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Financial Responsibility Agreements with Students - SBCTC

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Financial Responsibility Agreements with Students
NACUBO Advisory Report 2015-1
Colleges and universities increasingly ask students to affirm their understanding of theirfinancial obligationto the institution by signing a financial responsibility agreement prior to registeringfor classes.Afinancial responsibility agreement provides relevant information about officialinstitutional policiesto students andcontractually binds them to those policies.
A Financial Responsibility Agreement is intended to protectstudent debts from bankruptcy discharge and set parameters for internal andexternal collectionefforts to ensure compliance with laws and regulations such as:• Fair Debt Collection Practices Act (FDCPA)• Telephone Consumer Protection Act (TCPA)•Title IV of the Higher Education Act
NACUBO recommends use of a comprehensive financialresponsibilityagreement as astudent servicebest practice, protecting the school, maximizing collections, and providing anefficient processto obtain cost-saving electronic agreements.
Schools are encouraged to consider requiringstudents to sign an agreement prior toregistering forclasses and periodically thereafter.Theinstitution will need to determine how oftenstudents areasked to reaffirm the financial responsibility agreement, taking into account state law,characteristics ofthe student population, and coordination with other processes.Current practices varywidely. Some institutions choose to require students to affirm their agreement each time theyregister for a class, others ask students to sign one each term or each year, while some colleges anduniversities are satisfied with a one-time requirement that is clearly worded to cover thestudent’s entire enrollment.
NACUBO recommends utilizing an electronic agreement located within the school’sonline registrationsystem behind the student authentication portal.NACUBO also recommendsan “opt-in” formatthat utilizes check boxes next to each topic for which the student’s agreement is required.
For some topics, specific “opt-out” instructions must be provided to meet regulatoryrequirements andprotect the institution from potential future disputes.Whereappropriate, opt-out instructionsshould clearly delineate theconsequencesto the student ofopting-out.
Ultimately, how schools build their agreement or choose which text to incorporate dependson campusleadership, culture, level of IT support, and theadvice of the school’s legal counsel.
There are many considerations toproperly implementing a studentagreement….
State Laws.Ensure compliance with state laws relating to debt collections, late fees,convenience feesfor certain payment methods, collection agency fees, attorney’s fees, and the like.
Truth in Lending Act (TILA).Make sure the student agreement falls within theexceptions fora private education loan and does not trigger a requirement that the institution followTILA when implementing an agreement.Aninstitutionshould seekspecific counsel to ensure compliance.
E-SIGN Act.Make certain the process in which a student electronically executes anagreement complieswith the federal E-SIGN Act and the state’s Uniform ElectronicTransactions Act(UETA). These laws govern the validity of electronic records and signatures.Forty-seven statesand the District of Columbia have passed UETA. The other three states (Washington, NewYork, and Illinois) have state provisions governing the validity and use ofelectronic signatures.
The following sample language provides a template for a college or university to use as astarting pointin developing or reviewing its financial responsibility agreement.
PAYMENT OF FEES/PROMISE TO PAY:I acceptfull responsibility to pay all tuition, fees and other associatedcosts assessedas a result of my registration and/or receipt of services. I further understand andagree thatmy registration and acceptance of these terms constitutes a promissory note agreement (i.e.,a financialobligation in the form of an educational loan as defined by the U.S. Bankruptcy Codeat 11U.S.C. §523(a)(8)) in which {Institution Name} is providing me educational services,deferring someor all of my payment obligation for those services, and I promise to pay for allassessed tuition, fees and other associated costs by the published or assigned due date.
PAYMENT OF FEES:Iunderstand and agree that if I drop or withdraw from some or all of the classes for whichI register, I will be responsible for paying all or a portion of tuition and fees in accordance withthe publishedtuition refund schedule at {Institution’s tuition refund policy/schedule URL}. I haveread theterms and conditions of the published tuition refund schedule and understand those terms areincorporated herein by reference. I further understand that my failure to attend class or receivea billdoes not absolve me of my financialresponsibility.
DELINQUENT ACCOUNT/COLLECTION:Financial Hold:I understand and agree that if I fail to pay my student account bill or any monies due and owing {Institution Name} by the scheduled due date, {Institution Name} will place a financial hold on my student account, preventing me from registering for future classes, requesting transcripts, or receiving my diploma.
DELINQUENT ACCOUNT COLLECTION:LatePayment Charge:I understand and agree that if I fail to pay my student account bill or anymonies due and owing {Institution Name} by the scheduled due date, {Institution Name} willassess late payment and/or finance charges at the rate of {Institution $ or % amount} per month onthe past due portion of my student account until my past due account is paid in full.Note: Schoolslooking to implement this provision should make certain any and all amounts comport withapplicable law.
COMMUNICATION:Methodof Communication:I understand and agree that {Institution Name} uses e-mail asan officialmethod of communication with me, and that therefore I am responsible for readingthe e-mailsI receive from {Institution Name} on a timely basis.
Contact:I authorize {Institution Name} and its agents and contractors to contact me at my current and any future cellular phone number(s), email address(es) or wireless device(s) regarding my delinquentstudent account(s)/loan(s), any other debt I owe to {Institution Name}, or to receive general information from {Institution Name}. I authorize {Institution Name} and its agents and contractors to use automated telephone dialing equipment, artificial or pre-recorded voice or text messages, and personal calls and emails, in their efforts to contact me. Furthermore, I understand that I may withdraw my consent to call my cellular phone by submitting my request in writing to {Institutional office or position} or in writing to the applicable contractor or agent contacting me on behalf of {Institution Name}.
Updating Contact Information:I understand and agree that I am responsible for keeping {Institution Name} records up to date with my current physical addresses, email addresses, andphone numbersby following the procedure at {Institution website for updating student address/emailaddress/phone number}. The linked procedure is incorporated herein by reference. Uponleaving {Institution Name} for any reason, it is my responsibility to provide {Institution Name}with updatedcontact information for purposes of continued communication regarding anyamounts thatremain due and owing to {Institution Name}.
ENTIRE AGREEMENT:Thisagreement supersedes all prior understandings, representations, negotiations andcorrespondence betweenthe student and {Institution Name}, constitutes the entire agreement betweenthe partieswith respect to the matters described, and shall not be modified or affected by anycourse ofdealing or course of performance. This agreement may be modified by {Institution Name} ifthe modificationis signed by me. Any modification is specifically limited to those policies and/orterms addressed in the modification.
OPTIONAL SUBJECTS AND TEXT:FINANCIAL AIDMETHOD OF BILLING (e.g. e-bill, paper invoice)BILLING ERRORSWITHDRAWALPRIVACY RIGHTS & RESPONSIBILITIESIRS FORM 1098-TSTUDENT AGE
OtherConsiderationsGoverning LawArbitration or MediationAdditional Title IV Authorizations
This presentation was prepared using the NACUBO Advisory Report 2015-1 available at:http://www.nacubo.org/Documents/BusinessPolicyAreas/Advisory_Report_2015_1.pdf

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Financial Responsibility Agreements with Students - SBCTC