NAICU Washington Update

Regulations on Cash Management and New REPAYE Program Published By Department of Education

November 03, 2015

On October 30, 2015, the Department of Education published two sets of regulations aimed at making sure students: 1) have ready and cost-free access to their federal student aid funds; and 2) are able to repay their federal student loans back based on a percentage of their income.

The first set of regulations was developed in response to reported misuse of debit and prepaid cards by providers of those cards; some of whom had financial arrangements with institutions. The cards were sometimes linked to other campus services and involved significant service charges.

The regulations prescribe restrictions on both the use of these cards and the disbursement of federal student aid funds by institutions on heightened cash monitoring or reimbursement. In many cases, the regulations apply to providing students the credit balance for their aid. Credit balances are most often associated with low tuition institutions.

In July, NAICU signed onto NACUBO’s analysis of the proposed regulations, which are both complex and lengthy. Further analysis is forth-coming.

The second set of regulations adds another – and more generous – income-driven loan repayment plan to students’ options for paying their loan debt. Monthly payments are capped at 10 percent of a borrower’s discretionary income. The plan is open to all borrowers no matter when they took out their loans. The new option is called Revised Pay As You Earn (REPAYE) and will be available in December. The Department has provided an online resource for students to get information about the plan.

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