The fact that change occurs has been our topic for the past three weeks.  Change happens and it presents in many areas that have practical implications.  Thus far, we have discussed the reality that change may bring positive results.  Other changes on campuses for which we have addressed points for consideration include changes in key personnel and changes in ownership or control of an institution.  In this edition of the Regulatory Bulletin we consider another change which we observe a greater preponderance of today than in the past.  That situation is when a school either changes locations or addsearth a new location.  It is almost like multi-Grammy Award winner Michael W. Smith singing that he is trying to “find my place in this world”; or perhaps a similar sentiment expressed by more recent Grammy winner, Taylor Swift, as she sang she was trying to “find a place in this world.”  It is interesting to note that the slight variation in the words of the lines in the two artists’ songs may indicate points for a school to consider when looking at location changes or additions.  We will reflect on that momentarily.  But first, it is important to realize that while one may initially think of this topic as being related only to a chain of proprietary schools, the fact is that there are more and more traditional colleges and universities that are experiencing expansion in their locations.  So, if a school is expanding its locations or changing locations, what are some of the implications and considerations when making such a decision?

Finding “a” Place or “my” Place? 

We referenced two songs, each by different award-winning artists.  The lines in their songs varied ever so slightly in the words in the phrase referencing their role in the world.  While these songs have no specific relation to a school, the choice of words may give some pause when considering a school’s location.  Most people have heard that a common key element to the success of a business is (all together now): Location.  Location.  Location.  We will not contest this truism.  However, what is important in determining the location?  Some of it may very well have to do with the difference in whether a location is just that, “a” location, versus one that would be called “my” location, or “my place in this world.”  Any school can find “a” location.  But, is it the right location for your school?  All of the typical things to consider are important, e.g., is the price right (purchase or lease, build-out costs, etc.)?  Does the potential location have competitors to your educational offerings nearby?  Also, is the location amenable to your education environment?  To illustrate, it may not be a good choice to select a location that has been a fish warehouse at the docks at the harbor if your educational offerings are nursing programs (unless, perhaps, there is an emergency trauma center nearby to handle industrial accidents, etc.).  And, what will the location say about the image of your school if you choose that location?  Do you have a brand image you want to create or accentuate?  If so, does this location contribute to that?  Do you want your location to be one that has plenty of space for free parking, or do you want to have the location with easy access to public transportation, whether it be the bus, Metro, or subway?  Do you choose a location that has plenty of complementary businesses in the area (e.g., restaurants and retail stores) for a convenience to your students, as well as possible part-time employment opportunities?  Or, do you establish a location on site at a corporation (office setting or manufacturing, etc.) to offer on-going educational opportunities to the company’s employees in the evenings or on weekends, etc.?  (A manufacturing company may have around-the-clock shift employees that citycould allow for daytime classes as well.)  Is the location you are contemplating a safe area of town?  Did you check crime reports for the area?  With the accentuated emphasis on campus crime and security, this could be an important consideration.  Is the location a place where you and your staff would want to go to every day for work?  (Keep in mind that even if you, as upper administration/management, may not physically locate your office there away from the primary or main campus, you should view it as if you were going to have to work there every day.  The location and ultimate “build-out” of the space on the new campus affects employee and student morale.)  Have you considered the prospective location as it relates to city zoning regulations, and also, will you have opportunity to expand at that location once up and running if you were to choose to do so?

The above considerations are important, among potentially many more, to a decision on location for expansion as it relates to an educational institution.  Hopefully, a school has addressed each of the preceding questions in making a determination of not just finding “a” place, but “my place” in the world for expanding educational offerings.  How will the new location help meet your school’s mission in this world?

Location, Location, Location…and Title IV Aid

We have established that getting the right location is important.  But, just as importantly to a school that wants its students to receive Title IV Federal Student Aid, the location has to be approved.  It is absolutely critical that the director of financial aid be aware of any potential changes in location.  It has been this writer’s experience that there are times when the academic side new locationof the house, along with upper administration, has determined to begin offering programs at a new location (this could be in the same town or across state) absent the financial aid director being involved to submit the necessary updates to the electronic Application for Approval to Participate in the Federal Student Aid Programs (E-App).  Without prior notification and/or approval of the new location as an eligible site for Title IV purposes, students would be precluded from receipt of Title IV assistance.  It is important to note that an additional location is any site distinct from the main campus (or another approved location of the school).  One school that comes to mind had a beautiful re-furbished campus, including a number of new buildings.  They had recently purchased additional property approximately three-fourths of a mile away for further needed space.  Students were taking classes there as the school considered it as part of the main campus although the school did not own the property between the main campus and the new site.  There was no contiguous border of property lines to consider the new site the same campus location as the original main campus.  Those students who may have received more than 50% of their otherwise eligible program’s instruction at that location would not be eligible for Title IV aid.

