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AwardYear: 1998-1999 EnterChapterNo: 3 EnterChapterTitle: Institutional Eligibility and Administrative Requirements SectionNumber: 7 SectionTitle: Recordkeeping and Disclose PageNumbers: 153-164 hb3-158.pdf   The General Provisions regulations require schools to maintain records related to their participation in the SFA Programs. These records must be made available by the school to representatives of the Department and other specified individuals or organizations in the course of audits, program reviews, investigations, or other authorized reviews. The Improving America's Schools Act of 1994 (Public Law 103- 382) amended the General Education Provisions Act to require a school to keep records for three years rather than five years. Although institutional recordkeeping requirements for all SFA Programs have been consolidated into the General Provisions regulations, schools must also comply with all applicable program- specific recordkeeping requirements contained in the individual SFA Program regulations. This section describes recordkeeping and disclosure requirements, including a discussion of the Family Educational Rights and Privacy Act (FERPA), which restricts the disclosure of student records to other parties and requires the school to give a student the opportunity to review his or her records. REQUIRED RECORDS ------------------- A school must keep comprehensive and accurate program and fiscal records related to its use of SFA funds. The importance of maintaining complete and accurate records cannot be overemphasized. Program and fiscal records must demonstrate the school's eligibility for participation in the SFA Programs and show a clear "audit trail" for SFA Program expenditures. Records must be kept to demonstrate proper administration of SFA Program funds. For example, records for each SFA recipient must clearly show that the student was eligible for the funds received, and that the funds were disbursed in accordance with program regulations. [[Program records]] A school must establish and maintain on a current basis any application the school submitted for SFA Program funds. A school must also maintain on a current basis program records that document - the school's eligibility to participate in the SFA Programs, - the SFA eligibility of the school's programs, - the school's administration of the SFA Programs, - the school's financial responsibility, - information included in any application for SFA Program funds, and - the school's disbursement and delivery of SFA Program funds. Program Records a School Must Maintain The program records that a school must maintain include, but are not limited to - Program Participation Agreement - Accrediting and licensing agency reviews, approvals, and reports - State agency reports - Audit and program review reports - Self-evaluation reports - Other records, as specified in regulation, that pertain to factors of financial responsibility and standards of administrative capability [[Fiscal records]] A school must keep fiscal records to demonstrate its proper use of SFA funds. A school's fiscal records must provide a clear audit trail that shows that funds were received, managed, disbursed, and returned in accordance with federal requirements. Schools are required to account for the receipt and expenditure of all SFA Program funds in accordance with generally acceptable accounting principles. A school must establish and maintain on a current basis - financial records that reflect each SFA Program transaction, and - general ledger control accounts and related subsidiary accounts that identify each SFA Program transaction, and separate those transactions from all other institutional financial activity. Fiscal Records a School Must Maintain The fiscal records that a school must maintain include, but are not limited to - Records of all SFA Program transactions - Bank statements for all accounts containing SFA funds - Records of student accounts, including each student's institutional charges, cash payments, SFA payments, cash disbursements, refunds, and repayments required for each enrollment period - General ledger (control accounts) and related subsidiary ledgers that identify each SFA Program transaction (SFA transactions must be separate from school's other financial transactions) - Federal Work-Study payroll records - Records that support data appearing on required reports, such as + Pell Grant Statements of Accounts + ED Payment Management System cash requests and quarterly or monthly reports + SFA Program reconciliation reports + Audit reports and school responses + State grant and scholarship award rosters and reports + Accrediting and licensing agency reports In addition, a school must maintain the following records that pertain to the general administration of SFA Program funds. General Records a School Must Maintain A school must maintain records for each SFA recipient that include, but are not limited to - The Student Aid Report (SAR) or Institutional Student Information Record (ISIR) used to determine a student's eligibility for SFA funds - Application data submitted to the Department, lender, or guaranty agency by the school on behalf of the student or parent - Documentation of each student's or parent borrower's eligibility for SFA Program funds (e.g., records that demonstrate that the student has a high school diploma, GED, or the ability to benefit) - Documentation of all professional judgement decisions - Financial aid history information for transfer students - Cost of attendance information - Documentation of a student's satisfactory academic progress - Documentation of a student's program of study and courses in which enrolled - Data used to establish student's admission, enrollment status, and period of enrollment - Required student certification statements and supporting documentation - Documents used to verify applicant data - Documentation relating to each student's or parent borrower's receipt of SFA Program funds, including but not limited to + The amount of the grant, loan, or FWS award; its payment period; its loan period, if appropriate; and the calculations used to determine the amount of grant, loan, or FWS award, + The date and amount of each