Changes to Disbursement and Cash Management Rules Proposed by ED
August 9, 2007
A number of changes to the rules governing management of Title IV funds, including escheatment, excess cash, disbursement of credit balance refunds, and payment of prior-year charges are included in a notice of proposed rulemaking (NPRM) issued by the Department of Education on August 8. Comments are due September 7.
The NPRM primarily addresses changes to the Student Assistance General Provisions (§668), the part of the Title IV regulations which covers requirements common to all of the federal student aid programs. Corresponding changes to specific program rules are also included where necessary. These proposed rules were crafted with the help of a negotiated rulemaking committee last spring, including NACUBO representatives. According to the statutory schedule for Title IV rule changes, ED must publish final rules by November 1 in order for them to take effect July 1, 2008.
A number of the proposed changes will directly affect business office and bursar functions, although none are major. Key provisions are summarized below.
Payment periods. The NPRM makes a number of changes in order to align disbursements for all Title IV programs. Funds for all programs will need to be disbursed on a payment period basis, generally once per period. There are special rules for credit hour programs using nonstandard terms.
Return of Title IV funds. Corresponding changes would require institutions to use the same payment periods when calculating returns of Title IV funds when a student withdraws.
No-show students. The NPRM pulls together the rules for treatment of Title IV grant and loan funds when a student does not begin attendance into §668.21. The proposed regulations generally follow existing requirements, but set a 30-day deadline for the institution to return funds after it determines that a student failed to begin attendance. Institutions will not be required to return FFEL or Direct loan funds that were disbursed to a no-show student, unless the institution knew that the student would not attend prior to the disbursement.
Post-withdrawal disbursements of grant funds. The proposed rules eliminate a recent requirement that institutions notify a student who has withdrawn and obtain permission before disbursing earned grant funds directly to the student. Such disbursements would need to be made within 30 days of when the institution determined the student withdrew, rather than the 45 days allowed to return funds to ED.
Escheatment. The disbursement rules would formally adopt long-standing ED guidance that Title IV funds that cannot be delivered to students or parents cannot escheat to the state or any other party, but must be returned to ED, the lender, or the guaranty agency, as appropriate. For the first time, specific timeframes would be set out in the regulations for the return of funds if checks are not cashed within 240 days. If a check or EFT is returned as undeliverable, the institution has 45 days to make subsequent attempts to deliver the funds.
Minor prior-year charges. The threshold for using Title IV funds to pay for minor prior-year charges for tuition, fees, room and board would be raised from $100 to $200. Prior authorization from the student would no longer be necessary.
Paying credit balances to students. Under existing rules, institutions must pay any balance attributable to Title IV funds remaining on a student account after institutional charges are satisfied to the student or parent within 14 days. If an institution meets this requirement by notifying a student that a check is available for pickup, a new provision would require it to mail any checks not claimed by students within 21 days of the date of the notice.
Electronic payment methods. The rules on payments to students and parents would be updated to address electronic funds transfer and stored-value cards or other transaction devices. Institutions could request, but not "require or rely on" students or parents to open bank accounts (including those underlying transaction devices).
Late disbursements. Currently, institutions may disburse Title IV funds to a student who is no longer eligible if certain conditions exist within 120 days. If the student is not to blame for the institution's failure to disburse the funds in a timely manner, the institution can appeal to ED for permission to disburse funds later than 120 days. The proposed rules would eliminate the appeal process, but extend the 120-day period to 180 days.
Loan cancellation notices. The proposed rules would add provisions that distinguish between affirmative and passive confirmation by a student of a loan. If an institution obtains affirmative (written) confirmation from the student that he or she wishes to receive the loan for the award year, current parameters for providing notice to the student when funds are disbursed may be followed. If the institution relies on passive confirmation, i.e. it provides the student with an award letter or other notice but does not require a response, the disbursement notice must be made no earlier than 30 days prior or 7 days after the disbursement, and the student must be given 30 days rather than 14 days to cancel the loan.
Excess cash allowances. The tolerance for holding excess Title IV funds (funds not disbursed within 3 days of receipt) would be tightened. An institution could hold for up to seven days no more than 1 percent of its previous year’s total Title IV drawdown. The current provision which allows greater leeway during peak enrollment periods would be dropped.
A number of other modifications address issues particular to institutions using unique calendars and programs, or with clock-hour programs.
NACUBO would appreciate receiving copies of comments filed by members. Please share them with Anne Gross.
NACUBO Contact: Anne Gross, vice president, regulatory affairs, 202.861.2544
- Affordable Care Act: Final Rules on Coverage for Adjuncts and Students
- Administrative Jobs and Benefits Costs Drive Higher Ed Labor Costs
- OMB Super Circular Makes Changes to Audit Requirements
- 2014 Higher Education Accounting Forum
April 27-29, 2014
- ON-DEMAND: Understanding the Results of the 2013 NACUBO-Commonfund Study of Endowments, and a Look to 2014 and Beyond
- ON-DEMAND: How Behavioral Changes Helped Cut Energy Usage in Half
- ON-DEMAND: Developing a Market-Informed Approach to Tuition Pricing
- ON-DEMAND: Responsibility Center Management: The Process Necessary to Complete a Successful Implementation
- ON-DEMAND: OD: Responsibility Center Management: How Innovations Have Changed the Nature of RCM
- A Guide to College and University Budgeting: Foundations for Institutional Effectiveness, 4th ed. - by Larry Goldstein
- NACUBO's Guide to Unitizing Investment Pools - by Mary S. Wheeler
- Managing and Collecting Student Accounts and Loans - by David R. Glezerman and Dennis DeSantis