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NACUBO has released a borrower defense advisory with guidance on the Department of Education’s new rules, published in the Federal Register on September 23, 2019.

NACUBO’s guidance explains the new financial responsibility requirements for private nonprofit institutions and discretionary and non-discretionary triggering events, which affect both public and nonprofit institutions. Prior to 2019, public colleges and universities were generally exempt from ED financial responsibility reporting. However, the new rules require that all institutions that receive Title IV aid notify ED when certain triggering events occur.

The final regulation will go into effect on July 1, 2020. However, institutions may choose to implement regulations related to financial responsibility immediately.

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Borrower Defense Rules

  • All institutions, public and private, should ensure that protocols are in place to report triggering events to the Department of Education.
  • All institutions, public and private, should become familiar with the federal standards by which borrower defense claims can be asserted for Direct Loans.

Financial Responsibility

  • Private nonprofit colleges and universities should understand the new methodology for financial responsibility composite score calculations and the associated reporting requirements.
  • There are two implementation options:
    1. Immediate implementation:
      • Aligns with FASB ASU 2016-14.
      • Many new requirements: Expanded disclosures and “supplemental schedule” will take time and must be audited and included with financial statements (UG audit package or general-purpose).
      • No word on whether ED will publish an updated cross-walk
    2. Delay Implementation until FY20:



Sue Menditto

Senior Director, Accounting Policy



Bryan Dickson

Director, Student Financial Services and Educational Programs


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