Top Fines and Penalties for Title IV Institutions

Earlier this year, the Department of Education released its annual list of top 10 school audit findings and school fine reports, highlighting concerns Title IV institutions face in this heavily regulated environment, while publicly disclosing the institutions and penalties assessed. The Department bases this list and its penalty threshold on the gravity of the offense, the nature of the violation, and the size of the institution, according to the Department. It imposes fines to penalize misconduct and deter similar violations, as stated on the Department’s website.

This is a list you don’t want to end up on, as the lessons are better learned from the mistakes of others. Here’s what the department covered this year.

Top Finding: Campus Security

Similar to prior years, schools with campus security findings under the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act (Clery Act) face the largest penalties, with multiple institutions receiving fines in the tens and hundreds of thousands of dollars. Student safety and security represent some of the most important areas for institutions to follow to maintain federal financial aid funding.

Reviewing security policies and procedures on a regular basis and subsequently updating them is the best continuous action you can take to meet the Department’s expectations in safety. The Department provides guidance to help institutions understand the minimum requirements it must meet.

Further, it is important institutions properly report its crime statistics for the institution’s Clery geography during the three most recent calendar years. Knowing the Clery geography of your institution is required, as this covers on-campus, on-campus student housing, public property within campus bounds, public property immediately adjacent to and accessible from on-campus locations, and even certain non-campus properties.

Fines for IPEDS Nonsubmissions

While substantially smaller in amount than Clery Act fines, the number of fines imposed for failure to submit Integrated Postsecondary Education Data System (IPEDS) occurs frequently, with these fines creeping into the tens of thousands of dollars. IPEDS is the system of surveys required under the Higher Education Act of 1965, in which institutions must provide data on “enrollments, program completions, graduation rates, faculty and staff, finances, institutional prices, and student financial aid” (per the Act). There are varied components with IPEDS that cross multiple functions and service areas within institutions. Delegating the responsibilities for the reporting and understanding the deadlines will help you avoid making the Department’s dreaded list.

Investigation Findings in 2024

The “catch-all” rounding out the Department’s list is the general investigation findings that normally result from the Administrative Actions and Appeals Group’s administrative proceedings. These don’t directly come from the program reviews that the Department conducts, since program reviews evaluate Title IV, HEA statute and regulations, liabilities owed to the Department for errors in compliance, and future institutional capabilities improvements. However, program review findings can certainly lead to investigation matters, as penalties can arise from severe program review findings.

Further, the Department can assess fines for failing to meet the fiduciary standard of conduct, fraud, late or unpaid refunds, late submission of financial audits and compliance examinations, incentive compensation violations, failure to submit required financial protection, and disbursements to students enrolled at an ineligible location. There are many pitfalls that institutions will need to steer clear of to avoid fines and penalties.

The Exclusion of Cybersecurity Findings

One notable exception from the Department’s top 10 list of school findings is any violation of the Gramm-Leach-Bliley Act (GLBA). This is due to two primary reasons: the standards for safeguarding customer information didn’t become effective until June 9, 2023—meaning, these fines won’t start appearing until future years. The second reason being that nearly every final audit determination notification recently sent out from the Department states, “If your audit contains a finding related to the GLBA, this finding will be referred to the Federal Trade Commission (FTC) Division of Privacy and Identity Protection (as the investigative and enforcement authority for this finding falls within their jurisdiction) and to Federal Student Aid’s Technology Directorate, Enterprise Cybersecurity Group.” Fines and penalties could very well be issued by either entity in the future on cybersecurity matters. Similar to the Clery Act, this isn’t a compliance matter that an institution should take lightly.

Key Takeaways

Fines and penalties shouldn’t just be obstacles for Title IV institutions to avoid. They are educational tools that the Department uses to direct proper behavior. Make sure to discuss your concerns or questions on the Department’s regulations with one of Sikich’s Title IV audit experts.