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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.

Download Report

Cover of Report of the NAICU Financial Responsibility Task Force

 

News

 

NACUBO Resources

NACUBO Advisory Report 98-1, Title IV Financial Responsibility Standards Revised (January 13, 1998), a resource for nonprofit institutions

Sample Letter from ED to an institution with composite score under 1 detailing letter of credit alternatives

 

Department of Education Resources

Title IV Financial Responsibility Standards, final rule, Federal Register, November 25, 1997, pp. 62829 - 62887
Note: Appendix G provides details on calculation of the composite score for nonprofit institutions, beginning on page 62885.

2017-18 Student Financial Aid Handbook, Vol 2, Chapter 4, Audits, Standards, Limitations, and Cohort Default Rates 
Note: Discussion of financial responsibility standards begins on page 2-89

ED Dear Colleague Letter GEN-03-08, Use of Long-Term Debt in Financial Responsibility Calculation (July 2003)

Contact

Liz Clark

Senior Director, Federal Affairs

202.861.2553

lclark@nacubo.org

Contact

Sue Menditto

Director, Accounting Policy

202.861.2542

smenditto@nacubo.org


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Student Financial Services

Student financial services (SFS) describes how colleges and universities provide students and families with finance-related services, such as applying for financial aid and paying a tuition bill, along with the associated business processes necessary to pay for college. SFS professionals manage the policies and procedures related to a student's account, which tracks tuition and other charges, payments, and application of financial aid.

Department of Education Regulations

Compliance with federal rules and regulations impacts administrative offices across college and university campuses.

Program Integrity

NACUBO is committed to preserving the public's confidence in federal student aid programs and protecting students from fraud and abuse without placing an undue regulatory burden on institutions that offer a legitimate, quality education. NACUBO's expertise and advocacy efforts have focused on ED regulations related to program integrity, particularly borrower defense, gainful employment, and state authorization.