The Nuts and Bolts of Tuition Reimbursement

Based upon questions we have been fielding from parents recently, it may be time to revisit a subject that we first addressed in 2011 - how families can get reimbursed for private school tuition for their children who qualify for services under the Individuals with Disabilities Education Act (IDEA).

A good place to start this discussion is with understanding that parents have the right to enroll their child in any school they choose. Whether their child is a typical learner or a student with challenges, it is completely up to the parents to decide where and how they obtain their education (so long as they are, in fact, being educated, since attendance at a school or participation in an authorized home school program is mandatory). The issue in these situations is who will pay for this education.

It is also important to understand that states have a list of "approved private special education programs". The fact that these schools are "approved" means only that these programs meet certain criteria and follow certain rules - things like curriculum, school calendar, and participation in state testing. Local school districts that cannot meet the needs of a particular child may agree to place a student in one of these approved schools. The local district takes responsibility for the student's application and arranges to pay the tuition at this private approved school. [The state reimburses the local district for much of this tuition]. There is no cost to the family. Once the student is accepted into the approved private school, it  becomes the placement set forth in the student's IEP. 

Frequently, however, the local school district does not agree with the parents' contention that a particular student requires a private school in order to meet his or her needs. They offer an IEP that provides for the student to be educated in a public school, perhaps in a special class or with special supports. When that occurs and the parents believe that their child is not being provided with an appropriate public education - something universally referred to as FAPE (free, appropriate, public education), the parents may decide to enroll their child in a non-approved school that they believe will meet their child's needs. They may then file for a hearing before a state hearing officer to seek to have their tuition payments at the private school reimbursed to them. We recommend that the parents work with an attorney who is experienced in handling special education matters to represent them in the hearing.  Note that local school districts cannot and will not place a student in a non-approved private school, even if they think it would be helpful for the child. 

Under the IDEA, there is a three prong test, called the Burlington/Carter test, after two U.S. Supreme Court cases: Florence County. School. District. Four v. Carter and School Committee of Town of Burlington v. Department of Education of Massachusetts . 

1. First, the local school district has the burden of establishing that their IEP, including the school setting, is appropriate. If they succeed in demonstrating this, then they will prevail at the hearing. 
2. IF the district fails to establish that its IEP is appropriate, then the hearing officer will look to see whether the school in which the parents have enrolled their child is, indeed, an appropriate setting in light of the student's needs. Generally, a private special education school that works with students like the one at hand will be deemed appropriate. In contrast, a private general education program with little experience with students with disabilities will likely not be appropriate.
3. Finally, the hearing officer will look at the equities, meaning that it will examine whether the parents have dealt fairly with the district by looking at the programs that the district suggested and not having signed a binding contract with a private school in advance of examining the programs the district recommends. Note, however, that the parents’ preference for a private school is not a bar to reimbursement.

Even parents who are successful at a hearing still must lay out the tuition and await reimbursement which can come more than a year after the fact, given the time involved in scheduling hearings (even without an appeal from the hearing decision by the district). And the hearing process needs to reoccur each year, unless the parties reach a settlement. There can be no guaranty that parents will be awarded reimbursement, although an experienced attorney looking at all the facts in a particular case can be helpful in weighing the likelihood of success. 

Assessing a College's "Value"

Any good liberal arts college will encourage students to understand that correlation does not necessarily mean causation. This key component of critical thinking is what explains why ice cream consumption does not cause drowning, even though both tend to increase at the same time of year - in the summer.

However, it seems that this principle is often being overlooked in evaluating the colleges our society relies on for teaching students how to think critically. The U.S. Department of Education’s College Scorecard provides in its rankings database, among other information, median earnings of graduates. A recent New York Times article notes that this promotes a causation-for-correlation confusion, and that a particular institution’s direct impact on future earnings cannot be assumed.

Confounding factors include admissions selectivity and the fact that students at expensive universities often come from privileged backgrounds, which also correlates with high earnings. Colleges also vary in their focus on particular fields, some of which are more high-paying than others, thereby impacting the average when earnings of graduates across fields are evaluated as a whole.

There are many ways to assess a college’s value. Graduate earnings are just one of them, and even if this is the variable used, it must be interpreted with great caution.

Don't Delay Your FAFSA

What are you doing this weekend? If you're a college-bound young adult hoping to get financial aid to help with your tuition, your answer should be "filling out the FAFSA." Nearly all schools require that students fill out a FAFSA (Free Application for Federal Student Aid) for each year that they hope to receive financial assistance. And most experts suggest that even students who aren't sure whether they qualify should submit a form just in case; after all, students who don't definitely won't get financial aid.

The form is available on January 1st every year, and while different states and colleges have different deadlines, students who fill it in early tend to be awarded more aid money. Data suggest that students who file the from between January and March, for example, receive twice as much aid money as those who wait longer! One reason is that some state grant programs operate on a first-come, first-served basis.

Students will need information from their schools, like the school's code, which is usually found on the school's Financial Aid webpage. They will also need financial information from the past year, a trickier proposition as tax forms bearing these numbers are sometimes not yet available. Those who don't want to wait, however, can use estimated financial information from past years, then update their information when they receive it.

