Use these checklists to assist with Change in Ownership or Mergers.

Change in Ownership

Information concerning current status of school:

Have all FSA audits been submitted to the Department as required?      

Are there any outstanding audit findings or liabilities?      

Are there any outstanding Program Review findings or liabilities?      

Are there any outstanding ED Payment liabilities?      

The institution's latest Perkins, FFEL, and Direct Loan rates are as
follows:

Perkins latest default rate (last three years)      

FFEL latest default rate (last three years)      

Direct Loan latest default rate (last three years)      

Does the institution have a Default Reduction Plan? (See [DCL GEN
01--08](http://ifap.ed.gov/dpcletters/gen0108.html))

Does the institution meet all Financial Responsibility requirements as
outlined in\
[34 CFR 668.171 through
668.175](http://www.access.gpo.gov/nara/cfr/cfrhtml_00/Title_34/34cfr668_00.html)?
     

Is the institution's accreditation current?      

Is the institution's state license current?      

Has the Department of Education take any administrative actions against
the school?      

Does the prospective owner or officials of the institution have any
outstanding liabilities\
or other problems with current or previously owned institutions?      

Does the institution use a Third party servicer?      

Have there been any actions taken against this Third party servicer?
     

Financial Aid Staff---Does the institution use an adequate number of
qualified persons\
to administer the Title IV, HEA programs in which the institution wishes
to participate?      

Preparation steps the new owners will need to take before the change in
ownership

Contact the state and accrediting agencies to ensure a smooth and timely
approval\
of the change in ownership by those agencies.

Determine which officials will attend precertification training.

Date and location of training attended:      

**Names and titles of attendees:**      

Use the following checklist to guide you through the Change In Ownership
process:

The application can be found at <http://eligcert.ed.gov/>*.* In
addition, please ensure that the following documents are submitted to
the Department of Education:

Signature Sheet

Authorization (License) from the State that the authorization is for a
change in ownership

Current letter of accreditation, including:

A statement from the accreditor that the accreditation is for a change
in ownership

Year of most recent accreditation

Number of years

Stipulations, if any

Approval of each nondegree (vocational program), including

Number of weeks of instruction

Number of clock hours

Number and type (semester, quarter) of credit hours, if applicable

Default Management Plan, if applicable:

Default Management Plan set forth in DCL 01--08; or

Its own default management plan that has been approved by the Department
of Education; or

The institution is exempt under
[487(a)(14)(C)](http://edworkforce.house.gov/publications/heacomp/hea65p3.pdf)
of the HEA from providing a Default Management Plan. Specifically, the
institution does not have to use an approved Default Management Plan
if---

The institution, including its main campus and any branch campus, does
not have a cohort default rate in excess of 10 percent; and

The owner of the institution does not, and has not, owned any other
institution with a cohort default rate in excess of 10 percent

Plans to attend Fundamentals of Title IV Administration
(Precertification) Training

Once the institution attends Fundamentals of Title IV Administration
(Precertification) training, the institution must submit a Certificate
of Completion.

Financial Statements---only those financial statements (including day
one balance sheets) audited in accordance with Generally Accepted
Governmental Auditing Standards, prepared in accordance with Generally
Accepted Accounting Principles and prepared on the accrual basis are
acceptable. Financial statements that do not meet these standards are
rejected:

Audited financial statements of the institution for its two most
recently completed fiscal years

Audited financial statements of the purchaser (buyer) for its two most
recently completed fiscal years (if appropriate)

Day one balance sheet of the newly formed company (institution) as of
the date of the ownership change (acquisition)

Numeric Tests---To determine if the institution meets the financial
responsibility requirements, the institution will be asked to
demonstrate at the date of acquisition that it has an acid test ratio of
at least 1:1; has a positive tangible new worth (for not-for-profit
institutions a positive unrestricted current fund balance, a positive
unrestricted net assets), and is not materially leveraged, or burdened
with significant contingent liabilities that draws into question its
ability to continue as a going business concern. In addition, it must
not have been cited for past performance violations as set forth in
[668.174](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=668&SECTION=174&TYPE=TEXT)

[Note]{.underline}: The institution should be prepared to submit any
other documents or other information as considered necessary by the
Secretary in assessing the financial viability of the new company. This
may include, but is not limited to, information obtained from outside
sources and all credit information of the institution as well as the
buyer. Your School Participation Team will contact you if further
documentation is required.

Use the following checklist to guide you through if your institution is
going through\
a Merger process.

The institution must submit the following documentation along with the\
completed application:

Signature Sheet

Authorization (License) from the State that the authorization is for a
merger

Current letter of accreditation, including:

A statement from the accreditor that the accreditation is for a merger

Year of most recent accreditation

Number of years

Stipulations, if any

Approval of each nondegree (vocational program), including

Number of weeks of instruction

Number of clock hours

Number and type (semester, quarter) of credit hours, if applicable

Financial Statements (not required for public institutions)---only those
financial statements (including day one balance sheets) audited in
accordance with Generally Accepted Governmental Auditing Standards,
prepared in accordance with Generally Accepted Accounting Principles and
prepared on the accrual basis are acceptable. Financial statements that
do not meet these standards are rejected:

Audited financial statements of the institution for its two most
recently completed fiscal years

Audited financial statements of the purchaser (buyer) for its two most
recently completed fiscal years (if appropriate)

Day one balance sheet of the newly formed company (institution) as of
the date of the ownership change (merger)

Numeric Tests---the institution must demonstrate at the date of
acquisition it has an acid test ration of at least 1:1; has a positive
tangible new worth (for not-for-profit institutions a positive
unrestricted current fund balance, a positive unrestricted net assets),
and is not materially leveraged, or burdened with significant contingent
liabilities that draws into question its ability to continue as a going
business concern. In addition, it must not have been cited for past
performance violations as set forth in
[668.174](http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=668&SECTION=174&TYPE=TEXT)

[Note]{.underline}: The above checklist will assist your school in
determining what needs to be submitted to the School Participation Team
in order to be considered for the Merger.