With 74% of colleges and universities experiencing a data breach in the last two years, it’s now more important than ever to have strategies in place to prevent it.
If your institution handles Title IV financial aid data, you’re required to meet new cybersecurity regulations under the FTC’s Safeguards Rule.
But here’s the challenge—many universities aren’t fully prepared. Are your student financial records truly secure?
If you’re unsure, don’t worry.
In this guide, we’ll explain exactly what GLBA compliance for higher education means, why it matters, and how your university can meet these new security standards.
What is the Gramm-Leach-Bliley Act (GLBA)?
The Gramm-Leach-Bliley Act (GLBA), enacted in 1999, is a federal law designed to protect consumer financial data. Initially, it applied to banks, credit unions, and financial institutions, requiring them to implement safeguards for handling sensitive customer information.
GLBA consists of three key sections:
- The Financial Privacy Rule: Governs how financial institutions collect and share consumer data.
- The Safeguards Rule: Requires institutions to establish security measures to protect sensitive data.
- The Pretexting Provisions: Prevents unauthorized access to personal financial information.
The primary goal of GLBA is to reduce fraud, prevent identity theft, and strengthen consumer data protection. Over time, cyber threats have increased, leading to expanded regulations to protect more industries handling financial information—including higher education institutions.
The Safeguards Rule – requires financial institutions (and higher education institutions with this amendment) to implement administrative, physical, and technical safeguards to protect such information against cyber-attacks, email spoofing, phishing schemes, and similar cybersecurity risks.
Why Universities Must Comply with GLBA
Source: Students Financial Services
The major reason is that universities handle massive amounts of personal and financial information, which is extremely important to protect. This includes:
- Bank account details for tuition payments.
- Social Security numbers for financial aid processing.
- Credit card transactions for housing, dining, and fees.
- Loan agreements and repayment plans.
If higher education institutions fail to comply with GLBA regulations, they may face third-party data breaches, identity theft, and even financial fraud which could put both students and institutions at risk.
What is the FTC Safeguards Rule?
Source: TIADA
The FTC Safeguards Rule is a set of mandatory cybersecurity standards designed to protect consumer financial data from theft, fraud, and cyberattacks. Originally intended for banks and financial institutions, the rule was expanded to include higher education institutions due to their role in processing Title IV federal student aid.
With the June 9, 2023 compliance deadline already gone, universities must follow strict security guidelines or risk fines, federal audits, and potential exclusion from federal financial aid programs.
How Does the Safeguards Rule Protect Against Cyber Threats?
Universities and colleges are prime targets for cybercriminals due to the large amounts of personal and financial data they store. In fact:
- The education sector is the #1 target for ransomware attacks, with attacks increasing by 100% year-over-year. (Sophos 2023 Report)
- Almost 60% of higher education institutions reported financial losses due to cybersecurity incidents. (GOV.UK)
The Safeguards Rule addresses these risks by requiring institutions to implement critical security measures, including:
- Data Encryption: Prevents unauthorized access to financial records.
- Multi-Factor Authentication (MFA): Ensures only authorized users can access sensitive data.
- Continuous Cyber Security Monitoring: Detects and prevents attacks in real-time.
- Incident Response Plans: Helps institutions respond to security breaches effectively.
This new rule will apply to those Title IV Higher Education Institutions with exceptions for institutions that handle less than 5,000 consumer records and the exceptions will only apply to some of the requirements. The exceptions being specifically- having a written risk assessment, an incident response plan and preparing the annual report to the board of directors. If you are exempt, we will still recommend you conduct those activities.
Educause, an association for Higher Education IT leaders, has been following the topic closely and has published an analysis from the initial proposal and later joined with the America Council on Education (ACE) and other associations and responded with comments from the industry on the proposed reporting requirements.
When does the amended FTC Safeguards Rule go into effect?
While this originally applied to financial institutions, the FTC has proposed changes to the Safeguard rule that adds Higher Education institutions into scope via the financial aid processing. Due to increasing data breaches that includes a growing number of ransomware attacks, the FTC is amending this rule to include more entities in an effort to prioritize the protection of consumer information. Throughout 2022 the FTC has proposed changes and sought commentary to be included in the final rule publication.
Deadline to be in compliance with the Safeguards Rule: June 9, 2023
What are the FTC Safeguards Rule Requirements?
Entities subject to meeting the Safeguards Rule requirements, as defined in Section 314.4 of the Code of Federal Regulations (this is the Elements section of the broader Standards for Safeguarding Customer Information of Part 314), must ensure these nine elements are included and conducted as part of the information security policy. Nine elements summarized from the current version of Section 314.4:
- 314.4(a) Designate someone (internal or service provider) to implement, enforce and oversee the information security program.
