Session 47 Direct Loan Reconciliation and Closeout Presenters Isiah Dupree – Direct Loan Operations Wendy Jerreld – COD School Relations Center

Session 47

Direct Loan Reconciliation

and Closeout

PresentersIsiah Dupree – Direct Loan OperationsWendy Jerreld – COD School Relations Center

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Topics of Discussion

• Direct Loan Closeout Statistics

• Questionnaire on Best Practices

• Summary of the Various Areas that Affect

Reconciliation

• COD School Relations Center Solution

• School Monitoring Procedures

• Program Year Closeout

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2002/2003 – 1205 schools in the program

Total Loan Disbursed = $11,199,012,627.00

Number of schools closed out at 7/31/2004 = 473

39%

Direct Loan Closeout Under COD

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74%


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82%


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39% 74% 82%Give yourself a hand

2002/2003 2003/2004 2004/2005

Questionnaire on Best Practices

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Establish Internal Policies and Procedures

• Identify Key Individuals

– What are the other offices at your institution

that plays a key role in administering the Direct

Loan Program?

– Who is responsible for reviewing and

processing the 30-Day Warning report?

– Who gets a copy of the monthly SAS report?

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• Identify Key Individuals

– Do you know who has access to the COD

system in your office?

– Do you know who has the authority draw down

funds through GAPS in your office?

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• How do you account for students with missing

MPNs?;

• How do you account for MPNs with no activity 30

days after 1st day of classes?

• Do you notify students immediately when MPNs

are rejected by COD?

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• Do you use/keep a spreadsheet to track all

disbursements, adjustments, rejections, and

drawdown actions as they occur?

• Have you establish a working relationship with

your COD Customer Service Representative?

• Do you stay current on all changes by going to

IFAP, www.ifap.ed.gov?

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• Do you query internal systems for incomplete

processing?

• Do you review batch activity?

• Do you Export all data?

• Do you Import all responses?

• Do you compare your internal records?

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• Do you resolve all rejects in a timely manner?

• Do you review business office records?

• Do you back up your data?

• Do you test your back up data?

• Have you updated your contact information in

COD?

Summary of the Various Areas that Affect Reconciliation

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Summary of the Various Areas that Affect Reconciliation

• Cash Receipts and Refunds

• Disbursements and Adjustments

• Booking a Loan

• Monitoring Your Process

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Cash Receipts and Refunds

To understand monthly reconciliation, we must first understand the cash management life cycle and our own daily processing …

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Advance Funded Cash Management Life Cycle

COD

Borrower

Treasury/FRB

GAPSRequest Funds

Cash Receipts Disbursem

entsChanges

Disburse

ments

Adjustmen

ts

DLSCPayments

Refund of Cash (optimal)

Cas

h T

ran

s

Book

ed L

oans

Follow the MoneyReporting

Refund of Cash

School

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Pushed Cash Management Life Cycle

COD

Borrower

Treasury/FRB

GAPS

DLSC

Book

ed L

oans

Follow the MoneyReporting

School

Disburse

ment R

ecord

s

Funded Disb

ursemen

t List

Pay

men

t R

equ

est Cash Receipts

Disbursem

ent

Payments

Adjustments

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Cash Management Life Cycle

•Cash Receipts

•Refunds of Cash

•Disbursements

•Adjustments

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Cash Receipts

• Requesting funds

– Advanced Funds:

• https://e-grants.ed.gov/gapsweb/ or GAPS Hotline at

888-336-8930

– Pushed Cash: based on actual disbursements

• Receiving funds

– Direct deposit to school bank account

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Timely Disbursement of Funds

• Disbursing funds

– Substantially equal disbursements

– 30 day delay for 1st time borrowers

– Late disbursements

• Funds must be disbursed to borrowers within 3

business days.

For more information, review 34 CFR, 668.164-165

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Refunds of Cash

• Reasons

– Received more funds than disbursed

– Disbursement adjustment to borrower’s account

• Regulations

– Returning or reusing funds

For more information, review 34 CFR, 668.166

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Refunds of Cash

• Methods of Return

– Electronically through GAPS (http://e-grants.ed.gov/gapsweb/)

– Check, mail to:COD School Relations CenterAttn: Refunded CashP.O. Box 9001Niagara Falls, NY 14302

– For more information, see DLB 06-09

For more information, review 34 CFR, 668.166

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Payment to Servicing

• Does not impact school’s cash balance

• May be made by school or by borrower

• Should be sent to:U S Department of EducationDirect Loan Servicing CenterATTN: Payment CenterP.O. Box 530260Atlanta, GA 30353-0260

– For more information, see DLB 06-10

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Reporting Disbursements & Adjustments

• Pushed Cash Schools

– Submission and acceptance of disbursement

– records is critical for Pushed Cash

schools

– because NO accepted disbursement

records

– = NO FUNDS!For more information, review 34 CFR, 668.164-165

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Disbursement Adjustments

• Reasons

– Eligibility changes

– Return at borrower’s request

• Reporting Adjustments

– 30 days from date of adjustment

• Returning funds

For more information, review 34 CFR, 668.164-165

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Reporting Disbursement & Adjustments

• Downward adjustments to borrower’s account

must be accompanied by:

– Returning funds as a refund of cash or

– Reusing/recycling funds for another eligible

borrower

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Booking a Loan

• Booked vs. Unbooked Disbursements

– Award + MPN + Disbursement = Booked

– Loans must book to transfer liability from the

school to the student

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Computing Your ECB: The Direct Loan Cash Equation

BeginningCash

Balance

CashReceipts

Refunds of

Cash+ -

=-EndingCash

Balance

BookedAdjust-ments*

BookedDisburse-

ments-

* Downward Adjustments are negative; upward adjustments are positive.

