Navigating Federal Funding: How Colleges on Heightened Cash Monitoring 2 Receive Aid During a Government Shutdown
A federal government shutdown presents unique challenges for colleges and universities, particularly those on Heightened Cash Monitoring 2 (HCM2). As the lapse in appropriations forces agencies like the U.S. Department of Education to furlough staff, institutions that rely on federal student aid for their operations must navigate a revised and simplified process to ensure funding continues to flow.
Navigating Funding on Heightened Cash Monitoring 2 (HCM2) During a Shutdown
For institutions on HCM2, the typical process for receiving federal funds is a reimbursement model. This means the school must first disburse its own funds to students for federal student aid programs, then submit a detailed reimbursement request with student-level data to the Department of Education’s Office of Federal Student Aid (FSA) for review and approval.
However, during a government shutdown, this detailed oversight process is temporarily suspended. Due to a significant number of FSA employees being furloughed, the standard procedures for reviewing and verifying student-level data are not feasible. As stated in GEN-25-42, ‘All schools currently on HCM2 may submit a reimbursement claim during the lapse in appropriations. However, the claim may not be processed until the government reopens.’ In previous shutdowns, institutions on HCM2 were paid based on submissions of the Standard Form 270 (SF-270), without a complete review of documents submitted.
This prior model streamlined approach ensured that colleges and universities could continue to receive critical funding without the lengthy review of individual student records. By shifting the focus to a basic, signed request form, the government could maintain a flow of funds to institutions, preventing significant cash flow disruptions that would ultimately harm students. However; with GEN-25-42, FSA has taken a different approach and may not fund HCM2 claims. Depending on the length of the shutdown, this will create more undue chaos for institutions burdened with HCM2.
The Continued Importance of Compliance and Documentation
While the immediate process for receiving funds is eliminated, it is crucial for institutions to remember that the underlying compliance requirements have not been waived. The signed SF-270 is a certification that the institution has disbursed funds to eligible students.
Institutions must continue to maintain all documentation that supports the eligibility of each student for whom they are requesting reimbursement. This includes:
Verification of student enrollment
Records of satisfactory academic progress
Documentation of financial need and disbursements
Any other required information to demonstrate Title IV program eligibility
Although these records may not be reviewed for payment during the shutdown, institutions should be prepared to present them if and when a post-shutdown audit or program review is conducted. A lapse in government appropriations is not an excuse for a lapse in institutional compliance.
A Precedent for Interrupted Payments
This information is vital for financial aid administrators, bursars, and business officers at HCM2 institutions. By understanding this revised process, you can prepare accordingly, ensuring your school has the necessary documentation and processes in place to secure funding and maintain continuity for your students during this challenging period.
Is your institution in need of expert guidance on Title IV compliance and financial aid administration? Our team is ready to serve. We have extensive experience in helping colleges and universities navigate complex regulatory environments, manage compliance, and ensure a smooth flow of federal student aid funds. Contact us today to learn how we can support your institution.
