The Department of Education's financial responsibility standards (Subpart L of 34 CFR 668) are intended to ensure that institutions that participate in the federal financial assistance programs are able to meet their financial obligations and provide the resources necessary to offer their educational programs and comply with ED rules. In addition to other requirements, nonprofit and for-profit schools are subject to calculation of a composite score made up of three financial ratios. Institutions that do not demonstrate passing scores are subject to additional oversight and may be required to provide surety to ED. To learn more about the newly enacted regulations, visit NACUBO's Borrower Defense page.
IMPORTANT NEWS FOR PRIVATE COLLEGES AND UNIVERSITIES
Borrower Defense Rules Have Significant Implications For Financial Reporting (October 26, 2018). Newly implemented regulations include new triggers for financial reporting and disclosures and may impact financial responsibility composite score calculations.
Report of the NAICU Financial Responsibility Task Force
For a decade, NACUBO and the National Association of Independent Colleges and Universities (NAICU) have been urging ED to correct its treatment of certain elements in the ratios used to calculate the composite score. The Report of the NAICU Financial Responsibility Task Force, published in 2012, details the associations' concerns and recommendations.