Monitoring Your Process

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Organize

• Finish What You Start

– Map your process and procedures

– Monitor your process

– Ensure all records have been sent to and

accepted at COD

– Consider managing timing issues to finish

what you start within the month

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Monitor Your Cash Flow

• Ensure cash receipts are posted to the correct year

• Verify requested funds have been received

• Comply with cash management timelines

• Ensure that all funds received are either disbursed

or returned

• Verify correct addresses are used when returning

funds

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Use Your Reports

• 30-Day Warning Report (COD)

• Booked Status Report (EDExpress or custom)

• Monthly SAS Report

Direct Loan Reports are covered in Session #48

The COD School Relation Center Solution

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The COD School Relations Center Solution

• Reconciliation Team Responsibilities

– Universal E-mails Outreach• Outreach to schools with cash > accepted and posted

disbursements

• Outreach to schools with unbooked loans

– Assist schools with monthly reconciliation• Review assigned schools’ ending cash balance

• Identify and prioritize which schools need assistance

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• What should you be looking for?

– Timing issues

– Cash issues

• Cash transactions in wrong year or split between

years

• Funds sent as refunds of cash that should have been

a payment (or reverse)

• Funds recycled for disbursement in a different year

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• What should you be looking for?

– Loan Issues

• Unsent/unacknowledged disbursement batches

• Rejected disbursements

• Disbursements recorded in business office, but not

in in DL/Financial Aid system

• Unbooked loans

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• How do I know I am finished?

– All discrepancies have been identified and

resolved

– Timing issues are tracked for reconciliation in

next month’s SAS

– All monthly reconciliation efforts have been

documented

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• School Monitoring - what is its purpose?

– Program integrity and fiscal responsibility are

of primary importance for the Department of

Education and Federal Student Aid

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For more information, review IFAP Announcement datedMay 19, 2004

School Monitoring Procedures

• Pro-active action taken by COD School Relations Center

– Review unsubstantiated funds balance

– Review unbooked loan balance

– Review closeout status

– Schools are contacted by COD

• By e-mail (sent weekly)

• By phone

Direct Loan Operations – Monitoring Procedures

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For more information, review DLB – 05-14


• Schools with unsubstantiated balances greater than 60 days

– Freeze Cash letter sent to the President and the

Financial Aid Director

– Manual review flag placed in Grant Application and

Payment System (GAPS) for all current award

years

• all funding requests held until unsubstantiated balance is fully

substantiated

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• Schools with unsubstantiated balances greater than

90 days

– Call for Cash letter sent to the President and the

Financial Aid Director

– Copy of this letter is sent to the School

Eligibility Channel

– Manual review flag remains in GAPS

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• Schools with unsubstantiated balances for closed

years

– Manual review flag into GAPS for all current

award years

Direct Loan Program Year Closeout

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Direct Loan Program Year Closeout

• Automated Process for Program Year Closeout

– COD Web site

• Balance Confirmation Screen

• School Correspondence Screen

• Funding Information Screen

• School General Screen

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Balance Confirmation Screen

• Balance Confirmation Form

– Provides school contact information

– Provides school ending cash balance per the

COD System

– Allows users to agree or disagree to the balance

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• When to use the screen

– Use it throughout the year during monthly

– reconciliation

– Use it to confirm closeout

– Must have received a Zero Balance Letter

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Funding Screen

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Correspondence Screen

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School General Screen

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Closeout Correspondence• Remaining Balance Letter

– E-mail only; sent to Financial Aid Administrator

• Zero Balance Letter

– E-mail only; sent to Financial Aid Administrator

• Notification Warning letter

– Paper letter only; sent to the President and Financial Aid Administrator

• Program Year Closeout Letter

– Paper letter only; sent to the President and Financial Aid Administrator

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Other Closeout Correspondence

• Negative Balance Letter

– Generated when school

• has not confirmed closeout, AND

• has a negative ending cash balance, AND

• award year is closed

• Change to Zero Balance Letter

– Generated when school

• makes invalid attempt to confirm closeout, OR

• ending cash balance changes after it confirms closeout

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Session 40 Hands On Tour of DL ToolsSession 41 Best Practices in Using DL LSDASession 42 DL Funding & Cash Management A-ZSession 43 Best Practices for Processing DL at Your SchoolSession 44 Direct Loans A – ZSession 45 Direct Loans – How to Get StartedSession 46 What’s New in Direct Loans: Grad PLUS and

other HERA Related ChangesSession 48 Direct Loan Reports & Reference Materials-Tools

of the TradeSession 49 How Direct Loan Servicing is Improving the

Financial Aid Experience for You and Your Students

Other Direct Loan Sessions

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Contact Information

We appreciate your feedback and comments.

Isiah Dupree can be reached at:

• Phone: 202-377-3137

• Fax: 202-275-3476

• E-mail: [email protected] or

[email protected]

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Contact Information

We appreciate your feedback and comments.

COD School Relations Center can be reached at:

• Phone: 1-800-848-0978

• Fax: 1-877-623-5082

• E-mail: [email protected]

Documents

Session 47 Direct Loan Reconciliation and Closeout Presenters Isiah Dupree – Direct Loan Operations Wendy Jerreld – COD School Relations Center