Everything You Need to Know About Financial Aid Compliance & How to Stay Compliant

Follow this ultimate guide to understand federal financial aid compliance, why compliance is so important, and a few best practices to improve your processes.?

Financial Aid Compliance: Ultimate How-To Guide

Nearly 13 million students access funds from the U.S Department of Education’s federal student aid programs - providing over $120 billion worth of financial aid every year.

Offering financial aid options is important for all institution types to ensure they provide equal access to their students.

There are various federal laws based on financial aid. If you fall behind these laws and regulations, it could have drastic implications for your school. That is why it is crucial to include a strong system of maintaining financial aid compliance as part of your school administration.

In this guide, we’ll cover what financial aid compliance is, why it's important, and a few strategies that can help you maintain compliance.

How Financial Aid Compliance Affects Your School

It’s essential for any school to maintain an appropriate level of financial aid compliance. Here are some of the main reasons why this is so important:

Improves Enrollment Management

Financial aid plays a big role in meeting enrollment management initiatives and goals. Schools need to meet all of the required regulations to remain eligible for these financial aid programs.

Reduces Financial Liability

If your school is not up to date with financial aid rules and regulations, and issues are discovered in your program review, your institution will be liable and it may result in an expensive fine.

Improves Financial Control

Federal regulations provide flexibility in how financial aid is distributed. This can be strategically planned to have a positive effect on a school’s financial processes and cash flow.

Helps You Keep A Better Reputation

It is also important to maintain compliance for your institution's reputation. Your school/college may not be attractive to aspiring students if there is no financial aid available. Especially if it is due to your lack of adherence.?

6 Best Practices to Improve Financial Aid Compliance

To make financial aid compliance easier to manage, here are a few of the best strategies to reduce possible compliance issues.

1.??Clear Communication Across Departments

One of the most important first steps in maintaining financial aid compliance is to keep clear communication across each department. Poor communication is an easy way for departments to access incorrect or outdated information, which can easily translate to compliance issues.

This is why it’s so important that your financial aid team has a clear line of communication with other departments, like accounting, enrollments, or anyone else that has administrative functions.

If any compliance regulations change, it’s important to quickly update all departments. This helps develop a stronger sense of collaboration, and it ensures everyone remains up to date with the correct information.

2.??Automate Compliance Processes

Regardless of how knowledgeable and experienced your financial aid compliance team is, there is always the potential for human error to occur.?

One of the best ways to avoid compliance mistakes slipping through is to use an automated software reconciliation solution. Software tools exist that let you instantly reconcile COD and SIS data.

This makes it easier to identify different types of financial aid reports and discover any discrepancies or issues that financial aid admins need to correct.

This is a lot more efficient than trying to manually identify issues in spreadsheets. It saves time and works more accurately.

3.??Review Policies And Processes

Financial aid compliance requirements may change from time to time. Institutions should take the time to go over their processes at least once a year to identify any policies or regulations that may have altered. This also helps you identify inefficiencies in the way that you operate.

An internal review is also a fantastic opportunity to bring different departments together and keep them updated on the current financial aid compliance processes and requirements.

This could also offer some important insights into new software solutions or tools that need to be adapted into policies.

4.??Use Data to Make Informed Decisions

An important part of financial aid management is to keep an eye on all the different metrics. This includes monitoring different types of aid expenditures, the number of students with unmet needs, or the debt levels of graduates.

Clearly organizing and reviewing this data can give financial aid teams a vast amount of valuable information that can help them to improve performance.

Carefully analyzing data ultimately provides ways to improve financial aid efficiency.

5.??Utilize The Standards Of Excellence Review Program

The Standards Of Excellence (SOE) Review Program, offered by the National Association Of Student Financial Aid Administrators (NASFAA) is an excellent way to ensure your school is up to date with compliance.

This program involves experienced financial aid professionals visiting your school and assessing the way your financial aid office operates.

This includes looking at where your strengths and weaknesses are, providing the most up top date information about financial aid, and sharing helpful advice to improve compliance in various areas.

If you plan to conduct an audit of your own financial aid compliance, then using the SOE review program is one of the most comprehensive ways to do this.

6.??Join NASFAA

NASFAA?is possibly the best source of information when it comes to maintaining financial aid compliance. Your institution can become a NASFAA member, which will provide you with all of the association’s resources to help you maintain compliance.

The member’s only resources offered through this membership include many tools to evaluate just how successful your school's financial aid operations are. The tools will also help you to implement changes to improve your financial aid compliance.

Conclusion

Maintaining financial aid compliance is an important legal requirement for all schools or educational institutions. There are many laws and regulations to keep up to date with, so it's essential to have strong systems in place and to review processes on a regular basis.

This can all be assisted with the right school management tool. Implementing this feature will help to prepare teams for audits and maintain an adequate structure for day-to-day procedures.?

About Diamond Student Information System

Diamond SIS is a cloud-based student information system that incorporates all the critical data and functions of an institution into one compliant platform, managing all the administration online.

The system is easily accessible for users across various platforms and devices, such as mobile phones, tablets, laptops, and PCs, and is simple to navigate for everyone.

For more information, go to diamondsis.com or call us at 213.545.2718.?