At its core, it's a simple concept. When students attend college with the help of federal aid, the government should have a way to get its money back when those students withdraw.
But in practice, returning that money was far from simple. So more than two decades ago, colleges asked for help. Could they and the Education Department come up with a straightforward way to get the government its money back?
From that question, the federal regulation governing the return of funds under Title IV—the portion of the law that governs federal student aid programs—was born.
Since the rule took effect in 2000, it has morphed into an arcane mess that takes up 128 pages of the Education Department's Federal Student Aid Handbook. Colleges must wrestle with the rule hundreds of times each semester, feeding often-elusive variables into a calculation that fills a six-page federal worksheet and returning a precise amount—sometimes thousands of dollars, sometimes less than $100—within a narrow window of time. Fines of thousands or even hundreds of thousands of dollars can result from small mistakes, so colleges devote a substantial amount of time and resources to obsessing over the process. Most college financial aid offices assign at least one experienced staff member to overseeing compliance with the regulation.
And yet, despite that devotion, they can't get it right. Calculation errors related to this return-of-aid rule are the most common finding in audits and program reviews of colleges, according to Education Department data. The third most common? Returning those aid dollars late. And No. 6? Failing to return them at all.
The Education Department disburses about $150 billion in Title IV aid every year, and the regulations that govern its use are designed to protect taxpayer money. But the rule for returning the tiny fraction of Title IV funds that goes unused at most institutions is emblematic of what colleges have come to hate about the hundreds of federal regulations they must comply with. After years of patches, stipulations, and new interpretations, the rule creates as many problems as it solves and drives up costs for colleges, and ultimately for students, in the process.
Read more at The Chronicle of Higher Education: http://chronicle.com/article/How-a-No-Brainer-Became-One-of/150061