ED Offers Supplemental Cash Management Guidance
5/16/2016
The Department of Education’s revised cash management rules, with a few exceptions, go into effect July 1. In a newly released Q-and-A document, ED addresses some common issues for institutions.
Several changes in the revised cash management regulations impact all colleges and universities participating in Title IV federal student aid programs. Institutions will face additional requirements if they offer bank accounts to students through agreements with financial institutions as well as those that use third-party servicers to process Title IV credit balance refunds.
The revised rules require institutions to keep all Title IV funds in federally-insured, interest-bearing accounts, including their Perkins Loan revolving fund. Other types of investment accounts are no longer an option, and the institution must ensure that Title IV funds are not included in nightly cash sweeps to uninsured accounts. The Q&A does not elaborate further on these requirements.
All institutions also must comply with a new rule that restricts the ability of an institution to include charges for books and supplies in tuition and fees unless certain conditions are met. For institutions seeking to establish arrangements where bulk rental or purchase of textbooks is included in tuition and fees, the Q-and-A document stresses that schools must have a process that allows students to opt out, and must reduce tuition and fee charges for those students by an amount that reflects the institution’s per-student cost of the books. Note that these rules apply to charges included in tuition and fees for which Title IV funds may be applied automatically. They do not apply to charges for books and supplies that are not included in allowable charges (for which the school must get the student’s authorization to pay with Title IV funds).
The rest of the Q-and-A document largely reiterates earlier guidance and further illustrates the differences between Tier One (T1) and Tier Two (T2) arrangements, provides additional information about student choice menus and responds to general concerns.
Regarding Tier Two arrangements, for instance, the Q-and-A document states, “Any account that can be linked to a student ID will be considered at minimum, to be an account under a T2 arrangement.”
Cash Management Checklist
NACUBO, with assistance from TMS, has developed a checklist to assist institutions in complying with the Department of Education's revised cash management regulations.
The checklist identifies key requirements of the new rules based on implementation date. General provisions that apply to all Title IV institutions, as well as provisions for institutions that have arrangements with banks and third-party servicers processing Title IV funds, are included.
Resources
A comprehensive library of resources, including a summary of the regulations, can be found on NACUBO’s Debit Cards and Campus Banking Products page. NACUBO members with further compliance questions may contact the NACUBO staff below.
