Department of Education Updates List of Troublesome Colleges

The U.S. Department of Education has published their list of of schools facing extra scrutiny as of June 1, 2015, and it’s a good idea to check if yours is on the list.

A total of 483 colleges are being closely monitoring due to concerns over their ability to handle federal funds, down from 543 schools in March 2015. The new list includes three public institutions — Northern New Mexico College, Mesalands Community College in Tucumcari, N.M., and Copiah-Lincoln Community College in Mississippi — all of which were added for their failure to submit audit documents to the Education Department either late or not at all.

The oversight, called Heightened Cash Monitoring, is taken with institutions to provide additional oversight for a number of financial or federal compliance issues, some of which may be serious and others that may be less troublesome.

Under the lower level of HCM, a school makes disbursements to eligible students from institutional funds, submits disbursement records to government, and then draws down Federal Student Aid funds to cover those disbursements. When a school is on the higher level of HCM, it no longer receives funds from the Federal Student Aid system. Instead, the school must submit a Reimbursement Payment Request for funds to the Department.

The higher level of HCM can cause cash flow problems as the school doesn’t have the ready access to federal student loan money. This higher level of HCM is one of the reasons why Corinthian fell apart in 2014 after having its federal funds spigot turned off.

Under the U.S. Department of Education guidelines:

Schools may be placed on HCM1 or HCM2 as a result of compliance issues including but not limited to accreditation issues, late or missing annual financial statements and/or audits, outstanding liabilities, denial of re-certifications, concern around the school’s administrative capabilities, concern around a schools’ financial responsibility, and possibly severe findings uncovered during a program review. Some schools are on this list due to preliminary findings made during a program review that is still open. Those findings could change when the program review is completed.

You can see the list of institutions on HCM as of June 1, 2015 here (in Excel spreadsheet XLS format).

According to Inside Higher Ed:

Seven for-profit colleges and one private nonprofit college that faced the more stringent aid restrictions in March won removal from that designation by June: the Real Barbers College in Anaheim, Calif.; Stone Academy in West Haven, Conn.; Manhattan Beauty School in Tampa, Fla.; American College of Hairstyling in Cedar Rapids, Iowa; International Beauty School in Cumberland, Md.; American Institute of Medical Sonography in Las Vegas; Institute of Therapeutic Massage in Lima, Ohio; and Ohio Mid-Western College in Cincinnati.

Asian-American International Beauty College, a for-profit college in Westminster, Calif., was removed from cash monitoring level 2 but remained on [the lower level of monitoring].

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About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.