GLOBAL BUSINESS & FINANCE REVIEW, Volume. 19 Issue. 2 (SPRING 2014), 61-68 ISSN 1088-6931 / eISSN 2384-1648∣Http://dx.doi.org/10.17549/gbfr.2014.19.2.61 ⓒ People and Global Business Association. All rights reserved. GLOBAL BUSINESS & FINANCE REVIEW www.gbfrjournal.org 1) Understanding FERPA Implications of the Family Educational Right s and Privacy Act Jill M. Oeding a , Leslie E. Nunn b , and Brian L. McGuire c a Assistant Professor of Business Law at the Romain College of Business at the University of Southern Indiana, Evansville, IN, USA. b Professor Emeritus of Business Law at the Romain College of Business at the University of Southern Indiana, Evansville, IN, USA. c Professor of Accounting at the Romain College of Business at the University of Southern Indiana, Evansville, IN, USA. A B S T R A C T This article examines two major issues in the case law surrounding the Family Educational Rights and Privacy Act (FERPA), a federal law that was intended to safeguard student records and also has the potential to withhold federal funding from educational institutions that violate this law. The first issue is that the FERPA statute does not support a private cause of action for individuals to bring suit. Rather, FERPA's penalties to educational institutions are essentially the potential loss of federal funding. The second issue addresses the question of what amounts to an education record under FERPA. Courts seem to favor schools by finding no education record when a document is questionable. However, courts require the release of information when an agency seeking to protect the student is requesting the information. Keywords: Family Educational Rights and Privacy Act, Education Records Ⅰ. Introduction The Family Educational Rights and Privacy Act (FERPA) is a federal law passed by Congress to safeguard student records. Noncompliance with FERPA has significant financial implications for educational institutions. For example, if a school or educational institution permits students' educational records to be released without an adult student's (or a minor student's parents') written consent, then federal funds are authorized to be withheld from the offending school district (20 U.S.C. §1232g(a)(1)(A); 1232g(d)). In addition, if an educational institution releases The authors wish to thank the Jong Rhim, Editor of the Global Business and Finance Review, and two, anonymous referees for their insightful suggestions. † Corresponding Author - Jill M. Oeding* Assistant Professor of Business Law, jmoeding@usi.edu education records of students to improper persons without proper consent, the educational institution is again at risk for losing federal funding (20 U.S.C. § 1232g(b)(1)). Specifically, the FERPA statute provides that no funds shall be made available under any applicable program to any educational agency or institution which has a policy of denying... parents of students... the right to inspect and review the education records of their children (20 U.S.C. § 1232g(a)(1)(A)). The statute further states that no funds shall be made available to educational institutions which have the policy or practice of releasing education records to improper individuals (20 U.S.C. § 1232g(b)(1)). FERPA provides in Section 1232g(a)(4)(A) that education records are records, files, documents, and other materials containing information directly related to a student which are maintained by the educational institutions. Specifically, a document is considered education records if (1) the document contains information that is directly related to a student and (2) the record is maintained by an educational