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Maximize School Growth: Unlock Title IV Application Process

Financial Aid for Schools

Why apply for Title IV funding?

If you opened a new school or managed one that does not offer Title IV funding, then you may want to keep reading. School owners, directors, and managers have an idea of the benefits, hurdles, and challenges in becoming a Title IV school.

Schools that are Title IV eligible have passed a rigorous litany of administrative requirements over the course of three or more years, including becoming accredited. Once the school is Title IV approved, it signifies that the school has met rigorous academic and administrative standards. This translates into a quality education for its students and the awarded diploma or degree is officially recognized by the Department of Education and other educational institutions.

The Benefits to the Student

Title IV doesn’t just provide additional sources of funding for your institution, it also helps students attain an education they otherwise would not be able to afford.

  1. Title IV can help make school more affordable for students, sometimes even without any financial burden.
  2. A nationally or regionally recognized degree or diploma that is accepted anywhere. 
  3. They will receive a quality education that meets or exceeds specific academic and industry standards.
  4. Students are protected under federal laws in cases where an educational institution does not comply with their role or duties.

The benefits to the educational institution

  1. A more stable source of income rather than relying on direct student payments.
  2. A sign of credibility and quality that prospective students will gravitate to.
  3. A competitive and advertising advantage over other institutions that do not offer financial aid.
  4. Can increase their tuition to the going market value.

Challenges for Obtaining Title IV Funding

  1. The paperwork, the tons of paperwork.
  2. Creating and implementing policies which means organizing your administrative operations for compliance.
  3. Time. This is a long process, you must be patient. The real challenge is how to make your school profitable without financial aid. This means trying to enroll cahs paying students and keeping your school profitable.

The Process

A school must first be accredited by an agency recognized by the Department of Education. Once accredited, a school may then apply for Title IV funding which takes an additional six to nine months.

The Council for Occupational Education (COE) is one of the more known national accrediting bodies. COE provides in their handbook a flowchart illustrating the accreditation process.

  • The school must be accredited by an accrediting agency recognized by the U.S. Department of Education. Click here for a list of different accrediting agencies.
  • The school must be in compliance with state licensing requirements. (Inquire with your state’s department of education)
  • The school must participate in the federal student aid programs authorized under Title IV of the Higher Education Act.
    • All Title IV Federal Student Aid Programs refers to the financial aid programs for postsecondary students, authorized under Title IV of the Higher Education Act of 1965 (Title IV, HEA) and administered by the U.S. Department of Education and listed in 34 CFR 668.1(c). 
  • The school must be financially responsible.
    • A public IHE (Institute of Higher Education) is deemed financially responsible if its debts and liabilities are backed by the full faith and credit of the state or another government entity.74 A proprietary or private nonprofit IHE is financially responsible if it meets specific financial ratios (e.g., equity ratio) established by ED,75 has sufficient cash reserves to make any required refunds (including the return of Title IV funds), is meeting all of its financial obligations, and is current on its debt payments.
  • The school must have a default rate (what is a default rate?) on student loans that does not exceed certain limits.
    • An institution may be deemed administratively incapable if it has a high cohort default rate (CDR). In general, the CDR is the number of an IHE’s federal loan recipients who enter repayment in a given fiscal year (the cohort fiscal year) and who default within a certain period of time after entering repayment (cohort default period; CDP), divided by the total number of borrowers who entered repayment in the cohort fiscal year.86
    • Since 2014, ED has used a three-year CDP in calculating an institution’s CDR.87 An IHE will be found administratively incapable if one of the following conditions is met:
      1. an institution’s CDR is greater than 40% in one year for loans made under the FFEL and Direct Loans programs.
      2. an institution’s CDR is 30% or greater for each of the three most recent fiscal years for loans made under the FFEL and Direct Loans programs; or
      3. an institution’s CDR is 15% or greater in any single year for loans made under the Federal Perkins Loan Program.
  • The school must not be subject to certain types of fines or penalties.
  • The school must have a code of conduct for education loans that prohibits certain conflicts of interest.
  • The school must provide students with certain information and disclosures.
  • The school must provide students with an institutional refund policy.
  • The school must provide students with a satisfactory academic progress (SAP) policy.

YouTube Video Links

Financial Student Aid videos to help you understand the Federal Financial Aid application process. FSACommunications youtTube Channel

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