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Safeguards Rule Implementation in Higher Education

Did you know that over 60% of higher education institutions in the U.S. have reported at least one cyberattack in the last two years?

From phishing scams to ransomware to data breaches, colleges and universities are becoming prime targets for cybercriminals, mostly because they hold sensitive financial data.

That’s where the FTC’s Safeguards Rule comes in. Under the Gramm-Leach-Bliley Act (GLBA), schools that handle student loans, tuition payments, or financial aid must follow strict guidelines to protect personal financial information.

In fact, the Department of Education has made GLBA Safeguards Rule compliance mandatory for Title IV schools since June 2023.

So, let’s dive in and help you protect what matters most: your students’ trust and data.

Introduction to the Safeguards Rule

Safeguards Rules
Source: Brown Edwards

The Safeguards Rule is part of the Gramm-Leach-Bliley Act (GLBA), a federal law that requires financial institutions to protect the privacy and security of consumer financial information. The rule is enforced by the Federal Trade Commission (FTC).

At its core, the Safeguards Rule says:

“If your institution handles financial data, you must have a written information security program to protect it.”

 

Why It Matters for Colleges and Universities

You might not think of a college as a “financial institution,” but if your school processes student loans, tuition payments, or financial aid, the GLBA applies. That means your university is legally responsible for protecting students’ personal financial information from breaches, misuse, or theft.

Because of growing cybersecurity risks in the education sector, the DOE now requires Title IV institutions (those participating in federal student aid programs) to comply with the FTC’s Safeguards Rule. Failing to do so could put federal funding at risk.

 

How It Connects to GLBA

The Safeguards Rule is one of three main parts of the GLBA:

  • The Financial Privacy Rule (how institutions collect and share personal data)
  • The Safeguards Rule (how they protect that data)
  • The Pretexting Rule (how they prevent social engineering attacks)

 

For colleges and universities, the Safeguards Rule is especially important because it lays out the exact steps institutions must take to secure financial records.

These include designating a qualified individual to manage the security program (e.g. CISO), performing risk assessments, encrypting sensitive data, monitoring vendor service providers, and training staff on data security.

Why Higher Education Institutions Are Affected

Colleges and universities may not seem like typical financial institutions—but in the eyes of the law, many of them are.

That’s because higher education institutions regularly collect, process, and store sensitive financial data from students, parents, and even staff.

Handling of Student Financial Data

From tuition payments and financial aid applications to student loan disbursements, schools manage a wide range of personally identifiable financial information. This includes:

  • Social Security numbers
  • Bank account and credit card details
  • Tax documents
  • Income and employment records
  • FAFSA and other loan application data

 

Because of this, institutions become targets for hackers seeking to exploit financial data. A breach can lead to identity theft, financial fraud, and loss of student trust.

Classification as “Financial Institutions” Under GLBA

Under GLBA, any organization that offers or provides student financial services—such as loans or payment plans—is considered a “financial institution.”

This includes nearly all Title IV-eligible institutions, meaning colleges and universities that participate in federal financial aid programs.

As a result, these schools must comply with the FTC’s Safeguards Rule and other privacy-related requirements.

Department of Education Enforcement Requirements

Since June 2023, the U.S. Department of Education has made compliance with the Safeguards Rule a condition for maintaining Title IV eligibility. That means:

  • Schools must develop and implement a written information security program
  • They must identify and mitigate risks to student data
  • And they must document and monitor their efforts regularly

Failure to comply can result in:

  • Loss of federal funding
  • Fines or legal consequences
  • Reputational damage and student distrust

If your institution processes student financial data, compliance is not optional — it’s legally required and crucial for protecting your school and your students and is evaluated during your annual Department of Education audit.

ForityData experience is shared with other higher education cybersecurity leaders in our Campus CyberCast podcast. Catch this episode where we talk about the continuous vulnerability management and third-party oversight.

GLBA Safeguards Rule Requirements and Implementation

FTC safeguards

To comply with the FTC’s Safeguards Rule, colleges and universities must develop and implement a written information security program designed to protect student financial data. This program must include specific administrative, technical, and physical safeguards.

Below are the core GLBA Safeguards Rule requirements your institution must follow:

1. Appoint a Qualified Individual to Oversee the Program

Designate a person to lead the information security college program. This person can either be an employee or a third-party vendor and would be responsible for your information security program.

