NACUBO Urges ED to Revise Financial Responsibility Standards
7/20/2017
In comments submitted to the Department of Education in response to the announcement that the agency would reopen its gainful employment and borrower defense rules, NACUBO argued for a separate negotiating rulemaking committee to take up the Title IV financial responsibility standards for nonprofit institutions. This would allow ED to address recent changes to nonprofit accounting standards and long-standing issues with how schools’ composite scores are calculated. ED is required by statute to use a negotiated rulemaking process to write or revise Title IV rules.
Financial responsibility was last negotiated under the umbrella of borrower defense to repayment in 2016. NACUBO noted that new triggers were added to the financial responsibility standards as part of the borrower defense rules, even though no one with financial expertise had been invited to participate in the rulemaking effort. With a separate panel, ED could select stakeholder representatives with the requisite knowledge of higher education accounting and reporting.
On June 16, the same day ED announced that it would reopen the two rules, a separate Federal Register notice indefinitely delayed the effective date of the borrower defense rules, which had been scheduled to take effect on July 1. This means nonprofit institutions will not have to file reports on triggering events as the rules require nor face potential mid-year recalculations of their composite scores until further notice.