- 314.4(b)(1) Write and exercise a risk assessment plan. This is to include identifying and managing the internal and external risks to confidentiality, integrity and availability of student, staff and customer information that could lead to various data breaches, alteration or misuse and assess the safeguards in place to control these risks. Periodically conduct additional risk assessments that reexamine the risks to the confidentiality, integrity and availability of student, staff and customer information.
- 314.4(c)(1)-(8) Implement safeguards to control risks. These should address:
- Access management and least privilege access to student, staff and customer information
- Keep an asset inventory of all systems, devices, platforms, and employees
- Encrypt the data of student, staff and customers or secure it through other effective controls
- Assess the security of any in-house developed apps (including adoption of secure development practices) or third-party apps that are transmitting, storing or processing the student, staff and customer data.
- Implement multi-factor authentication (MFA) for anyone accessing student, staff or customer data on your system.
- Ensure secure disposal of student, staff and customer information. Review your data retention policies to minimize unnecessary retention
- Develop procedures and processes for change management
- Implement logging or maintain a log of activity by authorized users access the data, and detect unauthorized access
- 314.4(d)(2) Monitor and periodically test the effectiveness of the safeguards to include detection of actual and attempted attacks on or intrusions into the information systems
- For information systems this includes continuous monitoring or periodic penetration testing and vulnerability assessments. If continuous monitoring is not an option nor are there systems for detection, changes to the information systems that may create vulnerabilities, entities shall conduct:
- Annual penetration testing
- Vulnerability assessments to identify publicly known vulnerabilities of your systems, at least every six months; and whenever there are material changes to your operations or business, or when there are circumstances, you know or have reason to know may have a material impact on your information security program
- 314.4(e) Security Awareness Training. Employees must be trained to take a proactive approach in identifying threats to the information systems through their daily activities.
- 314.4(f)(3) Monitor Service Providers (Third-party Risk Management). Select service providers that have the skills, experience, and feasibility to maintain appropriate safeguards and through the contracting process ensure service providers implement and maintain safeguards.
- Periodically assess your third-party service providers based on the risk they present and the effectiveness of their safeguards
- 314.4(g) Maintain and Optimize Your Security Plan. Adjust your security plan based on changes to personnel, technology, and the outcome of risk assessments.
- 314.4(h) Develop a Written Incident Response Plan. This should define the processes and procedures to respond and recover from a security event.
- This should cover the goals of the plan, internal response processes, role and responsibility definitions, communications plan for internal and external purposes, remediation processes, documentation of security events and the reevaluation of the plan.
- 314.4(i) Report to the Board of Directors. In writing, regularly and at least annually, communicate on the program’s activities and updates to the board of directors or equivalent governing body to ensure they are aware.
- This will include the status of the overall program and the compliance with the Safeguards Rule.
Steps to Develop a GLBA-Compliant Information Security Program
Universities must take proactive measures to protect student financial data and meet GLBA compliance requirements. Here’s a streamlined approach to building a secure and compliant information security program.
- Conduct Risk Assessments: Identify internal and external threats that could compromise student financial data, assess risks from cyberattacks and human errors, and update security measures regularly.
- Implement Data Encryption & Access Controls: Encrypt student financial records both in transit and at rest, use role-based access controls (RBAC) to limit access and enforce multi-factor authentication (MFA) for additional security.
- Provide Cybersecurity Training for Staff & Faculty: Train employees to recognize phishing scams, fraud risks, and safe data handling, enforce strong password policies, and conduct regular security awareness programs.
- Monitor Systems & Conduct Vulnerability Testing: Continuously monitor systems for suspicious activity, conduct annual penetration tests and biannual vulnerability assessments, and fix weaknesses before they can be exploited.
- Develop an Incident Response & Breach Management Plan: Create a clear incident response protocol, define roles and responsibilities in case of a breach, and conduct regular drills to test response effectiveness.
- Evaluate Third-Party Vendors & Service Providers: Audit external vendors handling student financial data, require GLBA compliance from service providers, and ensure data protection agreements are included in vendor contracts.
However, if your Title IV institution has fewer than 5,000 consumer records, you are exempted from certain requirements but may still have to protect the financial data and maintain an effective cybersecurity plan.
These institutions don’t need a formal written risk assessment, an incident response plan, or an annual board report.
The Consequences of Non-Compliance
If your institution fails to meet GLBA compliance, it won’t just be a simple mistake as it can have serious consequences. So, here’s what happens when a university fails to comply with the FTC Safeguards Rule.
1. Suspension from Federal Systems
The Federal Student Aid (FSA) Cybersecurity Team has the authority to temporarily or permanently disable a university’s access to Department of Education systems. This means institutions may lose access to essential systems used for:
- Processing federal student aid applications
- Managing student financial aid records
- Receiving federal funding
If a university is deemed a high risk to student data security, its Title IV participation could be suspended.
