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FASFAA Clock Hour Workshop October 25-27, 2015
1
Cash Management
For discussion purposes only
FASFAA Clock Hour Workshop
October 25-27, 2016
Cash
Management
David Bartnicki
U.S. Department of Education
Obtaining
& Maintaining
Title IV Funds
2 2
3
Obtaining TIV Funds
• Establish an account in the Department
of Education’s G5 Payment System
(G5) for requesting funds and reporting
expenditures
• Establish required bank account(s) for
receiving and maintaining funds
3
FASFAA Clock Hour Workshop October 25-27, 2015
2
Cash Management
For discussion purposes only
G5 Bank Accounts
• May have one account for all purposes
−Unless required by ED to have multiple accounts
• May have multiple accounts
−Including a separate DL account
• Must designated a bank account from which
refunds will be sent back via G5
−May be same account used for
other G5 processes
−May be different account
4
Bank Account Requirements
• Name of account must contain the phrase “Federal
funds”
OR
• Notify bank that account contains FSA funds AND
file a UCC-1 statement with appropriate state or
local governmental entity
−UCC-1 not required for public schools
• Cannot “sweep” federal funds due to potential risk
of loss
5
Maintaining & Accounting for Funds
6
Must maintain Title IV funds in a depository account insured by
FDIC or NUCA
Eliminate investment accounts
Require interest-bearing depository accounts unless:
School receives less than $120,000 annually
Best available account not expected to earn more than $500 on
Federal cash balances
Bank would require an average or minimum balance so high it
is not feasible in light of Federal/non-Federal cash resources
Consistent with OMB guidance, interest earned over $500 must
be remitted to Dept. HHS no later 30 days after award year
HHS, Payment Management System, Rockville, MD 20852
FASFAA Clock Hour Workshop October 25-27, 2015
3
Cash Management
For discussion purposes only
Managing Federal Funds
• Schools must not request funds that
exceed their immediate need for those
funds
−Funds received from G5 must be disbursed to
students within three business days of receipt
• Excess Cash
−Any amount of Title IV funds not disbursed to
students by the end of the third business day
after receipt
7
Separation of Duties and Internal Controls
• Schools must divide the functions of authorizing
payments and disbursing or delivering funds
• Organizationally independent
• Not members of the same family
• Together do not exercise substantial control over the
school
• Schools must have adequate systems of checks
and balances in system of internal controls
34 CFR 668.16(c)
8
Debit Card or
Student Bank
Accounts
9 9
10/30/15 Federal Register; 5/12/16 Elec. Ann.
FASFAA Clock Hour Workshop October 25-27, 2015
4
Cash Management
For discussion purposes only
Debit Card Provisions: Who is covered?
Tier 1 (T1) Arrangement
• U.S. school with third-party servicer*; and
• Servicer processes direct payments of Title IV aid; and
• Aid disbursed to contracted account or;
• Information about contracted account is provided to student
Tier 2 (T2) Arrangement
• U.S. school that has a contract with provider; and
• Provider is not a third-party servicer; and
• At least one Title IV credit balance recipient in 3 most recently completed award years use account; and
• Product is marketed to students through school communication, student IDs, or cobranded cards
10
*Third party servicers defined in GEN-15-01; GEN-16-15
Overview of new requirements
All T1 and T2
Student choice menu
No automatic opening of accounts
Privacy restrictions
Contract disclosure
All T1
ATM network
Fee restrictions
Contracts negotiated in best interest of students
Average student cost disclosure
T2 (more than de minimis)
Fee-free ATM
Contracts negotiated in best interest of students
Average student cost disclosure
11
12
Funding Process
FASFAA Clock Hour Workshop October 25-27, 2015
5
Cash Management
For discussion purposes only
Funding Basics
• G5 funding
−Specific for each program and for each award year
−Funding is not student specific
• COD disbursements
−Student specific
−Actual disbursements may be reported up to 7 days prior to disbursement date and must be reported no later than 15 days after the disbursement date or adjustment to a previously-made disbursement
13
Pell and TEACH Current Funding Level
• Pell and TEACH Grant funding is records first
