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On October 24, the Department of Education published a final regulation addressing several topics on its regulatory agenda, including financial responsibility, administrative capability, certification procedures, and Ability to Benefit.

Details of the final rule, which will be published in the Federal Register on October 31, will go into effect on July 1, 2024. ED also published a three-page fact sheet summarizing the final rule.

ED notes in a press release that the rule is intended to meet the Biden administration’s agenda “to make college more affordable, hold colleges accountable, and protect taxpayers and consumers.”

NACUBO’s summary below examines the provisions addressing financial responsibility and certification procedures, including transcript withholding policies. NACUBO staff will continue to review the regulation and will work with other higher education associations to determine ways colleges and universities will implement the changes.

Financial Responsibility Provisions

Overall, ED retained almost all financial responsibility items that were in its May negotiated rulemaking proposal. However,

ED retracted proposed requirements for institutions to disclose all recruitment, advertising, and pre-enrollment expenses and extended the triggering event reporting timeframe from 10 to 21 days. Both changes were recommendations NACUBO made.

The final rule supports ED’s stance that mandatory triggering events are directly linked to finances and signal significant financial concern; consequently, surety and ongoing engagement can be required. Some examples of mandatory triggers include legal actions and related costs, borrower defense claims, financial exigency, and equity withdrawals. However, the final rule narrows the scope of the teach-out trigger and adds a composite score recalculation for ownership changes and certain monetary obligations from legal and administrative actions. With discretionary triggering events, the rule provides institutions an opportunity to share additional information that demonstrates resolution or risk reduction.

Concerning related party disclosure requirements, ED clarified that de minimus routine transactions, such as meals for trustees, should not be considered. Another clarification requires institutions without related party transactions to add a note to the financial statements that discloses this fact. However, ED retained its regulatory requirement for institutions to identify individual related parties and transaction totals in a note to the financial statements. ED believes that because such information is provided solely for its use, there is no conflict with OMB rules that prohibits the disclosure of identifying information about individuals. NACUBO had expressed concerns that ED’s reasoning runs contrary to the principles of public transparency inherent in the Single Audit and Freedom of Information Acts.

Transcript Withholding Policies

Within the certification procedure provisions, ED made changes to its Program Participation Agreements with institutions to prohibit withholding transcripts in certain circumstances.

First, institutions cannot withhold transcripts—or take other negative actions against a student—in cases where a debt on a student’s account is created because of an error made by the institution in administering Title IV funds, or when there is fraud or misconduct by the institution or its employees.

Second, an institution will have to provide an official transcript to a student for payment periods when the student received Title IV aid and all institutional charges for that payment period were paid or included in an agreement to pay. This is a departure from ED’s proposal, which suggested that institutions would not be able to withhold transcripts in cases where a debt that caused the hold was the result of a Return to Title IV (R2T4) calculation. NACUBO had objected to this in our letter, and ED scrapped that R2T4 proposal, adopting instead the broader Title IV approach. It is unclear at this time whether “agreement to pay” simply means institutional payment plans or promise-to-pay provisions included in college and university Student Financial Responsibility Agreements.

The final regulation suggests that institutions will be able to utilize other existing methods of collecting a balance on a student’s account.

 The publication of the final rule completes a process that began in the winter of 2021-22 with public hearings and negotiated rulemaking sessions, with proposed regulations shared in May 2023.

Separately, ED published final regulations on September 28 addressing the gainful employment and financial value transparency provisions that were part of this regulatory package.


Sue Menditto

Senior Director, Accounting Policy



Bryan Dickson

Director, Student Financial Services and Educational Programs


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