2. Fines & Administrative Actions
Non-compliance findings are reported to the FTC and the Department of Education’s Administrative Actions and Appeals Service Group. Depending on the severity of the security weaknesses, institutions may face:
- Heavy financial penalties for failing to secure student financial data
- Strict administrative actions that could impact school operations
- Legal consequences if negligence leads to a major data breach
Fines could vary based on the extent of the violations, and institutions with a history of non-compliance face even harsher penalties.
3. Inclusion in Federal Audits
The Safeguards Rule compliance check is now part of the federal single audit process. This means:
- All institutions receiving Title IV funding will be audited to assess their cybersecurity policies.
- Non-compliance findings will be documented in the institution’s audit report.
- Reports will be sent to the FTC and the FSA Cybersecurity Team for further action.
4. Future Compliance with NIST SP 800-171 Standards
The Department of Education and Educause has also emphasized that universities will eventually be required to comply with NIST SP 800-171 standards. These standards govern controlled unclassified information (CUI) security, making them even stricter than current GLBA regulations.
This means institutions must start aligning their cybersecurity policies with federal government standards now to avoid future compliance issues.
References:
- Code of Federal Regulations Part 314 – Standards for Safeguarding Customer Information
- Code of Federal Regulations Part 314, Section 4 – Elements of an Information Security Plan
- Educause – Policy Analysis: Revised, Highly Prescriptive FTC Safeguards Rule
- Educause – Higher Ed Responds to Proposed Safeguards Rule Reporting Requirement
- Educause – FY22 Federal Single Audit: Safeguards Rule Objective Unchanged
- Department of Education, Office of Federal Student Aid – Enforcement of Cybersecurity Requirements under the Gramm-Leach-Bliley Act
How FortifyData Helps Higher Education Institutions Meet the Safeguards Rule
At FortifyData, we provide higher education institutions with the tools and expertise needed to meet GLBA compliance and safeguard student financial data.
Our platform helps universities and colleges assess, manage, and mitigate cybersecurity risks while ensuring they adhere to the FTC Safeguards Rule (Section 314.4).
Some of our services in this regard include:
1. Continuous Monitoring & Vulnerability Assessments
- Conduct internal, external, and cloud security assessments to identify risks.
- Provide continuous vulnerability scanning to meet compliance requirements.
- Offer a centralized risk view across all departments for better security management.
- 314.4(b) Conducting assessments of the University, including all Colleges and Departments and present the findings on a continuous or scheduled interval basis. This includes external, internal and cloud configuration/posture.
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- This meets the continuous monitoring requirement or every six month interval for vulnerability assessments
- This provides both a unified/centralized view of risk with the ability to manage it at the College and Department level. Understand which Colleges or Departments need more help than others in managing cyber risk.
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- Continuous or semi-annual vulnerability assessments will improve an annual penetration testing engagement by continuously managing the vulnerabilities the pentest team would have found and exploited.
- 314.4(d)(2)Monitor and periodically test the effectiveness of your safeguards
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- Continuous or periodic vulnerability assessments meets the requirement to identify the vulnerabilities that could be used in “an actual or attempted attack or intrusion into information systems”.
- For “material changes to operations” (personnel, technology or security events) it is required to conduct a vulnerability assessment to identify risks associated from those events.
2. Service Provider Risk Management
- Assess third-party vendors to ensure they follow GLBA security standards.
- Conduct periodic security evaluations to monitor ongoing risks.
- Help institutions strengthen vendor security policies to prevent data breaches.
- 314.4(f)(3) Monitor service providers (third parties).
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- We can conduct assessments of services provides for “periodically assessing service providers based on the risk they present and the continued adequacy of their safeguards”.
3. Compliance Tracking & Security Updates
- Track security policies to stay updated with regulatory changes.
- Adjust security plans based on risk assessments.
- Generate compliance reports for leadership and audits.
- 314.4(g) Evaluate and adjust your security plan.
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- Based on the findings of the vulnerability assessments, either continuously, periodically or result of material changes you can remediate the findings which may need to be adjusted in the information security program and the risk assessment.
At FortifyData, we make GLBA compliance simple by providing proactive security solutions that protect student financial data and help institutions avoid fines and penalties.
Final Thoughts
Universities must take proactive steps to secure their systems, monitor risks, and ensure they meet all Safeguards Rule requirements.
The best way to stay compliant is to regularly assess security risks, train staff, and monitor third-party vendors. Ignoring cybersecurity can lead to fines, audits, and loss of federal funding, so it’s crucial to act now.
Need expert cybersecurity support? Request a demo with FortifyData today for the best security solutions.
Frequently Asked Questions About GLBA Safeguards Rule Compliance for Higher Education
What are the nine elements required under Section 314.4 of the GLBA Safeguards Rule?