• Schools submit actual disbursement records to COD
• COD sends data for accepted actual disbursements G5 to create or increase authorization
• G5 makes funds available in the amount of accepted disbursements
14
Direct Loan Current Funding Level
• New schools: Loan support team works
with school to determine appropriate initial
funding level
• Continuing schools: Award year initial
authorization based on prior year
disbursement history
• Increases for all schools based on actual
disbursement records accepted by COD
15
FASFAA Clock Hour Workshop October 25-27, 2015
6
Cash Management
For discussion purposes only
Administrative Cost Allowance
16
• Pell Grant ACA
– Use to defray costs of administering program
– $5 per unduplicated Pell recipient per award year
– As of 2/29/16, Pell Grant ACA payments for 15/16 Award
Year will now be posted in G5 as an Available Balance in the
school’s ACA G5 Award Number, beginning with P063Q
• School must now go into G5 and request the Pell ACA
• Campus-Based ACA (optional)
– Use to defray costs of administering Campus-Based
programs AND Pell Grant Program
– Based on CB expenditures for award year
– School must request and draw down
• Comes from CB federal allocation
17
Required Authorizations
18
• School must obtain written authorization from
student/borrower prior to:
– Disbursing TIV to a designated bank account
– Using Title IV funds to pay any allowable charges
OTHER than tuition/fees and contracted room/board
– Holding TIV credit balances
– Crediting FWS funds to student account
• Can be rescinded at any time
• Valid for entire time student enrolled
FASFAA Clock Hour Workshop October 25-27, 2015
7
Cash Management
For discussion purposes only
Required Notices
19
• School must notify student of the Title IV funds
student will receive
– How and when funds will be disbursed
– If loan funds are subsidized or unsubsidized
• School must notify borrower of loan funds
received and credited to student account
– Date and amount of disbursement
– Right to cancel all or part of loan
– Cancellation procedures and deadlines
Disbursing Title IV Funds: General & Program Requirements
20 20
Getting Ready to Disburse
• Institution determines eligible
students, amounts and dates for
disbursements
• Institution confirms that student
is still eligible before disbursing
−General eligibility
−Program-specific eligibility
−Period for which student is eligible
21
FASFAA Clock Hour Workshop October 25-27, 2015
8
Cash Management
For discussion purposes only
What is a Disbursement?
• School credits student’s account; OR
• Pays student/parent directly
• May use
– FSA funds received from ED
– School funds labeled as FSA funds in advance
of actually receiving FSA funds
• Considered TIV funds at ED set timeframes
• Date of Disbursement
– Student account records and COD
disbursement dates must be the same
22
Crediting Student’s Account
23
• May only credit account for allowable charges
– Current charges for tuition, fees and room/board if
contracted with school
• No written authorization required
– Current charges for other educationally related
expenses
• Must have written authorization from student or
parent (PLUS)
• Includes – books and supplies (unless meet
exceptions), parking fines, library fines, other goods
and services provided by the school
Direct Payment
Disburse directly to student or to parent (PLUS)
– By check
– Cash (obtain receipt)
– Electronic funds transfer
• Designated student bank account
• Stored value card; Debit card
Tier 1 or Tier 2 account requirements may apply
24 24
FASFAA Clock Hour Workshop October 25-27, 2015
9
Cash Management
For discussion purposes only
Disbursing Funds
25
School must disburse Title IV funds a student is
eligible to receive for current payment during that
payment period
Exceptions, late disbursements, retroactive payments, and
payments for prior-year charges
School may credit student’s account with TIV funds to
pay only for charges associated with the current
payment period
School that charges upfront for entire cost of a program (or
charges for more than a payment period) must prorate the
charges
Proration of Payment Period Charges: if charge for more than PP
26
For programs with substantially equal PPs:
For all other programs:
Total Institutional Charges for Program
Number of PP in Program = Institutional Charges for PP
= Institutional Charges for PP
Credit or Clock hours in PP
Credit or Clock hours in Program X Total Institutional Charges ( )
