NMU's Compliance Database - Northern Michigan University

After discussion with counsel, NMU interprets this regulation to mean that NMU loses the exemption and would have to report on triggering information if any of the following applied: 

1) (Federal) Program Audit with compliance findings - track for five years;
2) Composite score below 1.5;
3) Borrower defense lawsuit against NMU; or
4) External audit report with a qualified audit opinion.


NMU will use the compliance database report function to attest that none of the following have been identified for the next year. For consistency, timing for annual attestation will be shortly after the external audit report is complete, although any of the other conditions would also start the requirement as well. 

In general, the requirement is for all institutions to ensure that protocols are in place to report new triggering events (effective October 17, 2018) to the Department of Education in a timely manner, generally within 10 days. Independent nonprofit colleges and universities are subject to ED’s financial responsibility standards, while public institutions are exempt from the financial responsibility standards, unless subject to a condition of past performance under 34 CFR 668.174 (these are the four conditions listed above). The department may require a recalculation of an institution’s most recent composite score if certain triggering events occur:

In March 2019, the US Department of Education, subdivision Office of Post-Secondary Education, issued a guidance about the November 1, 2016 regulation regarding recalculation of the composite score. Specifically, there are five triggers that must be reported. NACUBO summarizes these triggers as: 

Automatic triggers. The final rules define five types of events or actions that would cause ED to recalculate an institution’s composite score, without waiting for the institution’s audited financial statements: 
1. Debts stemming from a judicial or administrative proceeding or settlement.
2. Borrower defense-related lawsuits.
3. Other litigation.
4. Accrediting agency actions requiring a teach-out plan when an institution is closing or is closing a branch or additional location.
5. Gainful employment programs that could become ineligible for federal aid in the next award year.

One additional automatic trigger—a cohort default rate (CDR) of 30 percent or higher for two consecutive years—would not involve any recalculation.

Finally, there are several discretionary triggers: 
• Significant fluctuation year-to-year in the amount of Pell Grant and/or Direct Loan funds received by the institution.
• Citation by state licensing or authorizing agency for failing requirements.
• Failing a financial stress test devised or adopted by ED (no such test has been developed or designated to date).
• High annual dropout rates.
• Accreditation status such as probation, show-cause order, or similar action.
• Violation of a provision or requirement in a loan agreement that enables the creditor to increase collateral.
• Pending claims for borrower relief discharge.
• Significant borrower defense claims expected due to a lawsuit, settlement, judgment, or finding.