Due Diligence for Higher Education Institutions
Global examines policies and procedures for institutional and student eligibility compliance using PPAs, ECARs, file samples and other documents from requested award years.
By Sherri Savasta
Merriam-Webster's dictionary definition of due diligence relative to a business reflects: “research and analysis of a company or organization done in preparation for a business transaction (such as a corporate merger or purchase of securities).” In the postsecondary financial aid world, one would think this primarily impacts the proprietary sector. However, with declining postsecondary enrollment for various reasons (the COVID-19 pandemic, state funding decreases, the 2024-2025 FAFSA rollout and more) over the past several years, numerous closures, mergers and acquisitions of institutions in all sectors have taken place.
Within the proprietary sector, you see institutions merging to create efficiencies to survive, acquisitions to expand reach and diversify the brand, and any number of combinations between larger or smaller education groups and single owners. At the end of the day, it must make sound business sense and present a more than reasonable chance to succeed. You can be assured that transactions between proprietary and public institutions involved due diligence audits in some shape or form.
Global Financial Aid Services has been conducting due diligence audits within the federal financial aid delivery area for decades. For institutions of any type, the bulk of revenue is typically realized by funding from their Title IV student assistance programs, thus the health of compliance with the administration of these programs, coupled with appropriate academic program offerings, is critical for institutional success. The focus of a Global due diligence review is to determine compliance with federal regulations as they pertain to the institution’s administration of Title IV programs. The review consists of, and is limited to, an examination of an institution’s policies and procedures for institutional and student eligibility.
Institutional eligibility is confirmed by an examination of items such as PPAs, ECARs and accreditation eligible programs, to name a few. For student eligibility, a sample selection of files will be identified for review from requested award years. The files will be selected randomly from a statistical sample of the total population receiving Title IV, HEA program funds for each award year. The practice of selecting a sample is standard across all types of audits and while the review will be thorough, it cannot be assumed to be all-inclusive. All reviews are conducted remotely, and access to all applicable systems and/or a secure online repository of requested materials is required.
If you are looking to expand your operations through a potential acquisition or merger, we strongly advise having a due diligence audit performed. Global would be happy to discuss our audit offerings with you. For more information, you can contact Sherri Savasta at 228.523.1072, ssavasta@globalfas.com and https://globalfas.com
Sherri Savasta is Global’s Director of Consulting. She has been with Global since 2006, bringing in-depth experience to financial aid processing solutions.