Disbursing Funds - Additional Guidance
27
• For schools that charge for more hours in a payment
period, IF a student signed an authorization to hold a
TIV credit balance, the school can use the credit
balance funds to cover the additional institutional
(tuition/fees) charges above the payment period
charges for the current year
• Please note - If the student does NOT grant authorization to
hold TIV funds, then the school can only credit TIV aid to cover
the prorated charges of the payment period and must provide
any excess TIV funds to the student within the credit balance
timeframes
FASFAA Clock Hour Workshop October 25-27, 2015
10
Cash Management
For discussion purposes only
Books/Supplies in Tuition & Fees
Allowed if
School has arrangement
with book publisher or other entity
Books/supplies available to students for prices below competitive market rates
Provides a way for students to
obtain the books and
supplies by the seventh day of the payment period, and
Has a policy permitting
students to opt out*
28
*opting out also opts out of book and supply disbursements under 668.164(m)
Books/Supplies in Tuition & Fees
Also allowed if: The books and supplies are not available elsewhere or
accessible by students from sources other than
those provided or authorized by the school,
OR
The school documents there is a compelling
health or safety reason
29
Disbursements for Books & Supplies
• Must provide a method for all TIV recipients to obtain books & supplies no later than the 7th day of a payment period if
−Title IV funds could have been disbursed 10 days before beginning of payment period, and
−Disbursed funds would have created a Title IV credit balance
Applicable to all TIV recipients, not just Pell eligible students, as of July 1, 2016
30
FASFAA Clock Hour Workshop October 25-27, 2015
11
Cash Management
For discussion purposes only
Disbursements for Books & Supplies
• Must provide the lesser of
−The Title IV credit balance, or
−Amount needed by student, as determined by the
school
• Must determine the method(s) for assisting students
with purchasing books & supplies
• If student utilizes the method, the student is
considered to have authorized the use of funds, for
this purpose only
• Student able to “opt out” of school process
31
Early Disbursements
• If the student is enrolled in a clock-hour program, the later of
– 10 days before the first day of classes of a payment period; or
– The date the student completed the previous payment period for which he or she received Title IV, HEA program funds
32 32
Early Disbursement Exceptions
• First disbursement of DL to 1st-year, 1st-time borrower
– May not credit student’s account or release funds until
30 days after first day of the student’s program of study
• For single term loans
– Must make two equal disbursement of loan proceeds
– Second disbursement may not be made prior to the
calendar midpoint of the payment period
Rule does not apply to schools with cohort default
rate <15% for the three most recent years for which
data has been published
33 33
FASFAA Clock Hour Workshop October 25-27, 2015
12
Cash Management
For discussion purposes only
34
Entrance Counseling
• Required for
−First-time Direct Loan borrowers
−First–time Grad PLUS borrowers
• Must be completed prior to the
first disbursement of the loan
34
Late Disbursements
35
– For Direct Loans
• A disbursement made after the student is no
longer enrolled at least half time
– For all other TIV aid (accept FWS)
• A disbursement made after the student is no
longer enrolled
– Must be made within 180 days after student
became ineligible
Need a valid ISIR/SAR to actually pay any TIV funds
36
Conditions for Late Disbursement
• For all programs, while student was eligible, ED
processed ISIR/SAR with official EFC and for
−For Direct Loan - originated within school system
• Origination Date not associated with submission or
ED record approval
• 30-day delay passed, if applicable
−For Perkins and FSEOG - funds were awarded prior
to student leaving school
−For TEACH Grant – grant was originated
36
FASFAA Clock Hour Workshop October 25-27, 2015
13
Cash Management
For discussion purposes only
Second DL Disbursements
Late second or subsequent
disbursements of Direct Loans
may not be made unless
student has graduated or
successfully completed the
period of enrollment
37 37
Reimbursement and HCM
38
Reimbursement/HCM2
