NAICU Washington Update

NAICU Supports Comments on Proposed Cash Management Regulations

July 06, 2015

NAICU helped to develop and supported comment letters to the Education Department regarding proposed cash management rules from both the American Council on Education (ACE) and the National Association of College and University Business Officers (NACUBO).

The cash management NPRM was published May 18, 2015 with comments due on July 2. Throughout the proposed regulations, the Education Department has sought to protect aid recipients from unacceptable charges on financial transactions involving Title IV funds. The Department has been concerned that third party servicers have been marketing services to colleges that are not in the best interest of students.

In the proposed rules, the Department has proposed a variety of guidelines on the handling of student financial accounts, as well as restrictions on the relationships between institutions and third party servicers. The regulations propose differential treatment of the institutional arrangements with third party servicers that provide student aid processing and financial services and those that just provide financial services. Institutions seem to find distinguishing the two challenging. The NPRM also provides rules for the treatment of credit balances, largely an issue for low-tuition institutions, and place significant limitations on fees when students access their funds.

NAICU supports protecting students from unfair financial charges, but also wants to be sure that colleges and students are not unduly restricted, burdened, or even confused by overly detailed regulations.

This rulemaking process started in the Winter 2014 when the Education Department held four negotiated-rule-making sessions on a half-dozen issues, including cash management. The negotiating team did not reach consensus on this issue so the Education Department was able to publish a Notice of Proposed Rule-Making (NPRM) that was not bound by the negotiations.

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