As each new academic year begins, it is important to review the legal obligations of the financial aid officer (FAO) regarding the administration of the Title IV and state funded financial aid programs. The following will address in general terms those duties and provide a context for the summaries of articles which will follow in the coming months.
The federal government considers those individuals who have direct and indirect authority over the Title IV funds to be a “fiduciary” as it relates to the management of those funds. The term is derived from the Roman law, and means(as a noun) a person holding the character of a trustee, or a character analogous to that of a trustee, in respect to the trust and confidence involved in it and the scrupulous good faith and candor which it requires.
Black’s Law Dictionary
In other words, the FAO is considered to be acting in a “fiduciary capacity”. The relationship of the FAO to the federal government and to the students is one of “great confidence” implying “a high degree of good faith”. This requires the FAO to act with the highest standard of care when administering the Title IV funds. Within this context, financial aid compliance with the Title IV regulations becomes an absolute priority for the FAO.
One is said to act in a “fiduciary capacity” … when the business which he transacts, or the money or property which he handles, is not his own or for his own benefit, but for the benefit of another person, as to whom he stands in a relation implying and necessitating great confidence and trust on the one part and a high degree of good faith on the other part.
Black’s Law Dictionary
In very simple terms this means that the complexity and chaos of the opening days of school are not and cannot be an excuse for non-compliance with the Title IV regulations. While the first priority for other staff at your college or university may be high enrollment numbers or a smooth registration process, the FAO must retain his or her perspective and thereby his or her commitment to adherence to all applicable regulations.
This is not to suggest, however, that the position requires a mindless and inflexible adherence to the regulations. Nor does it justify the FAO’s non-cooperation with the college’s goals and priorities. What it does require is a mature and balanced approach to the FAO’s obligations to both th e federal and state government and to his college or university.
In fact, the regulations in many ways recognize the administrative challenges faced by the FAO and are crafted to give him some degree of flexibility. For example, DOE regulations governing early disbursement (34 CFR 668.164(f)) and late disbursements (34 CFR 668.164(g)) provide flexibility for the FAO as he balances the aforementioned priorities.
As you begin each semester, it is important to keep these priorities in mind. It is important to note that they are only conflicting if either (1) you, as the financial aid professional, fail to effectively work with your college to find a proper balance of priorities or (2) the administration of your college is intent on ignoring the regulations. With the former, it is possible to reach a proper balance with the college and there are examples of that occurring on college campuses throughout the United States. With the latter, your obligations are clear and, in the event the administration of your college is intent on ignoring Title IV financial aid compliance, your ultimate duty must be to the proper and legal administration of the Title IV funds.