Fiscal Management | Knowledge Center

SUBJECT: Fiscal Management

This assessment outlines the financial standards schools must maintain to participate in the Federal Student Aid programs. If you identify areas requiring corrective action, we recommend that you complete an Action Plan.

*COVID-19

The Department of Education (Department) recognizes that the ongoing COVID-19 pandemic has created many unique challenges for postsecondary institutions. The Department has provided a variety of special guidance and regulatory flexibilities due to the President’s declaration of the COVID-19 national emergency on March 13, 2020. In addition, Congress has passed legislation offering relief from certain statutory requirements related to the Title IV, HEA programs.

For COVID-19 related guidance, including waivers and exemptions to Title IV rules, please see the following webpages:

The Department of Education’s COVID-19 Information and Resources for Schools and School Personnel: https://www.ed.gov/coronavirus/program-information
Office of Postsecondary Education COVID-19 Title IV FAQ: https://www2.ed.gov/about/offices/list/ope/covid19faq.html

We outlined in our April 3, 2020 electronic announcement (EA) that institutions must comply with the cash management regulations (34 CFR Part 668, Subpart K) unless unable to do so due to COVID-19 disruptions. Where an institution is unable to comply, it should document the reason(s) for instances where it is unable to comply and retain the documentation in its records. These included, but are not limited to, the following regulatory requirements:

Borrower Requests for Loan Cancellation (34 CFR 668.165(a)(4)(ii))
Excess Cash (34 CFR 668.166)
Notices/Authorizations (34 CFR 668.165(a)(3) and 34 CFR 668.165(b)(4)(iii))

In addition, under our December 11, 2020 Federal Register notice, the Secretary waived the requirement that an EFT be a direct deposit transaction allowing institutions and third-party servicers to use any type of EFT under the Treasury Department regulations in 31 CFR 208.2, including person-to-person payment methods such as Zelle and PayPal. Any alternative payment methods used must be disclosed in the institution’s annual compliance audit. The Secretary also temporarily modified the cash management requirements to allow institutions under Heightened Cash Monitoring 1 (HCM1) the ability to submit a request for funds without first paying the credit balances due to the students for whom those funds were requested. Institutions must pay credit balances no later than three calendar days after receiving the funds.

As outlined in the 12/11/2020 notice, these waivers expire at the end of the payment period that begins after the date on which the Federally-declared national emergency related to COVID-19 is rescinded. For more specific information outlining the Department’s guidance on the sunset of COVID-19 waivers and flexibilities, please review the June 14, 2023 Sunset of COVID-19 Waivers and Flexibilities electronic announcement.

Fiscal Management Worksheets:

Federal Pell Grant Monthly Reconciliation

TEACH Grant Monthly Reconciliation

FWS Monthly Reconciliation

FSEOG Monthly Reconciliation

Direct Loan Monthly Reconciliation

Activity Bar:

Fiscal Management Activity 1: Reconciliation Worksheets

Fiscal Management Activity 2: General Fiscal Requirements

Fiscal Management Activity 3: Excess Cash

Fiscal Management Activity 4: Disbursing Aid File Review Worksheet

Fiscal Management Activity 5: Financial Ratios

Fiscal Management Activity 6: Campus-Based Programs Administrative Cost Allowance

Fiscal Management Activity 7: Disbursing Funds

Additional Links:

2023-2024 FSA Handbook, Volume 2, Chapter 4 (digital version); pdf version

2023-2024 FSA Handbook, Volume 4, Chapter 1 (digital version); pdf version

2023-2024 FSA Handbook, Volume 4, Chapter 2 (digital version); pdf version

2023-2024 FSA Handbook, Volume 4, Chapter 5 (digital version); pdf version

2023-2024 FSA Handbook, Volume 4, Chapter 6 (digital version); pdf version

For reference, the table below lists the regulatory areas related to Fiscal Management. The left column shows the title of the regulatory section and summarizes the main content of some of the sections. The middle column includes a link to each regulatory section in the Electronic Code of Federal Regulations and any related guidance posted in the Knowledge Center. Where applicable, the associated assessment activity is listed in the third column.

Section Title	Links	Assessment Activity
Standards of Administrative Capability 34 CFR 668.16	34 CFR 668.16
Financial Responsibility 34 CFR 668, Subpart L, 668.171 through 668.176	34 CFR 668, Subpart L, 668.171 through 668.176
Record Retention and Examinations 34 CFR 668.24	34 CFR 668.24	Fiscal Management Activity 2: General Fiscal Requirements
Scope and institutional responsibility 34 CFR 668.161	34 CFR 668.161
Maintaining & Accounting For Funds 34 CFR 668.163 Institutional depository account Separate depository account Interest-bearing depository account Accounting and fiscal records	34 CFR 668.163
Cash Management (requesting funds) The advance payment method 34 CFR 668.162(b) Reimbursement payment method 34 CFR 668.162(c) Heightened cash monitoring payment method 34 CFR 668.162(d)	34 CFR 668.162 See also: G-5 Web Page: https://www.g5.gov Please review the following electronic announcement for information on the G5 to G6 transition - REMINDER – G5 to G6 Website Transition and Login.gov Option Coming Aug. 7, 2023	Fiscal Management Activity 1: Reconciliation Worksheets Fiscal Management Activity 6: Campus-Based Programs Administrative Cost Allowance
Disbursing Funds 34 CFR 668.164 Disbursement Disbursements by payment period Crediting a student’s ledger account Direct payments Tier one arrangement Tier two arrangement Ownership of financial accounts opened through outreach to an institution’s students Title IV, HEA credit balances Early disbursements Late disbursements Retroactive payments Returning funds Provisions for books and supplies	34 CFR 668.164	Fiscal Management Activity 4: Disbursement Worksheet Fiscal Management Activity 7: Disbursing Funds
Notices and authorizations 34 CFR 668.165	34 CFR 668.165
Excess Cash 34 CFR 668.166	34 CFR 668.166	Fiscal Management Activity 3: Excess Cash
Consumer Information	34 CFR 668, Subpart D
Composite Scores and Financial Ratios 34 CFR 668.171(b)(1); 34 CFR 668.172	34 CFR 668.171 34 CFR 668.172	Fiscal Management Activity 5: Financial Ratios
Refund reserve standards 34 CFR 668.173	34 CFR 668.173
Meeting financial obligations and providing administrative resources 34 CFR 668.171(b)(3)	34 CFR 668.171
Past Performance, Affiliation Standards, and Ownership Interest 34 CFR 668.174	34 CFR 668.174
Alternative Standards and Requirements 34 CFR 668.175	34 CFR 668.175