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More colleges under federal oversight for student aid disbursements

By Amy R. Connolly   |   Jan. 7, 2016 at 2:06 PM

WASHINGTON, Jan. 7 (UPI) -- Dozens of colleges and universities have been added to the growing list of institutions subject to increased financial oversight by the federal government, putting a damper on the schools' ability to dole out federal aid.

Records from the U.S. Department of Education show 540 colleges and universities are under "heightened cash monitoring" by the Federal Student Aid office as of Dec. 1, up from 499 in September. Of the 540, 86 are operating under the highest form of scrutiny.

Collectively, the institutions on the monitoring list received nearly $8 billion in student loans and grants from the federal government last year alone, an Inside Higher Ed analysis of federal records found.

Among the schools most recently added to the list for a lower level of scrutiny are Thomas Jefferson School of Law in San Diego, Ave Maria School of Law in Naples, Fla., and Charleston School of Law in South Carolina, all for "financial responsibility." A number of religious-based institutions, art colleges and cosmetology schools also made the list.

Heightened monitoring can result from minor infractions such as missing paperwork and computer issues, to more serious ones such as concerns about the school's administrative capabilities and financial responsibility.

"Heightened cash monitoring is not necessarily a red flag to students and taxpayers, but it can serve as a caution light," Undersecretary of Education Ted Mitchell said in April, after the first list of monitored schools was released. "It means we are watching these institutions more closely to ensure that institutions are using federal student aid in a way that is accountable to both students and taxpayers."

For Level 1monitoring, institutions must submit records of their student-aid disbursements before receiving federal funds to cover those payments. For the higher level of scrutiny, Level 2, schools must front the money with its own funding and request reimbursement.

The 86 facing "severe" level 2 sanctions include JRMC School of Nursing in Pine Bluff, Ark., for auditing findings and Carver Bible School in Atlanta and InfoTech Career College in Paramount, Calif. for problems uncovered during a program review.

Overall, 109 institutions on the monitoring list are nonprofit and private, 81 are public and 310 are for-profit. The remaining 40 schools are private and public foreign colleges including institutions in London, Toronto and Paris.

Across the United States, outstanding student loan debt has hit $1.2 trillion, with some $103 billion in default. The average individual student loan debt is about $30,000.

The Education Department began releasing information about heightened financial oversight in April, after months of refusals citing "competitive injury" and several requests from Inside Higher Education.

Mitchell said the financial oversight allows more "transparency and accountability" so borrowers and their families can make informed decisions about higher education.

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