ED Includes Financial Responsibility Rules in Upcoming Negotiations

Last June, the Department of Education announced its intention to revise two major rulemakings promulgated by the Obama administration that were widely seen as targeted at abuses in the for-profit sector. ED is now soliciting nominations of representatives to serve on two stakeholder committees, one on the borrower defense to repayment rules and one on gainful employment. In addition, ED will convene a formal subcommittee of the borrower defense committee to consider possible revisions to the financial responsibility standards.

By law, ED is required to use a formal negotiated rulemaking process when making changes to rules implementing Title IV of the Higher Education Act.

At a public hearing in July, NACUBO urged ED to address the financial responsibility standards as part of this rulemaking effort, noting longstanding concerns with the rules, recent changes to accounting standards for nonprofit entities, and the new triggering events that were added to the financial responsibility standards as part of the borrower defense rules. The establishment of a dedicated subcommittee will allow representatives of schools, accounting firms, and others with expertise in financial accounting standards and ED’s standards to focus specifically on these issues. ED has asked for separate nominations for the subcommittee and is seeking individuals to represent private nonprofit and for-profit institutions, accrediting agencies, chief financial officers, auditors, and organizations that provide accounting guidance and standards.

ED also seeks nominations of experienced business officers to serve on the borrower defenses and gainful employment committees. The borrower defense rules focus on how and when ED should forgive federal loans to students when they have been misled or defrauded by their institutions or the institution closes, and how ED can hold schools accountable for its losses. The gainful employment regulations established metrics to determine if nondegree programs at all types of institutions did an adequate job of preparing students for employment. The committee will consider changes to the debt-to-earnings rates measures, sanctions, and reporting and disclosures.

Each group will meet three times over the course of several months beginning in November and December in Washington, D.C. NACUBO intends to nominate business officers to represent the association. Members who might be interested in participating are encouraged to contact Anne Gross or Sue Menditto for more information.