disbursement or delivery of grant or loan funds, and the date and amount of each payment of FWS wages, + The amount, date, and basis of the school's calculation of any refunds or overpayments due to or on behalf of the student, and + The payment of any refund or overpayment to the SFA Program fund, a lender, or the Department, as appropriate. - Documentation of and information collected at any initial or exit loan counseling required by applicable program regulations In addition, a school must maintain records that include, but are not limited to - Reports and forms used by the institution in its participation in an SFA Program, and any records needed to verify data that appear in those reports and forms - Documentation supporting the school's calculation of its completion or graduation rates, and transfer-out rates (see Section 8) In addition - participants in the Perkins Loan Program must follow procedures in Section 674.19 for documentation of a repayment history for each borrower for that program (see Chapter 6), - participants in the FWS Program must follow procedures established in Section 675.19 for documentation of work, earnings, and payroll transactions for that program (see Chapter 7), and - participants in the FFEL Program must follow procedures established in Section 682.610 for documentation of additional loan record requirements for that program (see Chapter 10). RECORD RETENTION PERIODS ---------------------------- [[Three-year requirement]] The Improving America's Schools Act of 1994 amended the General Education Provisions Act to require a school to keep records for three years rather than five years. The minimum three year retention requirement was effective October 20, 1994. Final regulations published November 27, 1996 made conforming changes to the record retention requirements of the General Provisions regulations. The regulations were effective July 1, 1997. Schools must retain all required records for a minimum of three years. However, the starting point for the three-year period is not the same for all records. For example, some campus-based program records must be kept for three years from the end of the award year in which the funds were awarded and disbursed. However, schools must keep the Fiscal Operations Report (FISAP) and any records necessary to support its data for three years from the end of the award year in which the FISAP is submitted. The most current FISAP, which will contain 1997-98 data, must be submitted during the 1998-99 award year, will request 1999-2000 funds, and has a submission date of October 1998. Because this FISAP will be submitted during the 1998-99 award year, records must be kept until at least June 30, 2002, three years from the last day of the 1998-99 award year. There are additional exceptions to the general record retention periods for repayment records for Perkins Loans and records related to a FFEL or Direct Loan borrower's eligibility and participation in those programs. [[CLARIFICATION]] The chart on the next page illustrates the required minimum retention periods for records under the various SFA Programs. Note that the chart has been modified to clarify the retention requirements for Perkins repayment records and Perkins promissory notes, depending on whether the Perkins loan was issued before December 1987 or after December 1987 (when the repayment schedule was no longer formally part of the note). [[This file contains the chart "Minimum Record Retention Periods" on page 3-158 in Portable Document Format (PDF). It can be viewed with version 3.0 or greater of the free Adobe Acrobat Reader software.]] Different retention periods are necessary to ensure enforcement and repayment of SFA loans. Perkins Loan repayment records, including cancellation and deferment records, must be kept for three years from the date on which the loan was assigned to the Department, cancelled, or repaid. Perkins original promissory notes and original repayment schedules must be kept until the loan is satisfied or needed to enforce the obligation (for more information, see Chapter 6). Records relating to a borrower's eligibility and participation in the FFEL and Direct Loan programs must be kept for three years from the last day of the award year in which the student last attended the school. A school may retain records longer than the minimum period required. If the school does maintain the records for a longer period of time and receives a financial aid transcript request (see Chapter 2), the school is required to provide any information requested from records the school still maintains. [[Retention period may be longer than 3 years]] A school may be required to retain records for longer than three years if the records are involved in any loan, claim, or expenditure questioned in any SFA program review, audit, investigation, or other review (see Section 6 for more information on program reviews and audits). If the three-year retention period expires before the issue in question is resolved, the school must continue to retain all records until resolution is reached. RECORD MAINTENANCE --------------------- A school must maintain all required records in a systematically organized manner. Unless a specific format is required, a school may keep required records in [[Acceptable formats]] - hard copy - optical disk - microform - CD-ROM - computer file - other media formats Regardless of the format used to keep a record, all record information (except for the Institutional Student Information Record [ISIR]) must be retrievable in a coherent hard copy format (for example, an easily understandable print out of a computer file) or in a media format acceptable to the Department. The requirement providing for other media formats acceptable to the Department allows for the use of new technology as it is developed. The Department will notify schools of acceptable media formats; schools should not apply for approval of a media format. Any document that contains a signature, seal, certification, or any other image or mark required to validate the authenticity of its information must be maintained in its original hard copy or in an imaged media format. This includes tax returns, verification statements, SARs used to determine eligibility and any other