This person will:

  • Coordinate the entire data protection efforts
  • Work with different departments (IT, financial aid, admissions)
  • Regularly report to school leadership (board, president, compliance teams)
  • Be held accountable for program effectiveness

Important Note: This role is often filled by a Chief Information Security Officer (CISO), Chief Information Officer (CIO), or Data Privacy Officer. If using an external vendor, your contract should clearly define their duties and oversight responsibilities.

2. Conduct a Written Risk Assessment

Your institution must conduct a formal GLBA risk assessment to identify threats to the confidentiality and integrity of student financial data.

This risk assessment must:

  • Cover how information is collected, stored, accessed, and transmitted
  • Include systems (like student portals, email, and financial databases)
  • Identify vulnerabilities in hardware, software, and processes
  • Account for human factors, like employee behavior or errors
  • Be updated regularly, especially after major IT changes or incidents

Example: If you use a cloud-based system for tuition payments, evaluate its security features, how data is encrypted, and whether access is restricted to authorized staff only.

3. Design and Implement Safeguards to Control the Identified Risks

Based on your risk assessment, you must implement appropriate safeguards to mitigate those risks. These safeguards may include:

Technical Safeguards

  • Encryption of sensitive data in transit and at rest
  • Multi-factor authentication (MFA) for systems accessing financial data
  • Firewalls, antivirus software, endpoint protection
  • Access control systems (who can view or change data)

Administrative Safeguards

  • Written data-handling policies
  • Procedures for user access review and revocation
  • Background checks for employees in sensitive roles

Physical Safeguards

  • Securing file cabinets and server rooms
  • Limiting physical access to authorized personnel
  • Surveillance or security controls in restricted areas

“Institutions must also verify that any outdated or vulnerable systems (like legacy student databases) are upgraded or properly isolated.”

4. Regularly Test and Monitor Safeguards

You must regularly test the effectiveness of your safeguards to ensure they’re working as intended. This could involve:

  • Continuous monitoring tools (e.g., network threat detection)
  • Vulnerability scanning and penetration testing at regular intervals
  • Reviewing system logs for unusual activity or unauthorized access
  • Documenting and responding to test results

 

This process helps identify weak spots early and contributes to long-term data breach prevention.

5. Train Staff and Manage Third-Party Service Providers

Security is only as strong as the people who handle the data. That’s why:

Employee Training is Mandatory

  • All staff who access or manage student financial data must receive regular training
  • Training should cover password safety, phishing awareness, secure data handling, and recognizing suspicious activity
  • New employees should be trained as part of onboarding
  • Keep records of all training sessions

Third-Party Oversight is Required

If your institution works with third-party service providers (e.g., payment processors, cloud storage vendors, student information systems, file transfer software), you must:

  • Conduct due diligence on their data security practices
  • Contractually require them to implement appropriate safeguards
  • Monitor their compliance through audits or security questionnaires
    • Some institutions are leveraging third-party cyber risk intelligence which involves access the results of periodic external attack surface assessments to highlight any current vulnerabilities that wouldn’t be identified in a point-in-time report (e.g. your questionnaire, SOC2 Type 2 or HECVAT).

Additionally, you must vet and monitor any third-party service providers, ensuring they follow your GLBA Safeguards Rule requirements through contractual agreements and periodic reviews.

6. Prepare a Written Incident Response Plan

You must have a formal incident response plan (IRP) in place to quickly respond to data breaches or security events. The plan should include:

  • Steps for identifying, containing, and investigating a breach
  • Roles and responsibilities of internal response teams
  • Communication protocols (who gets notified and when)
  • Procedures for notifying affected students and federal agencies
  • Recovery processes to restore systems and data
  • Post-incident evaluation to strengthen future responses

 

Having an IRP isn’t optional—it’s critical for both GLBA compliance and public trust.

7. Secure Disposal of Student Information

The Safeguards Rule requires institutions to dispose of student data securely when it is no longer needed. This includes:

  • Deleting digital files using secure wipe tools (not just hitting “delete”)
  • Shredding physical documents that contain PII
  • Establishing clear data retention policies and schedules
  • Ensuring vendors also follow secure disposal practices

Example: Old FAFSA applications with outdated financial info should not be sitting unprotected in a filing cabinet.

