Proprietary Schools Change of Ownership
Outline of Procedures for
Change of Ownership in Title IV Institutions
Below is the preliminary documentation outlining the process whereby a new owner would be approved to receive US Department of Education Title IV funding. The change of ownership process, and citings are outlined below. Further information can be found within the USDOE FSA handbook-
USDOE Title IV Change of Ownership
A. Optional Pre-acquisition Review:
a. If the new owner chooses to partake in this optional review, a pre-acquisition review application must be submitted at least 45 days prior to the expected date of transaction. This application can be found at: http://eligcert.ed.gov/
b. This is the same application “E-App” that is required to be submitted within 10 days of the change of ownership except it is marked “Pre-Acquisition Review”. This allows the new owner to answer all the questions completely and accurately before the change of ownership occurs. While this pre-acquisition application does not provide approval into the Title IV program, it allows the new owner to streamline the process once he/she takes ownership. It doesn’t provide a binding decision by the USDOE, but this pre-acquisition application will be reviewed by the USDOE and the results of that review will be provided to the new owners.
i. If the potential owner decided against the purchase, he/she must notify the US DOE School Participation Team of the decision to withdraw his/her application.
ii. If the potential owner decides to purchase the school:
1. he/she must notify the USDOE within 10 days of the purchase date
2. he/she must submit the supporting documentation for a “materially complete application” (see below)
B. Materially Complete Application for the purpose of applying for temporary approval to participate in the USDOE Title IV program must include:
a. A completed application form (this can be found at: http://eligcert.ed.gov/
b. A copy of the school’s state license (that was in effect on the day before the change of ownership.)
c. A copy of the school’s accrediting agency approval (that was in effect on the day before the change of ownership) that specifically grants the school accrediting status and includes approval for all the non-degree programs the school offers.
d. The school’s two most recently completed audited financial statements (to be submitted via the Ezaudit system at: http://ezaudit.ed.gov.)
e. The new owners’ two most recently completed year’s audited financial statements (these are to be submitted via the Ezaudit system at http://ezaudit.ed.gov)
f. A completed signature page, section L
C. If the application is approved, the new owner will receive a Temporary Provisional Program Participation Agreement (Temporary PPA) which extends the terms and conditions on the original PPA under the prior ownership.
D. This Temporary PPA expires the earlier of
a. The date when the new program participation agreement is signed by the USDOE
b. The date the USDOE notifies the new owner that the school’s application to participate is denied
c. Or the last day of the month which follows the purchase month when the change of ownership occurred.
i. The USDOE can automatically extend the Temporary PPA on a month to month basis if the new owners submit, prior to the Temporary PPA’s expiration date the following.
1. a one day audited balance sheet for the date of purchase.
2. approval from the state for the change of ownership is provided
3. approval from the school’s accrediting agency for the change of ownership is provided
4. a default management plan is provided
The above process is extrapolated from the 2009/2010 USDOE Handbook. Another good source of information can be found in the “Change of Ownership at a glance” from the USDOE:
Accrediting Agency Requirements
In addition to the above USDOE requirements, each accrediting agency also have their own requirements that would be required to transfer the accrediting agency approval to the new owner. Examples of these requirements can be found as follows:
ACCSC: http://www.accsc.org/Content/FormsAndReports/FormsAndReports.asp (application for change of ownership I and II.
NACCAS: http://naccas.org/Applications%20and%20Forms/Forms/Applications%20and%20Forms1.aspx (applications 12 and 13)
ACCET: http://accet.org/displaycommon.cfm?an=4 (application 22)
State requirements for the change of ownership for proprietary schools need to be reviewed.
Other Revenue Source Requirements
The new owner must notify sources of other, non-title IV funding received by the school.
Specific change of ownership requirements for each school may differ. If you require additional information, please feel free to contact our office.