PellCheck: Fixing Good Enough Financial Aid
Every year the U.S. Department of Education provides a Pell Grant Awards accuracy report. This year, as in previous years, the Department of Education detected what are called Pell Grant “under awards” due to a small error in accuracy.
This year that small error in accuracy translates into approximately $188 million in Pell Grants not being awarded to qualified and needy students.
When asked, the U.S. Department of Education stated that the cost to recover such a small amount of money ($188 Million) outweighed the amount of the Pell Grant under-award errors.
Furthermore, according to the IMPROPER PAYMENTS ELIMINATION AND RECOVERY ACT OF 2010:
Anything below 2.5% in Pell Grant improper payments (award errors) is good enough …
Really?! Good enough for who?
It’s NOT Good Enough For Students
If a student is under awarded Pell Grant dollars but is one of the 53% classified as “dependent” on their FAFSA, they typically have to look to their parents to make up the difference … not something students or parents see as a good solution.
However, if the under awarded student is one of the unlucky 47% classified as “independent” (students, age 24 and up), they must make up their “under award” difference on their own . . . even if they are married, have children or are single parents.
CollegeAtlas.org (2015) states, “60% of students who drop out of college were responsible for paying their own tuition…” and “the inability to balance multiple life demands was a top contributor in their decision to discontinue college…”
It’s NOT Good Enough For Colleges and Universities
Institutions across Higher Education are losing hundreds of millions of Pell Grant dollars in tuition and student fees. To cover these shortfalls in revenue, colleges are forced to raise tuition and fees to compensate for ongoing educational operations. These gaps create a huge negative impact on student retention and graduation rates.
Additionally, federal, state and local governments impose strict program reviews on Financial Aid programs. These additional reviews demand the attention of an already heavily burdened staff and may result in substantial fines and penalties while detracting from their main focus, the student.
It’s NOT Good Enough For Us
In our opinion, when it comes to students and institutions, good enough accounting just isn’t good enough. So, we developed PellCheck, a new way to find and fix Pell Grant under awards.
See the power of PellCheck for yourself. Schedule a demo today.
The Non-solution Solution
For years, the U.S. Department of Education, along with College and University financial aid experts and groups have tried to solve the problem of Pell Grant under award errors . . . in many different ways, with varying degrees of success.
In fact, the U.S. Department of Education annually performs Title IV program reviews of approximately 250-300 selected institutions. NASFAA reports that on average these Title IV reviewed institutions paid $189,000 in fines. Even without the fines, these reviews are time consuming and costly, and can result in large compliance penalties to the institution if ignored.
At the same time, members of the U.S. Congress continue to seek answers and better solutions from the U.S. Department of Education – regarding improper Pell Grant payments. But, no matter how much Congress demands answers, to date no one has been able to provide more than a simple guess as to where the money went.
On top of that, the U.S. Department of Education recently abandoned its “QA Improper Payment Report” program, leaving schools with no other choice but to try to figure things out on their own . . . often by adding more financial aid team members, running more custom reports, and doing more stare and compare type activities in an effort to find Pell Grant Award errors.
Ultimately, all this has led to today’s non-solution solution of “good enough” accounting and an unchanged Pell Grant error rate which is still pegged at about $188,000,000 . . . and that, as one parent told us, “is a lot of ramen!”
Schools Try to Fill in the Award Error Gap
Since no one has successfully developed a cost-effective solution to the Pell Grant Award errors dilemma, schools and foundations have turned to student financial aid gap funding . . . using programs such as micro-grants or emergency funds to supplement their student’s financial needs.
One school in Ohio reported that for every $70 thousand invested in its micro-grant program, the school recovers $700,000 in lost revenue. While that is good, it would be better for students, colleges and philanthropists who give money for micro-grants if this money could go to help other students in need instead of the ones hurt by today’s “good enough” accounting model.
PellCheck can make it happen. See for yourself. Schedule a demo today.