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Student financial responsibility agreements (SFRAs) help to ensure that students understand their obligations and protect institutions from risk of default. The agreement is intended to properly disclose and set the contractual parameters between the creditor and consumer for the duration of the contractual relationship and to outline the relevant remedies available if there is a material breach of the terms. Additionally, the agreement assists the institution and its collection agency partners when complying with laws and regulations.

NACUBO Advisory AR 21-02, Best Practices for Student Financial Responsibility Agreements, is an update to the 2018 report and offers a template of priority and option subjects to assist schools in developing or strengthening their agreements.

Priority subjects address a promise to pay, collections, and communication. Optional subjects cover financial aid, billing, returned payments, withdrawal, privacy rights, and more.

Notably, the update addresses various court decisions and changes to case law regarding the assessment and recovery of contingent-based collection fees. It is critically important to note that any fee incidental to the principal obligation of the debt has to be expressly authorized by the agreement creating the debt, allowed by applicable law, and reasonable as defined in the relevant jurisdiction. Also, institutions are responsible for determining what amount is due and owing to the school. When any student account is placed for collection, the placing institution should be certain the amounts included in the debt are accurate, legally appropriate, and due and owing when placed with an agency.  

Additionally, the update includes new language for students revoking consent to be called or texted using auto dialing technologies, provides a sample severability clause, and modifies the arbitration/mediation section to reflect regulations that went into effect in July 2020.

NACUBO encourages institutions, after consulting with counsel, to strongly consider implementing the language included in this advisory.


Bryan Dickson

Director, Student Financial Services and Educational Programs


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