ed Dept Cold Cases

October 15, 2013

It’s a case of either colossal inefficiency or supreme accountability.

Earlier this year, the Education Department suddenly told officials at two universities they needed to pay up for minor infractions of federal student aid rules alleged to have occurred from 1994 to 1996.

The institutions -- the University of Colorado at Boulder and Yale University -- had initially objected to the fines when, in 1998, the Education Department’s Office of Inspector General issued reports finding them at fault for going too far in exercising discretion over how it awarded federal financial aid to students. 

Under federal law, college financial aid officers are permitted to use their own “professional judgment” in determining whether special circumstances exist for a student that would entitle him or her to more federal financial aid.

In 1997, the Education Department’s inspector general launched an audit into the University of Colorado’s use of “professional judgment” for the 1994-95 and 1995-96 academic years. Those investigators issued a report in July 1998 that concluded that the university misused its discretion, and sought a repayment of funds.

The university objected to the OIG report, but was informed in December 2000 that the Education Department had decided to hold off on deciding whether to impose the fines because it wanted to wait until litigation was resolved in other, similar cases.

Then, in April of this year, the university received a notice from the department in which the department decided to accept the recommendation of the 1998 report and impose a fine of $305,561.

In a letter to the department this summer, Chancellor Philip P. DiStefano protested the department’s “unreasonable and unwarranted delay” in adjudicating the case, and says that many of the original records from the financial aid office had since been destroyed and that people involved in the financial aid packages at issue had since retired, left the university, or died.

“If the audit had been resolved in a timely fashion, the documents and the personnel who could have allowed CU to effectively defend its exercise of discretion would have been available,” DiStefano wrote. “Instead CU is left to reconstruct events that occurred a decade and a half ago.”

The University of Colorado has since entered into a settlement with the Education Department to resolve the case. That settlement would require the university to pay $40,000 and is currently pending review from the Department of Justice, said Bronson R. Hilliard, a Colorado spokesman.

In Yale’s case, which played out along the same timeline as Colorado's, the university settled the matter with the Education Department in August, agreeing to pay $9,288, according to a university spokesman, Thomas Conroy.  

“We continue to be mystified by the fact that the department surfaced this issue after 15 years of silence to our response,” Conroy said. “We think it is fair to expect that an agency audit should be concluded within a reasonable time frame.”

An Education Department spokesman declined to comment on the cases.

Neither case involves allegation of widespread fraud or a serious misuse of federal money. In opening the cases against the two universities, the department had been seeking to recover just several hundred thousand dollars, an infinitesimal amount of the $150 billion each year that the federal government disburses in financial aid.

Advocates for colleges and universities said that the lengthy delays highlight serious unfairness in how the department reviews allegations of wrongdoing against colleges and universities.

“It's not news that the department takes a long time to reach decisions,” said Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education. “But this goes well beyond anything we've ever seen before.”

Justin Draeger, president of the National Association of Student Financial Aid Administrators, called the delays “outrageous” and said that his organization will be pushing for legislation that caps the amount of time the Education Department has to make a decision when it reviews an institution’s financial aid program.

“The issue is: what’s the point of a program review?” Draeger said. “Is it to right wrongs or is it really about being punitive?”

“If there are existing rules that are so unclear or so insufficient where the department doesn’t immediately know how to resolve them, then how would it be reasonable to hold a school responsible for knowing?” he added. 

 

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