Common Challenges Faced by Institutions

While the GLBA Safeguards Rule requirements are clear, actually implementing them can be difficult. It’s because colleges and universities are already juggling limited budgets (compounded with enrollment challenges at some institutions), aging infrastructure, desire to add new cloud services, and broad organizational responsibilities.

Here are some of the most common obstacles higher education institutions face:

1. Budget Constraints and Limited IT Resources

Many schools—especially smaller colleges—struggle to allocate funding toward data security. With so many departments competing for limited resources, cybersecurity often gets pushed down the priority list.

This leads to:

  • Understaffed IT teams who are stretched too thin
  • Inability to invest in essential security tools like encryption, monitoring software, or training platforms
  • Delays in hiring a qualified data security officer or external consultant

2. Legacy Systems and Outdated Infrastructure

Many schools still rely on legacy databases, old student information systems (SIS), or outdated hardware that wasn’t designed with modern cybersecurity threats in mind.

Common issues include:

  • Systems that can’t support encryption or multi-factor authentication
  • Lack of integration with newer tools
  • Incompatibility with modern risk monitoring platforms

3. Third-Party Vendor Management

Colleges often work with third-party vendors for services like tuition payments, cloud storage, learning management systems, or loan processing. While these services are convenient, they also bring risk.

Common vendor-related issues:

  • Not all vendors meet GLBA or FERPA data security standards
  • Contracts may lack proper data protection clauses
  • Schools may not monitor or review vendor practices regularly
  • Lack of accuracy, or recency, in security documentation or independent report on security posture

4. Training and Awareness Among Non-Technical Staff

Another major challenge is ensuring that non-technical staff (such as those in admissions, financial aid, or student services) fully understand their role in data protection.

These staff members often:

  • Handle sensitive information daily
  • Use passwords, share files, and respond to emails without realizing potential risks
  • Lack of ongoing training or practical examples of threats like phishing or social engineering

Consequences of Non-Compliance

With the U.S. DOE and the FTC now closely monitoring compliance, institutions that fall short could face long-lasting damage, such as:

1. DOE and FTC Penalties

If your school is audited and found non-compliant, consequences can include:

  • Official findings during Federal Student Aid (FSA) program reviews
  • Mandated corrective action plans with deadlines
  • Withholding of federal funds or temporary suspension of aid disbursement
  • Potential loss of Title IV eligibility

The FTC can also impose penalties, especially if a breach occurs due to neglected safeguards.

2. Financial Aid Eligibility Risks

Non-compliance doesn’t just bring fines—it can directly impact students. If a college loses access to Title IV programs, students may not be able to receive:

  • Federal Pell Grants
  • Federal Direct Loans
  • Work-study opportunities

3. Reputational Damage and Loss of Trust

Even if fines are avoided, the public fallout from a data breach or compliance violation can severely damage a school’s reputation.

Impacts include:

  • Negative media coverage and public scrutiny
  • Loss of student and parent trust
  • Decrease in applications and retention
  • Long-term brand damage that’s hard to repair
  • Closure of schools already in a perilous financial position (recall the Lincoln College closure)

Start Taking Safeguards Rule Seriously in Higher Education

Meeting GLBA Safeguards Rule requirements isn’t just about checking boxes—it’s about protecting student trust and securing your institution’s future. But with limited IT resources and growing threats, compliance can feel overwhelming.

FortifyData makes it simple. Our automated Cyber GRC platform helps you prioritize threats, streamline compliance, and safeguard financial data— acting as a force multiplier to make your team and cybersecurity program more efficient.

Read how this college was able to meet GLBA Safeguards Rule as attested to by their independent auditors.  How this college successfully achieved Safeguards Rule compliance and cybersecurity automation.

So, if you’re ready to strengthen your security and simplify GLBA compliance? Request a demo today and take control of your risk.

FAQ

The Safeguards Rule is part of the Gramm-Leach-Bliley Act (GLBA). It requires institutions that handle financial information to protect it through a written security program. It ensures organizations put in place technical and administrative measures to prevent data misuse or breaches.

Because schools manage student financial aid, loans, and tuition payments, they’re considered “financial institutions” under GLBA. This means they must meet the same data protection standards as banks and lenders.

It’s a formal review to identify where sensitive data is stored, who has access, and what security risks exist. The findings help shape the security measures in your written information security program (WISP).

It can lose eligibility for federal financial aid, face fines from the FTC or DOE, and suffer reputational damage. In serious cases, schools may be barred from participating in Title IV funding.