RCM&D Corporate Blog

Perspective on Changes to the Pell Grant

Posted on: Fri, 19 Sep 2014

The attached article is interesting and raises some questions.  As colleges and universities are trying to attract students, their future alumni, what are the motives behind how they “dole out” funding?  Need-based or merit-based and the gray areas that exist between the two is becoming apparent.

Funding methods have the potential to lead to allegations (actual claims or reputational risk issues) if a school is accused of treating candidates unfairly in the admissions process or accepting a student knowing they cannot afford.  

Schools, their business partners, and insurance carriers need to stay abreast of this issue.  What impact will this have in the future?  This is not a first time situation similar to this that has caused ambiguity and more insurance carrier questions and/or needed amended terms (to cover or exclude).

To note, the schools mentioned in the article are located near Washington, DC, thus I question if that is because they were an easy “target” to investigate.  I do not know why the two schools were chosen for investigation. 

Lastly, I suspect we will start to see some garnered interest in Reputational Risk coverage in the near future and hopefully those coverage terms will expand accordingly to be more responsive with higher limits and lower deductibles. 

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