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Business and Policy Areas
Business and Policy Areas
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NACUBO Formally Weighs In on ED's Proposed Cash Management Rules

July 13, 2015

NACUBO, joined by six other higher education associations, identified a number of broad concerns with the Department of Education's proposed rules on cash management in a July 2 comment letter to ED.

The proposed rules would impact Title IV cash management on college and university campuses and govern agreements between schools and banks and third-party servicers processing Title IV refunds while offering accounts to students.

ED established two specific types of arrangements: Tier One (T1) arrangements, agreements between an institution and a third-party servicer that performs one or more functions associated with processing direct payments of Title IV funds on behalf of an institution and offers one or more financial accounts to students and parents; and Tier Two (T2) arrangements, agreements between a school and a financial institution that offers and markets accounts to students.

Three overarching concerns were included in NACUBO's letter:

  • Third-party servicers and banks will simply exit this marketplace if the rules are too proscriptive, too difficult, and too expensive to implement, leaving colleges and universities without valuable partners that have helped them improve services to students.
  • ED has overstepped its statutory authority in regulating T2 arrangements simply because some students might choose to deposit Title IV funds into these accounts, and in requiring disclosures about charges for books and supplies included in tuition and fees.
  • The proposed regulations go well beyond the remedies necessary to resolve the problems that ED identified in justifying its action, imposing considerable and unnecessary burden on the regulated parties for very little added benefit.

NACUBO also offered detailed section-by-section responses to the proposed regulations.
Topics include:

  • Maintaining and Accounting for Funds
  • Books and Supplies Included in Tuition and Fees
  • Checks as an Option
  • Title IV Credit Balance Payments by ED
  • Student or Parent Choice in How They Receive Title IV payments
  • Existing Account as First and Default Option
  • Fee and Feature Disclosures
  • Sharing Student Information with Third-Party Servicers
  • ATM Access
  • Restrictions on Certain Fees
  • End-of-Year Disclosure of Account Fees

The department received more than 200 comments on the proposal from students, colleges and universities, consumer representatives, service providers, financial institutions, and state attorneys general, among others. NACUBO expects the final rules to be published before November 1 and they would take effect July 1, 2016.

Contact

Anne Gross
Vice President, Regulatory Affairs
202.861.2544
E-mail

Bryan Dickson
Senior Policy Analyst
202.861.2505
E-mail