Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

Institutional Eligibility and Administrative Requirements - Recordkeeping and Disclosure

AwardYear: 1996-1997
EnterChapterNo: 3
EnterChapterTitle: Institutional Eligibility and Administrative Requirements
SectionNumber: 8
SectionTitle: Recordkeeping and Disclosure
PageNumbers: 149-155


The General Provisions regulations require schools to maintain
student records, and program and fiscal records. Schools must make
these records available to auditors and representatives of the
Department, in the course of the reviews described in Section 7.

[[Complete and consistent records]]
The importance of maintaining complete and consistent records
cannot be overemphasized. Program and fiscal records must show a
clear "audit trail" for SFA Program expenditures. Similarly, student
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. Any exceptions to the
school’s normal procedures should be appropriately noted in the file,
in terms that would be clear to anyone reviewing the file, whether a
program reviewer or another member of the financial aid office staff.

[[Documenting special circumstances]]
The law explicitly requires the financial aid administrator to
document the student’s file when using professional judgment to
override a student’s dependency status, to adjust a student’s
Expected Family Contribution (EFC), or to make other adjustments
that will affect a student’s SFA eligibility. In general, the financial
aid administrator should note in the student’s records any unusual
situation that explains any special consideration given to the student
when awarding financial aid.

[[NEW]]
This section describes the recordkeeping requirements contained in
the General Provisions. However, schools should note that
regulations published December 1, 1995 made changes to the
recordkeeping requirements for the campus-based programs (see
Chapter 5).

This section also includes 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.

PROGRAM AND FISCAL RECORDS

A school must keep consistent and accurate records of its use of SFA
funds. These program and fiscal records must be available for
review, including, upon written request, any records of transactions
between a school and the financial institution where the school
deposits any SFA funds. As discussed in Section 3, Cash
Management, when a school establishes bank accounts for Pell
Grant, PAS, FSEOG, Perkins, Direct Loans, or FWS funds, it must
either inform the bank that these are federal accounts by writing the
bank (making sure to keep a copy of the notice) and filing a UCC-1
statement, if required, OR by including the words "federal Funds" in
the name of the account. The account designated as simply "SEOG
account" or "ABC University Pell Grant account" would not satisfy
the requirement because neither identification indicates that the
school will be depositing federal funds.

SOME EXAMPLES OF ACCEPTABLE
ACCOUNT DESIGNATIONS:

Federal Pell Grant Account
Federal Perkins Loan Cash Account
ABC University - Federal EDPMS Account
ABC - Federal Cash Account

STUDENT RECORDS

[[General student record requirements]]
[[NEW]]
In addition to program and fiscal records, a school must keep records
that substantiate the eligibility of its students for SFA funds.
Previously, a school was required to keep student records for five
years. The Improving America’s Schools Act of 1994 (Public Law
103-382) amended the General Education Provisions Act to require a
school to keep student records for THREE years. (See the chart on
page 3-152.) For each student who receives SFA funds, a school
must keep records of

- the student’s admission to and enrollment status at the school,

- the student’s program of study and the courses in which he or she
is enrolled,

- whether the student is making satisfactory academic progress,

- all financial aid the student receives (and a financial aid transcript
for a transfer student),

- all refunds due or paid and the source to which they are paid (e.g.,
to the student, the SFA Programs, or the FFEL lenders),

- verification of information on the student aid application, and

- any required certifications signed by the student, and any
documents used to document the student’s registration status.

The school must also keep records regarding its admission
requirements and the educational qualifications of each student in
each eligible program--whether or not such a student receives SFA
funds.

[[Admission and enrollment status information]]
If only certain programs at the school are eligible for SFA funding,
the school must maintain records regarding the admission
requirements for those programs and the educational qualifications
of the regular students enrolled in them.

Admission and enrollment status information may include why a
student was admitted, how the student’s standing compares to that of
the average student entering a particular eligible program, and what
remedial courses are necessary for the student to complete the
program.

[[High school diploma, GED program, etc.]]
To ensure that SFA recipients are eligible postsecondary students, a
school participating in the SFA Programs must document that the
student is no longer enrolled in elementary or secondary school. If
the student certifies that he or she has a high school diploma or
recognized equivalent, the school must keep a copy of the student’s
certification. A school may also need to keep statistics showing the
success of the GED program it makes available to its students, if the
GED program is not conducted by state or local secondary school
authorities.

[[Statistics on GED program and campus security; drug prevention
materials]]
The law requires that a school keep statistics relating to crimes
committed on campus (see Section 9). The school must also keep
copies of its drug prevention materials, as well as records indicating
that these materials were distributed to each student and employee,
and the results of the school’s evaluation of its drug prevention
program. The school must keep its drug prevention program records
for at least three years after the fiscal year in which they were
created, and must keep the records longer if they are needed to
resolve litigation or an audit, program review, or other action.

[[Specific program record requirements]]
Each SFA Program also has specific record retention requirements.
For instance, the Pell Grant regulations require a school to maintain
fiscal records for all program transactions, the name and social
security number of each student recipient, and records establishing
each recipient’s eligibility, cost of attendance, and the amount and
date of each payment to the student (as well as any repayments to the
program accounts on behalf of that student). See Chapters 5, 6, 7, 8,
and 10 for the program-specific requirements.

[[Availability of records]]
Student records must be organized and readily available for review
by the Department of Education. (Refer to The Blue Book for
further information.) The records must be kept at the degree- or
certificate-granting school, although not necessarily in one school
office.

[[The "Record Retention Requirements" chart and footnote on
page 3-152 are currently unavailable for viewing. Please
reference your paper handbook for additional information.]]

[[Microfilm and microfiche records]]
Records may be maintained on microfilm or microfiche, except for
the promissory notes and repayment schedules under the Perkins,
NDSL, and FFEL programs. (Note that microfilmed copies of
promissory notes and repayment schedules are NOT acceptable.)
Notwithstanding other record retention requirements, a school MUST
keep records involved in any claim or expenditure questioned by a
federal audit or program review until resolution of any questions.

DISCLOSING STUDENT INFORMATION

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.

Final regulations published on January 17, 1995 clarified FERPA
restrictions on disclosure of records that are created and maintained
by campus law enforcement units (for law enforcement purposes).
For more information, see Section 9.

Department regulations published in 1988 set limits on the disclosure
of personally identifiable information from school records, and
define the responsibilities of the school, and 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.

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 FILES 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 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.

[[Disclosure without student’s prior written consent]]
The FERPA regulations also establish rules governing the disclosure
of student information to parties other than the student. The
regulation lists twelve 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
SERVICE. 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.

[[Documenting 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 for program reviews]]
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, S.W.
Washington, D.C. 20202-4605