• Must credit student’s ledger account AND PAY any credit balances due to the students BEFORE requesting reimbursement
• May not obtain authorization to hold credit balance funds
• Must provide documentation as part of its request that the credit balances were paid
HCM1
• Must credit student’s ledger account AND PAY any credit balances due to the students BEFORE submitting a request for funds
• May not obtain authorization to hold credit balance funds
Must include all Title IV funds student is eligible for
when determining Title IV credit balances
39
Credit Balances
&
Prior Year Charges
FASFAA Clock Hour Workshop October 25-27, 2015
14
Cash Management
For discussion purposes only
Title IV Credit Balance
Title IV funds credited exceed total allowable
charges assessed by the institution
Institutional Charges = $3,000
Credits to account = $6,147
Pell $1,875
Sub DL $1,272
FSEOG $2,000
Scholarship $1,000
Title IV Credit Balance = $2,147
40
Paying Title IV Credit Balance
41
• School must pay credit balance to student or parent (if PLUS) no later than
– 14 calendar days after balance occurs if it occurs after first day of classes of payment period
– 14 calendar days after first day of classes if it occurs on or before the first day of classes of payment period
Paying Credit Balance: Check
42
• Considered paid on date
–School mails check
–Notifies student within 14 day timeframe
that funds are available for immediate
pick-up and provides specific location
• Can hold for 21 days from notification
• If student doesn’t pick up within 21 days
from notification, must immediately mail or
EFT, or return to ED
FASFAA Clock Hour Workshop October 25-27, 2015
15
Cash Management
For discussion purposes only
43
Holding Credit Balances
43
• Student or parent may voluntarily authorize
school to hold credit balance
• School must
– Identify amount of funds held for each student/
parent in a subsidiary ledger account
– Maintain cash equal to credit balances held
• School may retain interest earned on funds
44
Holding Credit Balances
44
• School must pay remaining balance
–Loan funds by end of the loan period
–Other FSA program funds by end of last
payment period in award year for which
they were awarded
Note: May not go beyond these deadlines even with
student or parent authorization!
Prior Year Charges
45
• Ability to use current TIV funds to pay minor prior year
charges
• Prior year charges – up to $200
• “Year” – loan period if Direct Loan
• “Year” – award year if NO Direct Loan
• Determine the “Year” for each Payment Period/Term
– New flexibility as of July 1, 2016 – if student has a DL and
other TIV aid in a payment period, the school can determine
if the prior year is a loan period or award year
• Student/Parent cannot provide authorization to pay for
more than $200
FASFAA Clock Hour Workshop October 25-27, 2015
16
Cash Management
For discussion purposes only
46
Resources
• IFAP – www.ifap.ed.gov
• FSA Handbook
− Volume 2, Chapters 3 and 4 (Fiscal Responsibilities)
− Volume 4 (Cash Management)
− Volume 6 (Campus-Based Programs)
• 34 CFR 668 Subpart K (.161- .166) Cash Management
• FSA Assessments
− http://www.ifap.ed.gov/qahome/fsaassessment.html
− Fiscal Management; Return to Title IV Funds; Federal
Perkins Loan
• fsatraining.info (various training modules)
47
48
10/3/16– Cash Management Resource
• New Cash Management Information page
– Include links to relevant Dear Colleague Letters,
Electronic Announcements, webinars, and other
cash management resources
– Right-hand side of IFAP
– Questions can be submitted to - [email protected] (answers will not be provided directly but may be used to create formal Q & As)
Electronic Announcements
FASFAA Clock Hour Workshop October 25-27, 2015
17
Cash Management
For discussion purposes only
49
Contacts
• Atlanta School Participation Team
– Main Number: 404-974-9303/9335
– Arva Thomas (IIS) 404-974-9412
– Cassandra Weems (IIS) 404-974-9305
• Atlanta Training Officers
– David Bartnicki – 404-974-9312
Email: [email protected]
Training Feedback
To ensure quality training we ask all participants to
please fill out an online session evaluation
• Go to http://s.zoomerang.com/s/DavidBartnicki
• Evaluation form is specific to David Bartnicki
• This feedback tool will provide a means to educate and
inform areas for improvement and support an effective
process for “listening” to our customers
• Additional feedback about training can be directed to
50
51
Questions?