A recent New York Times article contains additional information and resources for filling out the FAFSA. Good luck!

photo credit:401kcalculator.org via flickr

The Jury is Out on New NYC Special Education Rules

Parents who place their children in private special education schools in New York City and seek to have their tuition payments either made directly by the public school system (Connors funding) or reimbursed to them (Carter funding), have long come up against a NYC Department of Education which has put up extensive procedural barriers to avoid making these payments. Even the Mayor's office noted, in a press release, "The special education placement process has been fraught with contention and litigation in recent years."

    

Now, in the face of a bill pending in the New York State legislature which would make it easier and quicker for families to receive public funding, the City has decided to remove the most onerous barriers faced by families seeking school funding and, according to a statement by NYC Mayor Bill de Blasio, is "...turning the page, making changes that will ease the burden on these parents [by] ... cutting red tape, speeding up the process, and reaching outcomes that do right by families.”  A 2012 bill which would have permitted funding in religious schools was vetoed by the Governor, but the current bill (which has been put on hold in light of this action by New York City) did not include this provision.


The specifics of the new policy are scheduled to be put in place by September of this year and include:

• Expedited Decisions: The City will now seek to reach a settlement with parents (in cases where settlement is appropriate) within 15 days of receiving notice from the parent of their intention to place their child in a private special education school.
• Ending Unnecessary Litigation: The City will no longer litigate cases which were settled or decided in prior years, or where the Department of Education fails to offer a school placement, except where there is a change in the kind of educational setting the student requires.
• Less Paperwork: Parents will no longer need to submit full documentation every year. The new requirement will be for documentation every three years.
• Quicker Payments: The City will make monthly payments where required by a school and give parents a payment schedule for other payments. 
• Payments Pending Appeals: Where parents have won a claim for tuition reimbursement which the City seeks to appeal, the City will pay the tuition while the appeal is pending.

Attorneys practicing in the area of special education are hopeful that these new policies mark an end to the very difficult relationship between the City and it's Department of Education and parents. Still, the devil is always in the details and families and the attorneys representing them are reserving judgement until they see how this new approach works in practice. 

College Savings Day is May 29

Parenthood is full of uncertainties, but there’s one thing that parents can count on: college tuition is likely to keep rising. To spare themselves and their children from years of loan repayments, parents need to understand the many ways to save for college tuition and to reduce college costs.  There are plenty of options for saving beyond the coffee can hidden under the bed: Coverdell Education Savings Accounts (cover K-12 expenses in addition to college, and are limited to $2,000 annual contributions), standard personal savings and investment accounts (generally subject to state and federal income taxes), and 529 plans (college savings plans that are free from federal taxes) are all good options. In honor of College Savings Day on 5/29, we’ll focus this post on 529 plans. Future posts will look at other aspects of paying for college.

First, it’s important to know what costs your child will face. Take a deep breath and visit the College Cost Calculator for an estimation based on your child’s age, the type of school s/he will likely attend, and average tuition inflation.

Now that you know what you’re up against, the next step is to choose a 529 plan. All 529 plans have two things in common: they’re investment options, and they’re free from federal income tax. Most states offer several plan options, and some of them have further benefits that may make withdrawals free from state tax too, or qualify students for state grants and s
cholarships.

529 plans fall into two categories. The first, a prepaid tuition plan, is currently available in 11 states. It allows parents to buy tuition ahead of time, based on today’s costs. The money is then passed on to the college when the child enrolls down the road. This is a great option for students who know they’re going to stay in-state because it locks them into tuition rates that are almost certain to be lower. The second variety, the savings plan, is a bit more versatile. The 529 savings plan works a bit like a 401(k) retirement plan: money contributed into the account is invested, typically in mutual funds (either by a fund manager or by the account holder, depending on the plan), and can later be withdrawn for qualifying education expenses without being subject to federal taxes.

Here are some good things to know about 529s:

• While enrolling in your state’s plan may offer you particular benefits, you can enroll in any plan in any state, regardless of where you live or where your child ends up enrolling. Be sure to research all state plans to find the best one for your family. 

• Anyone can contribute to a 529, so spread the word to grandparents, aunts and uncles, etc.

• Almost all plans allow the account to be transferred to another beneficiary without penalty, so if your child is drafted to the NBA and no longer needs your help paying for college down the line, the account can become his younger sister’s college fund instead. 

• Most financial advisors recommend that parents who can afford only retirement savings or college savings choose the former. Your child can always borrow money for college, but you can’t borrow money for retirement. 

CollegeSavings.org allows visitors to research their plan options by state or by feature. Consider whether a prepaid tuition or savings plan is best for your family first, and be sure to consider other factors like the minimum initial contribution and maximum total contribution limits; state tax breaks and other state-specific benefits; and enrollment and other annual fees charged by the plan. 529 plans are considered to be assets of the parents, not the student, in calculating Expected Family Contribution for financial aid under the FAFSA form, the universally utilized calculator of college financial aid. This means that it has less of an impact when total family assets are considered.

A note about using a 401(k) or IRA retirement account as a college savings fund: Most financial advisors seem to steer people away from this option. Even though account holders can withdraw from these funds without penalties after the age of 59 1/2, the withdrawals still count as taxable income, unlike funds from a 529. Additionally, the amount withdrawn will be added to your annual income, meaning that you will fall into a higher income bracket and your child may not qualify for financial-based student aid next year.

Important Note: The information above is intended to get you started thinking about these issues -- not to be financial, investment, or accounting advice. Please see an appropriate professional for specific guidance, tailored to your family's needs.