Section 314.4 of the Code of Federal Regulations defines the nine required elements of a GLBA-compliant information security program. Institutions must designate a qualified individual to oversee the program; conduct a written risk assessment covering threats to the confidentiality, integrity, and availability of student financial data; implement safeguards addressing access management, asset inventory, encryption, application security, multi-factor authentication, secure data disposal, change management, and activity logging; monitor and periodically test the effectiveness of those safeguards; provide security awareness training for staff; monitor third-party service providers through contractual requirements and periodic assessments; maintain and adjust the security plan based on risk assessment outcomes and operational changes; develop a written incident response plan; and report to the board of directors in writing at least annually on program status and compliance. Each element must be documented and demonstrably operational, not just described in policy.
Does the GLBA Safeguards Rule require continuous monitoring or is periodic vulnerability assessment sufficient?
Section 314.4(d)(2) gives institutions a choice but sets a clear minimum. Institutions that implement continuous monitoring satisfy the requirement to detect actual and attempted attacks or intrusions into information systems. Institutions that do not have continuous monitoring in place must conduct annual penetration testing and vulnerability assessments at least every six months, and additionally whenever there are material changes to operations or circumstances that may have a material impact on the information security program. Continuous monitoring is the stronger compliance posture because it satisfies the requirement on an ongoing basis rather than creating windows of undetected exposure between scheduled assessments. FortifyData’s continuous assessment of institutional systems and vendor environments satisfies the 314.4(d)(2) monitoring requirement while also improving the value of any annual penetration testing by ensuring known vulnerabilities are being actively managed between engagements.
Which Section 314.4 requirements apply to institutions with fewer than 5,000 consumer records?
Institutions with fewer than 5,000 consumer records are exempt from three specific requirements: the formal written risk assessment under 314.4(b), the written incident response plan under 314.4(h), and the annual written report to the board of directors under 314.4(i). The remaining six elements of Section 314.4 apply regardless of institution size, including the requirement to implement safeguards, monitor and test their effectiveness, train staff, and oversee third-party service providers. Importantly, the exemption does not remove the obligation to protect student financial data. Smaller institutions are still subject to Department of Education audit review and are still expected to demonstrate a functioning security program even without the formal written documentation requirements that apply to larger institutions.
How does the GLBA Safeguards Rule define third-party service provider oversight requirements?
Section 314.4(f)(3) requires institutions to select service providers that have the skills, experience, and capacity to maintain appropriate safeguards, contractually require those providers to implement and maintain safeguards for student financial data, and periodically assess service providers based on the risk they present and the continued adequacy of their safeguards. The practical challenge is that periodic assessment in the traditional sense means point-in-time questionnaires or annual SOC 2 reviews that reflect a vendor’s posture at a moment in time rather than their current state. FortifyData addresses this by conducting continuous active assessments of third-party vendor environments and auto-validating questionnaire responses against live technical findings, giving institutions the ongoing oversight evidence that satisfies 314.4(f)(3) and can be documented for auditors rather than reconstructed after the fact.
How does annual penetration testing relate to GLBA Safeguards Rule compliance?
Annual penetration testing is the minimum testing requirement for institutions that do not implement continuous monitoring under Section 314.4(d)(2). It is designed to identify vulnerabilities that could be exploited in an actual or attempted attack. However, a penetration test conducted once a year reflects the institution’s posture at a single point in time. Vulnerabilities introduced between annual tests through new systems, configuration changes, or newly disclosed CVEs are not identified until the next engagement. Continuous vulnerability assessment addresses this gap by actively identifying exposures as they emerge. FortifyData’s continuous assessment improves the return on annual penetration testing by ensuring the vulnerabilities a penetration testing team would find and exploit are being actively managed throughout the year, so the annual engagement surfaces new and deeper findings rather than re-documenting known issues that have not been addressed.
How does FortifyData map to the specific Section 314.4 compliance requirements?
FortifyData supports several of the nine Section 314.4 elements directly. For 314.4(b), continuous or scheduled assessments of the university including all colleges and departments provide the documented risk assessment basis the rule requires, covering external, internal, and cloud environments. For 314.4(d)(2), continuous monitoring or semi-annual vulnerability assessments satisfy the testing requirement and provide the detection capability the rule specifies for actual and attempted intrusions. For 314.4(f)(3), continuous active assessment of third-party service providers with periodic review against the risk they present satisfies the vendor oversight requirement with documented, ongoing findings rather than point-in-time snapshots. For 314.4(g), vulnerability assessment findings feed directly into the security plan adjustment process, providing the evidence base for maintaining and optimizing the program over time. Compliance reporting from the platform supports the board reporting requirement under 314.4(i) with documentation that communicates program status clearly to non-technical leadership.