document when a signature seal, etc., contained on it is necessary for the document to be used for the purposes for which it is being retained. A school may maintain a record in an imaged media format only if the format is capable of reproducing an accurate, legible, and complete copy of the original document. When printed, the copy must be approximately the same size as the original document. [[Special requirements for SARs & ISIRs]] Special maintenance and availability requirements apply for Student Aid Reports (SARs) and ISIRs used to determine eligibility because it is essential that these basic eligibility records be available in a consistent, comprehensive, and verifiable format for program review and audit purposes. Because the SAR is a hard copy document, it must be maintained and available in its original hard copy format or in an imaged media format. The ISIR, an electronic record, must be maintained and available in its original format, i.e., as it was supplied by the Department to the school on a magnetic tape or cartridge, or as it was archived using EDExpress software supplied to the school. A school that uses EDExpress has the ability to maintain the ISIR data that it has maintained during the applicable award year by archiving the data to a disk or other computer format. A school that receives ISIRs on magnetic tapes or cartridges may make a copy of the file received from the Department. A school is not required to maintain all required records in its financial aid office. For example, it may be more appropriate for a school to maintain some records in the business office, the admissions office, or the office of the registrar. The responsible administrator in the office maintaining the records should be aware of all applicable record retention requirements. If a school closes, stops providing educational programs, is terminated or suspended from the SFA Programs, or undergoes a change in ownership that results in a change of control, it must provide for the retention of required records. It must also provide for access to those records for inspection and copying by the Department. For a school that participates in the FFEL Program, the school must also provide access for the appropriate guaranty agency. EXAMINATION OF RECORDS ------------------------- [[Location]] A school must make its records available to the Department at an institutional location designated by the Department. These records must be readily available for review, including any records of transactions between a school and the financial institution where the school deposits any SFA funds. These regulatory requirements reflect longstanding Department policy. [[Cooperation with agency representatives]] A school that participates in any SFA Program, and the school's third party servicers, if any, must cooperate with the agencies and individuals involved in conducting any audit, program review, investigation, or other review authorized by law. This cooperation must be extended to the following individuals and their authorized representatives: an independent auditor, the Secretary of the Department, the Department's Inspector General, the Comptroller General of the United States. A school must also provide this cooperation to any guaranty agency in whose program the school participates, and the school's accrediting agency. [[Timely access]] A school must cooperate by providing timely access to requested records, pertinent books, documents, papers, or computer programs, for examination and copying by any of the agents listed above. The records to which timely access must be provided include, but are not limited to, computerized records and records reflecting transactions with any financial institution with which the school or servicer deposits or has deposited any SFA Program funds. [[Reasonable access to personnel]] A school must also provide reasonable access to all personnel associated with the school's or servicer's administration of the SFA Programs so that any of the agents listed above may obtain relevant information. A school or servicer has not provided reasonable access to personnel if the school or servicer - refuses to allow those personnel to supply all relevant information, - permits interviews with those personnel only if the school's or servicer's management is present, or - permits interviews with those personnel only if the interviews are tape recorded by the school or servicer. [[SFA recipient information]] If requested by the Department, a school or servicer must provide promptly any information the school or servicer has respecting the last known address, full name, telephone number, enrollment information, employer, and employer address of a recipient of SFA Program funds who attends or attended the school. A school must also provide this information, upon request, to a lender or guaranty agency in the case of a borrower under the FFEL Program. DISCLOSING STUDENT INFORMATION ----------------------------------- [[FERPA]] To protect the privacy of students and families, federal law sets certain conditions on the disclosure of personal information from records kept by schools that participate in the SFA Programs. The relevant law is the Family Educational Rights and Privacy Act of 1974 (FERPA); do not confuse FERPA with the Privacy Act of 1974, which governs the records kept by government agencies, including the application records in the federal processing system. FERPA restrictions on disclosure of records that are created and maintained by campus law enforcement units (for law enforcement purposes) are discussed in Section 8. Department regulations set limits on the disclosure of personally identifiable information from school records, define the responsibilities of the school, and define the rights of the student in reviewing the records and requesting a change to the records. A school must give the student the opportunity to inspect and review his or her educational records, but does not have to provide copies of the records unless the requirement that the student come to the school to inspect and review the records would effectively deny access to the student. While the school may not charge a fee for retrieving the records, it may charge a reasonable fee for providing copies