U.S. Department of Education Announces Personal Liability Requirements for Postsecondary Institutions Participating in Title IV Programs

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Jonathan D. Tarnow, John R. Przypyszny, Cindy Irani, Sarah, L. Pheasant
March 14, 2023
On March 1, 2023, the U.S. Department of Education (ED) published Electronic Announcement GENERAL-23-11 (EA) notifying institutions that participate in the Title IV federal student aid programs (Title IV) that it is establishing certain personal liability requirements for individuals who exercise “substantial control” over an institution. The EA clarifies ED’s procedures and considerations when determining when, or whether, to require such persons to co-sign the institution’s Title IV Program Participation Agreement (PPA) in their individual capacity, thus assuming personal liability for Title IV program losses the federal government would otherwise incur if the institution is unable to appropriately resolve such liabilities.
This new guidance meaningfully broadens ED’s position on PPA signatories of nearly one year ago, when ED published Electronic Announcement GENERAL-22-16, which expanded PPA signature requirements to include entities exercising substantial control over private non-profit and for-profit institutions participating in the Title IV programs, but stopped short of imposing any additional personal signatory or liability requirements. (While these actions reflect a significant expansion of PPA co-signature requirements, we note that personal liability is not entirely new to the Title IV regulatory regime, as longstanding regulations provide that individuals who exercise substantial control over a participating institution are potentially liable to ED for fines in connection with the improper retention of Title IV program funds under the “return to Title IV” rules. See 34 CFR 668.93(d)(1).)

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