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Simplify Financial Aid Disbursement

Best practices that can benefit students and the institution
University Business, November 2016

Higher education professionals responsible for disbursing financial aid continue to confront key challenges, from shifting regulations to the expense of cutting and managing paper checks. The new Cash Management rules published by the U.S. Department of Education, for example, will significantly impact the administration and disbursement of financial aid. In addition, the rapid evolution of the financial services industry and emerging electronic payments technologies require a depth of understanding greater than ever before.

This web seminar explored these obstacles, and how they can be overcome with strategies to improve the efficiency of financial operations, streamline administrative processes, decrease costs and improve the student experience. Presenters outlined best practices and how they can benefit the institution, while demonstrating the features and capabilities of BlackboardPay, the financial aid disbursement solution from Blackboard. BlackboardPay was designed to meet current and proposed regulatory standards, and meets the needs of institutions and students by providing choice, convenient account benefits and faster disbursement options than ACH. 

PEDRO MARZO
Senior Director, Financial Solutions
Blackboard Transact

In a nutshell, the new Cash Management rules are designed to provide a level playing field for students so that the information they have access to is clear, their information is protected, and they’re not persuaded or deceived into opening financial accounts that they don’t want. The new rules also focus on transparency and disclosure of agreements between providers and institutions, and ensure that institutions have more control and awareness of the marketing that students may receive for products from vendors, such as credit-based products.

The key focus areas of the rules include ensuring that if an institution has an agreement with a provider that the students have fee-free access to their funds, that the students are not subject to onerous fees that most other consumers are not subject to, that the options to receive their financial aid credit balance are clear and neutral, and there’s nothing preselected for them. The rules also mandate that students have access to the terms and conditions of the account, as well as fees, that there’s sufficient and convenient access to ATMs, and that the information shared with providers prior to the student selecting the account falls within FERPA and directory data guidelines and specifically prohibits the sharing of sensitive information or personal identifiable information.

The Department of Education (DOE) definitely went through its due diligence process. Blackboard was an active participant in those conversations, as most vendors were. From our point of view, we agree with the department’s direction. There are other government agencies—such as the U.S. Treasury—that are very actively working on removing paper checks from the system, because paper checks are not only expensive and inconvenient, but they also add a lot of friction and risk, for both the person receiving the check and the institution cashing the check. We are working with our institutions to try to de-emphasize paper checks and to facilitate an all-electronic disbursement process.

DOE has made great progress in providing guidelines for fees. But once the student selects an ACH to any bank account and that bank account is not subject to Tier 1 or Tier 2 restrictions, then the student is out in the open and subject to some of the same onerous fees that we’ve talked about. That’s another reason we decided to create BlackboardPay, because we thought we could do a better job of creating an account that protected all students from onerous fees, including those who may be unable to open a traditional bank account.

As you review either your processes or your current vendor, or whether you emphasize ACH or paper checks, just know that students may still be subject to check-cashing fees, or that if they’re using ACH to a bank account that’s not a Tier 1 or a Tier 2, they may be subject to fees nonetheless.

At a bare minimum, we encourage institutions to review the enrollment process that students go through when they make their payment selection, and make sure that the choices are listed factually—that ACH Direct Deposit is the first option, that the student has to provide proactive consent before opening an account, and that all the options are presented without any option pre-selected. Also, provide quick and clear access to the account’s terms and conditions. You want to make sure that you’re not endorsing or highlighting an option for your students.

DERRICK SHY
Senior Manager of Sales
Blackboard Transact

BlackboardPay is a comprehensive outsource disbursement platform that allows your institution to present a number of options to your students for how they receive and manage their disbursement dollars. Those options include ACH Direct Deposit to an existing bank account, whether checking or savings; a paper check, or we allow students to choose the prepaid debit account.

BlackboardPay was developed in anticipation of the Department of Education guidelines, beginning about ten years ago. From day one, our goal has been unencumbered, free and clear access to funds. We’re excited that the Blackboard model has aligned with the spirit of the regulations. We have never mailed or delivered unsolicited cards, marketing materials or access to the devices of students.

We have always felt that it was in the best interest of Blackboard, your institution and your students that students come through a very neutral enrollment process wherein they are delivered options to choose from, based on their own current financial situation, without trying to coerce them into one method over another. We’ve always presented our options in a neutral manner with no over-emphasis on any one option.

Benefits for students
We’re very excited about the ways in which students who do opt in to our prepaid account can access their funds surcharge-free. Our card can be used anywhere MasterCard is accepted, for both PIN-based and signature-based transactions, for free. We allow students to write and use free convenience checks, which is great for those who need to pay someone like a landlord or a merchant that does not accept plastic. Students can also use those same convenience checks to walk into more than 6,700 retail locations around the country, including all Walmart locations, and cash those checks for free. As campuses embrace modern conveniences such as apps, these students can use their BlackboardPay MasterCard to have this experience as well.

Students can also do outbound ACH transfers to a local or existing bank. If they do already have a checking account they can still sign up, receive the disbursement into the Blackboard account, and then go online and transfer the funds into that existing bank account.

We’ve always provided nationwide access of surcharge-free ATMs to all students, regardless of account type. We partnered with Allpoint because they are the largest private ATM network in the country.

How fast do students receive their disbursements via Blackboard? Funding can happen within 15 minutes of us picking up your institution’s file and processing it. The second fastest option is the ACH direct deposit.

The last option is paper checks. The important piece is that we never hold paper checks, we never hold funds. Once the school notifies Blackboard to disburse, that paper check is cut the next business day and mailed out to your student.

Partnering with an organization such as Blackboard helps your institution ensure program integrity, that you’re providing the best options to students and that you are in compliance with all federal regulations.

To watch this web seminar in its entirety, visit www.universitybusiness.com/ws041916 

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