of the records, provided that the fee would not prevent access to the records. The box to the right notes several important elements of the school's responsibilities and the rights of the student or parent. The regulations apply to all education records the school keeps, including admissions records (only if the student was admitted) and academic records as well as any financial aid records pertaining to the student. Therefore, the financial aid office is not usually the office that develops the school's FERPA policy or the notification to students and parents, although it may have some input. A school is required to -- - Develop a written policy listing the types and locations of education records maintained by the school, and stating the procedures for parents and students to review the records. - Notify parents and students of their rights with respect to educational records. - Document the student's file each time personally identifiable information is disclosed to persons other than the student. A student has the right to -- - Inspect and review education records pertaining to the student. - Request an amendment to the student's records. - Request a hearing (if the request for an amendment is denied) to challenge the contents of the education records, on the grounds that the records are inaccurate, misleading, or violate the rights of the student. The FERPA regulations also establish rules governing the disclosure of student information to parties other than the student. The regulation lists 13 conditions under which "personally identifiable information" from a student's education record may be disclosed without the student's prior written consent. Several of these conditions are of particular interest to the financial aid office: - Disclosure may be made to authorized representatives of the U.S. Department of Education, the Office of Inspector General, or state and local education authorities. These officials may have access to education records as a part of an audit or program review, or to ensure compliance with SFA Program requirements. (Representatives of the Department include research firms that are under contract with the Department to conduct studies of financial aid procedures, using student information provided by the schools selected for the study. The term also includes the SFAP public inquiry contractor.) - Disclosure may be made if it is in connection with financial aid that the student has received or applied for. For instance, the school may receive a request from the Immigration and Naturalization Service (INS) or the Federal Bureau of Investigation (FBI) for access to a student's records. Such a request may only be granted if the student information is needed to determine the amount of the aid, the conditions for the aid, the student's eligibility for the aid, or to enforce the terms or conditions of the aid. - Disclosure may be made to the student's parent, if the student is a dependent of the parent, as defined by the Internal Revenue Serivce (IRS). If the student receives more than half of his or her support from the parent, under the IRS definition, the student is a dependent of the parent. (Note that the IRS definition is quite different from the rules governing dependency status for the SFA Programs.) - Disclosure may be made to organizations that are conducting studies concerning the administration of student aid programs on behalf of educational agencies or institutions. [[Disclosure requests for information]] Schools are required to keep a record of each request for access and each disclosure of personally identifiable student information. The record must identify the parties who requested the information and their legitimate interest in the information. This record must be maintained in the student's file as long as the educational records themselves are kept. [[Sample disclosure statement]] If student records are requested by Department reviewers in the course of a program review, for instance, the school must document in each student's file that the student's records were disclosed to representatives of the Department. The easiest way for the school to do this is to photocopy a statement to this effect and include it in each student's file. A statement such as the following would be appropriate for a review of the SFA Programs conducted by a Department regional office: "These financial aid records were disclosed to representatives of the U.S. Department of Education, Region __, on (Month/Day/Year) to determine compliance with financial aid requirements, under 34 CFR Part 99.31(a)(4)." [[Redisclosure to other authorized parties]] When student information has been disclosed to one of the parties listed above, that party may redisclose that information to additional parties who are authorized to receive the information without prior written consent, provided that such redisclosure is included in the statement in the student's file. For instance, if a program review finds evidence that a student may have fraudulently obtained aid, this information may be redisclosed to the Department's Office of Inspector General (OIG) by the regional office. (Thus the OIG would not have to make a separate request to the school for the same information.) When redisclosure is anticipated, the additional parties to whom the information will be disclosed must be included in the record of the original disclosure. For instance, to continue the example for an SFA program review, the following statement might be added: "The Institutional Review Branch may make further disclosures of this information to the Department's Office of Inspector General, and to the U.S. Department of Justice, under 34 CFR 99.33(b)." You should check with the program review staff to find out if any redisclosure is anticipated. As mentioned earlier, the financial aid office is usually not responsible for developing the school's FERPA policy. However, if you are involved in developing your school's policy and would like a copy of the Department's model policy for postsecondary schools, you may write to the following address: Family Policy and Compliance Office U.S. Department of Education 600 Independence Avenue, SW Washington, DC 20202-4605

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