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Cash Management Requirements


Cash Management Requirements Tammy Hansen Iowa State University David Bartlett Federal Student Aid * * * * * * * * * * * * * * * * * * * * * * * * * * * * 12/14/2010 ... – PowerPoint PPT presentation

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Title: Cash Management Requirements

Cash Management Requirements
  • Tammy Hansen
  • Iowa State University
  • David Bartlett
  • Federal Student Aid

Cash Management Requirements
  • General
  • Funding Process
  • Disbursing Title IV Funds
  • Prepaid Debit Cards Stored-Value Cards
  • Managing Title IV Funds
  • Q A

  • General

Standards of Conduct
  • School is a fiduciary of Title IV funds
  • Subject to the highest standards of care and
    diligence in administering the programs and
    accounting for the funds received
  • School is a trustee of federal funds
  • May not use Title IV funds for other than their
    intended purposes
  • May not use Title IV funds as collateral
  • Applies to schools third-party servicer

Separation of Duties and Internal Controls
  • Schools must divide the functions of authorizing
    payments and disbursing funds
  • Organizationally independent
  • Not members of the same family
  • Schools must have adequate systems of internal
  • See 34 CFR 668.16(c)

Accounting and Recordkeeping
  • School must maintain financial records that
    reflect all Title IV program transactions
  • General ledger control accounts and related
    subsidiary accounts must identify all program
    transactions and separate those transactions from
    all other transactions
  • See 34 CFR 668.24(b)

Accounting and Recordkeeping
  • School must maintain documentation relating to
    each students (or parent borrowers) receipt of
    Title IV funds
  • The date and amount of each disbursement of Title
    IV grant or loan funds
  • The date and amount of each payment of FWS wages
  • The payment of any overpayment or return of Title
    IV funds

Federal Funds Account
  • Schools must maintain Title IV funds in a
    federally insured account that is identified as
    containing federal funds
  • Perkins Loan Revolving Fund must always be in an
    interest-bearing account
  • Other Title IV funds must be in an interest
    bearing account unless the school drew down less
    than 3 million in Title IV funds in prior award
    year and expects to draw down less than 3
    million in current award year

Garnishment of Title IV Funds Prohibited
  • No Title IV grant, loan, or work assistance can
    be subject to garnishment or attachment
  • Schools must oppose any garnishment order they
  • Schools must notify any off-campus FWS employers
    of this requirement
  • Note FWS wages may, with the students
    authorization, be used to pay any costs of
    attendance the student owes the school or that
    will become due and payable during the period of
    the award

Escheating of Title IV Funds Prohibited
  • Schools must return any Title IV program funds it
    attempts to disburse directly to a student if the
    student does not receive the funds
  • Schools must have a process to ensure Title IV
    funds never revert to the school, escheat to the
    state or to any party
  • If a credit balance check is not cashed, schools
    must return the funds no later than 240 days
    after issuing the check - See 34 CFR 668.164(h)

  • Funding Process

Funding Basics Pell, TEACH, and IASG
  • Generally, funding is not student specific,
    allocations based on COD-G5 processing
  • Timelines and deadlines for reporting
    disbursements to the Common Origination
    Disbursement (COD) System
  • Actual disbursements may be reported up to seven
    days prior to disbursement date and must be
    reported no later than 15 days after the
    disbursement date or change to previously
    reported disbursement

Funding Basics Campus-Based
  • Funding is specific for each program and for each
    award year not student specific
  • School allocations are the result of FISAP data
  • No student level reporting except for Perkins
    Loans reported to NSLDS
  • Campus-Based program level data reported through
    the eCampus-Based system, including the FISAP
  • Generally, October 1 following end of award year

Funding Process Direct Loans and Grants
School makes or schedules actual disbursements to
student accounts
G5 transfers funds to schools federal funds
School transfers funds from federal funds account
to operating account
School reports actual disbursements to COD
School requests funds from G5 for transfer to
schools bank
School funds actual disbursements to student
COD accepts actual disbursement records and
raises Current Funding Level (CFL) to amount of
accepted actual disbursements
COD sends CFL amount to G5. G5 adjusts
authorization to match COD CFL amount
Methods for Requesting Funds
  • Method is determined by ED
  • Advance
  • Heightened Cash Monitoring 1 (HCM 1)
  • Heightened Cash Monitoring 2 (HCM 2)
  • Reimbursement
  • HCM1, HCM2, and Reimbursement require the school
    to disburse students eligible funds to students
    account and then request Title IV funds from ED -
    See 668.162(e)

Funding Advance Pay
  • Pell, TEACH, and Iraq-Afghanistan Service Grant
    are records first
  • COD must accept actual disbursement records to
    create funding in G5
  • Schools may submit actual disbursements or change
    anticipated disbursements to actual disbursements
    up to seven calendar days prior to actual
    disbursement date

