Policy Update: More Change on the Horizon for Department of Education Cash Management Rules
Monday, February 19, 2018
Posted by: Crystal Bazarnic
More Change on the Horizon for Department of Education Cash Management Rules
February 19, 2018
It has been two years since the Department of Education (ED) has implemented the Cash Management Rules which require institutions to keep Title IV funds in federally-insured, interest-bearing accounts and restricts what items may be included in tuition and fees.
In January 2018, a pre-solicitation notice regarding a “Federal Student Aid Next Gen Payment Card Program Pilot” was posted on the Federal Business Opportunities website, in which it is stated that the FSA intends to launch an FSA Payment Card to “facilitate FSA loan refunds, along with other funds, originated by participating schools.”
This pilot program would offer students the ability to select a financial account directly sponsored by the Department to receive their financial aid.
You may review the entire draft document at https://www.fbo.gov/utils/view?id=f1a0e743e9c3283b1a3821f2fca20d93. (Opens a PDF for download.)
Dan Toughey, President of TouchNet, states in a post on the topic, ‘One thing is becoming clear – two years after implementing its new Cash Management Rule, the Department of Education (ED) is not pleased with the results. Specifically, the Department feels that student bank account fees are still higher than necessary. While some vendors have lowered their charges, even touting cuts of up to 50%, the Department believes that most student account offerings are still ‘not in the best interests of the students.’ ” Toughey states that during the Negotiated Rulemaking sessions in 2014 there was a discussion around the creation of a "back-door" option that would allow ED to offer its own debit card refund program.
Toughey continues: “So, just when you thought it was safe to jump back into student refunds, the game is very likely changing again. Not only is ED considering direct disbursement of funds to student debit cards, but also it wants the ability to track the types of purchases and transactions made with these cards. The Department would then possess the ability to restrict the types of products and services for which the funds could be used. This may be just a red herring, but all campuses once again need to keep a sharp eye on decisions from the Department of Education concerning student financial account practices.”
Visit https://www.touchnet.com/en/knowledge/toughey-talks to read Dan Toughey’s full post on this topic.
Joan Piscitello, Treasurer at Iowa State University spoke to NACCU Executive Director Dawn Thomas about the discussions currently taking place about student aid refunds.
Piscitello served on the Department of Education’s negotiated rulemaking committee representing business officers and bursars at postsecondary institutions as the original cash management rules were developed. She has spoken about changes to the Cash Management Rules and how the changes will affect processes within institutions at NACCU annual conferences and web conferences.
Piscitello raises some compelling questions:
- Since the refunds may be from student aid and other sources, will the institution have to make multiple disbursements?
- Many universities have relationships with financial institutions that add banking function to the student ID card. Will the implementation of the Federal Student Aid card eliminate these programs?
- Who would be responsible for card issuance: The Department of Education or the institution?
One thing seems certain: there is more change on the horizon.
Feedback is currently being solicited by the Department of Education. You may submit questions and comments in writing to FSAEAT@ed.gov. No phone calls will be accepted.