Changes in Location

A school may experience a change in location as a result of a physical move of the campus, or more commonly, by the addition of a new site.  There are points to consider when making such a move (pun acknowledged).

  • Will a student be able to receive more than 50% of his/her instruction in an eligible program at the new location?  If so, the school must report this new location to U.S, Department of Education (ED).  Reporting of the new location, along with providing the necessary supporting documentation, must be accomplished within 10 calendar days of the change.  (If the addition of the location goldis due to a change in ownership of an existing school, the notification must occur within 10 business days.)   No Title IV funds may be disbursed to otherwise eligible students until the new location has been appropriately reported to ED. The notification must include the supporting documentation of state licensure as a postsecondary institution as well as accrediting agency approval for the location.
  • In some situations, a school that adds a location will have to wait for ED’s approval prior to any payment to students.  That is, while most schools may only need to report the new location and provide the supporting documentation mentioned above, there are some circumstances in which a school must wait to receive ED’s approval before proceeding to pay students Federal Student Aid (FSA) program funds.  These circumstances include instances when:
    • The school itself is provisionally certified by ED for Title IV purposes.
    • The school is on a heightened cash monitoring or reimbursement method of payment for Title IV purposes.
    • The school purchased the new location from another school that provided eligible education programs and FSA funds to students in the prior year at that location.
    • The school would be subject to loss of Title IV eligibility due to its cohort default rate if it adds the new location.
    • The school has been told previously by ED that it has to apply to ED for approval of a new location.
  • When adding a new location, a school should ensure that doing so will not cause it to violate limitations that would result in loss of its institutional eligibility.  These limitations include the following.
    • A school that does not offer a 4-year baccaulaureate degree or a 2-year associate’s degree must not admit more than 50% of its students who do not have a high school diploma or its equivalent.
    • The school’s total enrollment may not include more than 25% of the students who are incarcerated.
    • The school may not have more than 50% of its students enrolled in correpsondence courses, and no more than 50% of the courses the school offers can be correspondence courses.
  • In many cases a school may not be subject to the requirement to have offered the educational programs for at least two years at the new location before being able to offer Title IV aid to students at that location.  However, in the case of a school purchasing a location from another school entity, the new additional location may have to offer the educational programs for two years in order to be approved.  But, in the situation of a school obtaining a location from a prior school’s owners, the two-year requirement will not be stipulated if:
    • The school agrees to be liable for all improperly spent or unexpended Title IV funds that were received by the prior school.
    • The school purchasing the location assumes liability for any unpaid refunds owed to students that received Title IV funds.
    • The school agrees to use the prior school owner’s institutional refund policies for students enrolled prior to the date of the change in ownership.  (See our Regulatory Bulletin posted last week for more information on details related to changes in ownership of a school or location.)

It should also be pointed out, that if a school disburses Title IV funds to students before appropriately notifying ED and/or gaining ED’s approval, as applicable, the school is liable for all funds disbursed.  (NOTE:  Although the focus of this Regulatory Bulletin has been on changes in location, there are also important considerations regarding ED notification and/or approval when adding new educational programs that a school should ensure it addresses.  For additional information in this regard, please feel free to contact FAME.)

Continuing the Change Challenge

We have acknowledged previously that change is not comfortable.  But, times of change are generally when we see growth,butterflies enhancements and a stretch closer toward ultimate excellence.  Another old truism states that, “if you keep doing what you are doing, you will keep getting what your are getting.”  Change interrupts that cycle and allows for attainment of the better.  Change can be imposed, or it can be initiated.  In most cases, it is better when it is self-initiated.  As an example, most schools understand that self-regulation is far better than regulations being imposed from the outside.  As we come to an end of this four-week series on change, may we all continue on in the self-initiated change challenge, ever in pursuit of the excellence in service we are capable of providing in the education arena.

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For those schools that may desire assistance with situations of changes in location, you may wish to consider the services available through FAME’s Consulting Services department.

 

(20142015FSAH; 34CFR600)

 

This article is presented for informational and educational purposes only and should not be considered to be giving legal advice.  Individuals should consult their own legal counsel.