Funding Advance Pay
  • Direct Loan
  • Schools with prior year history of disbursements
    in spring received initial G5 authorization in
    late March/early April
  • All other schools received initial G5
    authorization in June, based on prior year

G5 Payment System ED OCFO
  • Provides financial management support services
  • Provides online capability for schools to
  • Request payments
  • Adjust drawdowns
  • Access current grant and payment information
  • Return funds
  • All transactions by Title IV program and award
    year designation

Managing Federal Title IV Funds
  • Schools must not request Title IV funds that
    exceed their immediate need for those funds
  • Funds 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
  • For circumstances beyond the schools control
    (change in enrollment status, change in award
    because of verification), school may maintain
    excess cash to make disbursements within seven
    additional days

Excess Cash
  • Allowable excess cash tolerances
  • School may maintain for up to seven days funds
    that do not exceed 1 of total amount the
    institution drew down in the prior year
  • Consequences for retaining excess cash
  • Require school to reimburse ED for costs ED
    incurred in making those funds available to the
  • Put the school in HCM 1, HCM 2, reimbursement
    payment method

  • Disbursing Title IV Funds

  • Defined as the date a school credits a students
    account at the school or pays a student or parent
    directly with
  • Title IV funds received from the ED
  • School funds used in advance of receiving funds
    from the Department
  • Disbursement date reported to COD must be the
    actual date of disbursement

Disbursement Reporting Deadline
  • Actual disbursement records reported to COD must
    be submitted to COD no later than 15 calendar
    days after making the disbursement or adjustment
    to a previously reported disbursement
  • Applies to the 2013-14 award years will likely
    apply to subsequent award years
  • See July 8, 2013 Federal Register Notice

Required Notices
What Who is Notified When Required Elements
Type and amount of Title IV funds student will receive Student Prior to disbursement Type and amount of Title IV funds available How and when funds will be disbursed If Direct Loan funds, amount of subsidized and unsubsidized
Credit of any loan funds to students account if affirmative confirmation obtained Student (or parent, if Parent PLUS loan) Within 30 days of disbursement (either before or after the disbursement) Date and amount of disbursement Right of borrower to cancel all or portion of loan Procedures and deadlines for borrower to cancel the loan
Credit of any loan funds to students account if affirmative confirmation is NOT obtained Student (or parent, if Parent PLUS loan) No earlier than 30 days before, and no later than seven days after disbursement Date and amount of disbursement Right of borrower to cancel all or portion of loan Procedures and deadlines for borrower to cancel the loan
Required Notices
  • Affirmative confirmation
  • School obtains written confirmation that the
    student wants the loan before the school credits
    the students account with loan funds
  • Borrower must be given at least 14 days from the
    date of notification to respond
  • If affirmative confirmation is not received,
    borrower must be given at least 30 days from date
    of notification
  • See 34 CFR 668.165(a)

Required Authorizations
  • Use of Title IV funds to pay for allowable
    charges other than tuition, fees, and room and
  • Holding Title IV credit balances
  • Disbursing Title IV funds by EFT to a bank
    account designated by the student or parent
  • Use of a stored-value card or a similar
    instrument for issuing a Title IV credit balance
  • See 34 CFR 668.165(b)

Required Authorizations
  • Language must be clear and conspicuous
  • Authorization must be voluntary
  • Must be completed prior to action
  • Valid for students entire enrollment
  • Student (or parent) can refuse, cancel, or modify
    at any time

Notices and Authorizations
  • Generally, schools may provide notice or receive
    authorizations electronically
  • May direct students to secure website that
    contains the required information
  • Must notify each student every year that function
    is performed electronically
  • Identify information to be provided
  • Provide address where information can be found

Allowable Charges
  • May only credit account for allowable charges
  • Current charges for tuition, fees, and room and
    board if contracted with the school
  • Other current institutional charges if the
    student and/or parent provides written
  • Includes books, supplies, and other equipment

Prior-Year Charges
  • Title IV funds can be used to pay minor prior
    year institutional charges up to 200
  • Student/Parent cannot provide authorization to
    pay for more than 200
  • For Title IV grants, the year is the award year
  • For Direct Loans, the year is the loan period

Early Disbursements
  • Term-based credit-hour program
  • 10 days before the first day of classes of the
  • Clock-hour and non-term credit-hour programs
  • Later of
  • 10 days before the first day of classes of the
    payment period, OR
  • The date the student completed the previous
    payment period

