In the October 2015 provisions from the Department of Education’s (DOE) Program Integrity and Improvement Final Regulations, an institution must maintain their Title IV in an interest-bearing account, unless any the following apply:
- The institution receives less than $120,000 in federal awards per year.
- The best reasonably available interest-bearing account would not be expected to earn interest in excess of $500 per year on federal cash balances.
- The depository would require an average or minimum balance so high that it would not be feasible within the expected federal and non-federal cash resources.
- A foreign government or banking system prohibits or precludes interest bearing accounts.
Under the old regulations, an institution could hold funds in insured bank accounts or investment accounts secured by collateral of value reasonably equivalent to the amount of those funds and had to return any interest earned over $250.
The new rules require all Title IV funds to be held in federally insured, interest-bearing accounts, including any Perkins Loans funds and any interest earned over $500 be returned.
What Has Changed?
The new regulation removed the option for an investment account and increased the excess interest threshold. As clarification, the new regulations note that the account itself must be insured – not that the deposits in the accounts have to be under federally insured limits.
On May 19, 2017, the Department of Education (DOE) released an electronic announcement (EA) that provided special instructions on returning excess interest earned on Title IV dollars to the federal government. The excess interest over $500 earned on these accounts is due back to the federal government by July 30 of each year.
For more information on returning funds:
If you would like to learn more or have any questions, please contact your Dean Dorton advisor or Megan Crane at firstname.lastname@example.org or 859.425.7643.