Financial aid "criminal" exonerated

Financial aid “criminal” exonerated

Glenn Bogart, J.D.

I’ve been working on this certain program review appeal case forever, it seems.

It was a sad case if I’ve ever seen one.  I’m going to leave out the name of my client to protect his privacy – but I think the story needs to be told.

This client, Mr. X we’ll call him, is an immigrant.  He had a non-accredited school for some years, and then ran across the owner of an accredited, Title IV school, who was a bit down on his financial luck.  Long story short, Mr. X ended up buying the school, only to find out later that the old owner had a big bunch of undisclosed, unpaid refunds.

When this came to light in a program review, as Kurt Vonnegut said in one of his books, the excrement hit the air conditioner.  Reimbursement.  All kinds of file review and audit requirements.   Meanwhile, the old owner, who had been retained because he supposedly knew all about Title IV, flew the coop on the second day of the program review visit and has been pretty scarce ever since.

The feds actually were pretty good about providing the school its reimbursements.   The school received something like $1.2 million in reimbursements before it got cut off entirely.

Now, when a school is on the reimbursement system of payment, it can request payment from the U.S. Department of Education only once every 30 days.  Generally it is subjected to pretty onerous documentation requirements.  In this case, the regional office would pick a sample from each reimbursement list and require the school to provide all kinds of records in order to prove the students were eligible.  Could be worse – I’ve seen other cases where 100% documentation of some 28 items pertaining to student eligibility had to be sent in to be prayed over before any reimbursement would be released.

So, the reimbursement system actually seemed to be working at this school.   Rather than doing the file review itself, the school hired a CPA to do it, thinking that this would be the most efficient (although, costly) way to get the Department the information it needed.  But the Department picked apart the first CPA report on the file review.  The school then hired another CPA to do it all over again.  Still no good.  Eventually, the school was denied recertification, and that was the end of the Title IV.  Naturally, at the time that happened, there were students in the financial aid pipeline.  No further Title IV was paid