ED Hosts Second Neg Reg Session Focusing on Cash Management

By Maria Carrasco, NASFAA Staff Reporter

The Department of Education (ED) kicked off its second negotiated rulemaking session on program integrity and institutional quality on Monday, focusing solely on the issue of cash management. 

Negotiated rulemaking — known as neg reg — brings together stakeholders from various interested constituencies with the goal of reaching consensus on new or revised regulatory language. While Monday’s session primarily focused on cash management, this neg reg committee will touch on issues including state authorization, distance education, return to Title IV funds (R2T4), and accreditation throughout the rest of the week. 

Monday’s session was structured to go through changes ED made in its draft regulatory text on cash management since the last neg reg session, which was in January. The committee began the day by discussing newly added draft text regarding how institutions credit a student's ledger account with Title IV funds in order to pay for charges associated with the current payment period.

ED tweaked language from the last session to clarify that its proposal to require schools to return to students any unused meal plan flex dollars applies only to those cash equivalents and not to leftover swipes at traditional all-you-can-eat dining halls. Under this draft regulatory text, institutions would not be able to retain unused flex dollars on student meal plans and any remaining balance at the end of the payment period must be returned to the student no later than 14 days after the end of the payment period. ED clarified that an institution is not required to refund any remaining balance that is less than $1.00, and added language proposed by negotiators in January that would allow an institution to apply unused meal plan flex dollars  to be carried forward or to be used to pay unpaid allowable charges at the student’s request.

Some negotiators expressed concerns that the regulatory text could exclude students from receiving leftover funds from their meal plan if their institution uses a “swipes” system. Magin Misael Sanchez, representing civil rights organizations and consumer advocates in the committee, pressed ED to add language to include students who have “swipe” meal plans. 

“I think it's really important that the department still considers including these meal swipes as part of the money that students are refunded,” Sanchez said. “At the very least, if not the full retail value, at least the cost of these swipes to the institution. This is a sizable amount of money for students ... It can make a big difference for students in being able to afford not just general education expenses, but living expenses as well.”

The draft regulatory text also included language that an institution may only automatically include costs of books and supplies as a part of tuition and fees if the institution “demonstrates there is a compelling health or safety reason to do so.” ED is proposing to remove current language that permits institutions to also automatically include books and supplies in the tuition and fees charged in instances where the materials are not available from other sources. Zack Goodwin, representing financial aid administrators, pointed out that the removal of this regulatory text potentially contradicts guidance ED has issued with respect to prison education programs. While ED argued schools could continue to do so with the student’s authorization, they admitted that it could be problematic to collect authorizations from PEP students and would re-visit the language.

And an institution may credit a student's ledger account for purchasing books, supplies, and other “educationally related goods and services” provided by the institution, given that in each payment period, the institution individually discloses the cost of the goods before any authorization being signed, and the parent or student must choose to purchase those materials. The institution must also make those books or supplies available to students “at or below competitive market rates.”

The committee then moved on to cover added language to the tier one arrangement section. ED added language that an institution, third-party servicer, or third-party servicer's associated financial institution may add or change any fees to students where a withdrawal is attempted but denied due to insufficient funds in the financial account. Additionally, ED added language that no “sunset” fee can be charged to a student “at any point in the lifecycle of a financial account or access device,” including if the student graduates, leaves the institution, or turns a certain age. 

Most of the negotiators supported this added language. Barmak Nassirian, a negotiator representing U.S. military service members and veterans, said the added language is “an added layer of protection.”

“This issue of non discrimination is intended to protect Title IV recipients by requiring that they not be treated any differently than people who deposit their own money or have access to their own accounts without Title IV,” Nassirian said.

Monday’s session ended with a discussion over returning funds and overpayments. In the draft regulatory text, ED created timelines for how institutions handle reporting Title IV overpayments. Multiple negotiators, including Nassirian, urged ED to be as flexible as possible in collecting Title IV overpayments from students. They noted that, because overpayments arise primarily from Pell Grants and FSEOG, the students who must repay them are by definition low-income. They asked that ED revise the payment plan criteria for overpayments to match the SAVE repayment plan in acknowledgment of this fact.

“I will strongly support treating them as leniently as possible, because it's kind of self-defeating,” Nassirian said. “If you offer them a repayment scheme that is still not workable for them, you're checkmating them.”

This neg reg session continues throughout the week. Stay tuned to Today’s News for more coverage on the session. Those interested in watching the session can register on ED’s website


Publication Date: 2/6/2024

Peter G | 2/6/2024 2:32:50 PM

So, while it's been many years since I worked in ResLife, the issue with the "swipes" system is this tension between individual rights/cost and collective rights/cost.

Swipes systems in general are priced on a collective basis with the assumption that there will be melt. Collectively everyone gets a lower price because the people who underuse are subsidizing the full use.

One can argue about whether collectivism (ironically here represented by the corporations who run food service) or individualism is a better approach, but it's misleading to say ". It can make a big difference for students in being able to afford not just general education expenses, but living expenses as well." since there will be both individuals helped and harmed by a different financial model, since this sort of change will tend to raise the base pricing level for all participants imo.

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