By Adam Steinfurth, CPA
With the release of its Final Rule: Program Integrity and Improvement dated October 30, 2015, the Department of Education repealed §§ 668.8(k)(2) and (k)(3) and made a conforming change in § 668.8(l). These changes affect academic programs which are required to measure a student’s progress in clock hours for Title IV purposes.
Under the current rule, a program is required to be measured in clock hours if:
- State or federal regulations require the program to be measured in clock hours for licensure or other authorization to practice an occupation
- The credit hours in the program do not comply with the Department of Education’s definition of a credit hour. For example, if your accreditation accepts more outside class work than the Department of Education allows.
- All of the clock hours that are the basis for the credit hours are not offered and attendance in the program is not required. This may be applicable to programs that do not require make-up hours for their programs.
However, the current requirements do not apply if the state or federal licensure requires that a limited component of a program must include a practicum, internship, or clinic component of the program with a minimum number of clock hours.
Under the new rule which will be effective on July 1, 2016, these exceptions are removed and an institution will have the option of measuring programs covered under these circumstances with clock hours or credit hours using the clock-to-credit hour conversion formulas.
Schools may prefer measuring progress in clock hours if all of the school’s other programs are measured in clock hours. Keeping a program in clock hours instead of performing a clock-to-credit conversion can save the unneeded complexity of the conversion and thus reduce the chance of errors occurring. Further, if a school has all of its other programs measured in clock hours, it can be burdensome to adapt processes and controls to monitor a credit hour program.
Similarly, schools may prefer to measure progress in credit hours for Title IV purposes if their other programs are already measured in credit hours. Further, the conversion from clock to credit hours may result in an increased amount of aid for which the student may be eligible. If the school considers outside class hours in the clock-to-credit conversion, the resultant credit hours can lessen or eliminate the reduction of aid for an academic period. For example, if a 720 hour program converts to 24 semester credit hours after accounting for outside hours, the clock hour measurement would have its Pell and Direct Loan amounts reduced by the fraction of 720/900 while the credit hour measurement would allow for a full disbursement of aid.
However, due to the 90/10 rule, gainful employment metrics, and cohort default rates, it is not always desirable for a school to increase its Title IV receipts. If you are considering the impact of this proposed rule on your school, M & A can guide you through its implementation and aid you in considering all of the possible financial implications.
Volume 3, Issue 1