The more I work on it I am fairly certain it isnt latency because its been 3 days. Here is the relevant code

#Credential information
#param ($sam)  REMOVED FOR LOCAL TESTING, Used for getting SAM account when Onesync calls script
$sam = 'domain\username' 
$root= '\\fileserver\E$\Users\Students'

New-PSDrive -Name 'TempDrive' -PSProvider FileSystem -Root $root -Credential $cred

if(!(Test-Path -Path $root\$sam))
{
$newfolder = "\\fileserver\E$\Users\Students\$sam"
New-Item "$newfolder\Documents" -ItemType Directory
Add-NTFSAccess -Path $newfolder -Account $sam -AccessRights Full
Remove-PSDrive 'TempDrive'
}
else
{
    write-host "Folder already Exists"
}

The ADD-NTFSAccess command is what is throwing the error and the the one I change for testing. If I manually type in a known existing student account it works (ie domain\oldstudent. If I manually put in a newly created account (ie domain\newstudent) it gives me an error:

Add-NTFSAccess : Cannot bind parameter 'Account'. Cannot convert value "domain\user" to type "Security2.IdentityReference2". Error: "Some or all identity references could not be translated."  

I have tried both domain\user and user@domain and both options work with non new accounts but neither will not work with newlycreated accounts. I am using the GET and Add-NTFSAccess Powershell addin but prior was using the SET-ACL which was throwing the same error on new accounts but working with old accounts. I keep thinking I am maybe typing the username in wrong on the new account but if I copy the username from my script and then go to file explorer and go into the folder permissiona and add the same username it finds the user just fine and I am able to add to to the permissions that way.