Late Disbursements
  • If student no longer eligible and only if
  • School received an ISIR with an official EFC
    while the student was still eligible and -
  • For Direct Loans and TEACH, the school originated
    the loan while the student was still eligible
  • For FSEOG and Perkins, the school awarded the aid
    while the student was still eligible

Late Disbursements
  • Must be made no later than 180 days after the
    student became ineligible
  • If student is eligible, school must attempt to
    make late disbursement

Late Disbursements
  • For Direct Loan recipients, a disbursement made
    after the student is no longer enrolled at least
  • May not originate a new loan or increase an
    existing loan amount
  • May not make a second or subsequent disbursement
    unless student completed the loan period
  • First-time first-year borrowers must complete 30
    days of program

Title IV Credit Balance
Institutional Charges 3,000 Credits to
account 6,172 Pell 1,900 Direct
Loans 3,272 Scholarship 1,000 Title IV Credit
Balance 2,172
Title IV funds credited exceed total allowable
charges assessed by the institution
Institutional Charges 9,738 Credits to
account 9,000 Pell 3,500 Direct
Loans 5,500 Scholarship 1,000 Title IV Credit
Balance 0
Paying Title IV Credit Balances
  • School must pay credit balance to student/parent
    no later than
  • 14 calendar days after balance occurs, if it
    occurs after first day of classes of payment
  • 14 calendar days after first day of classes if it
    occurs on or before the first day of classes of
    payment period
  • Payments via check are considered paid on date
    school mails check or notifies student

Paying Title IV Credit Balances
  • Schools are prohibited from charging students a
    fee for receiving Title IV funds
  • If students/parents are required to open a bank
    account, or the school opens a bank account for
    the student, student/parent consent is required

Paying Title IV Credit Balances
  • If a school delivers Title IV funds by crediting
    funds to a school-issued debit card, students
    cannot be charged a fee for making withdrawals of
    Title IV funds from the card
  • Student must not incur any cost in making cash
    withdrawals from convenient bank branch or ATM
  • See 34 CFR 668.164(c)(3) and page 4-42 of 2013-14
    FSA Handbook

Holding Title IV Credit Balances
  • Student or parent may voluntarily authorize
    school to hold credit balance
  • School must
  • Identify amount of funds held for each
    student/parent in subsidiary ledger account
  • Maintain cash equal to credit balances held
  • School may retain interest earned on retained

Holding Title IV Credit Balances
  • School must release any remaining Title IV credit
    balance upon request of the student (parent)
  • School must release any remaining Title IV credit
    balance of-
  • Direct Loan funds by the end of the loan period
  • Grants and Perkins Loans by the end of the award
  • See 34 CFR 668.165(b)(5)(iii)

Disbursements for Books Supplies
  • Must provide a method for Pell-eligible students
    to obtain books supplies no later than the
    seventh day of a payment period if -
  • Title IV funds could have been disbursed 10 days
    before beginning of payment period, and
  • All Title IV aid would have created a Title IV
    credit balance
  • See 34 CFR 668.164(i)

Disbursements for Books Supplies
  • Must provide the lesser of
  • The Title IV credit balance, or
  • Amount needed by student, as determined by the
  • 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

  • Prepaid Debit/Stored-Value Cards

Prepaid Debit/Stored-Value Card
  • A prepaid debit/stored-value card may be used to
    disburse FWS wages or a Title IV credit balance
    if the school is in compliance with the
    regulations at 34 CFR 668.164(c) and the
    information on page 4-46 of 2013-14 Federal
    Student Aid Handbook

Card Requirements - Overview
  • Card must be
  • Free to student/parent
  • Widely accepted
  • Able to be converted to cash
  • May not be a credit card
  • Able to withdraw cash from an easily accessible
  • Able to be used to purchase goods from a merchant

Card Requirements - More
  • School must have students authorization to use
    the prepaid debit/stored-value card for paying
    FWS wages or Title IV credit balances
  • Value of card must be convertible to cash
  • Student must not incur any fees for withdrawing
  • Student must not be charged for having card issued

Card Requirements - More
  • Underlying account must be Federally insured and
    must be unique to each student
  • School must not be able to make claims against
    the funds on the card
  • Card must not be marketed as a credit card
  • School must inform student of any terms or
    conditions associated with accepting or using the

Card Requirements - More
  • Use of card must comply with all timeframes
    associated with disbursing FWS wages or Title IV
    credit balances
  • Students access to funds cannot be conditional
    upon continued enrollment, academic status, or
    financial standing with the school

  • Managing Title IV Funds

Returning Funds
  • Direct Loan funds are school and award-year
  • Funds not disbursed to a student, or returned
    from a students institutional account, may be
    disbursed to another eligible student within the
    regulatory timeframes
  • Returned funds that cannot be disbursed to
    another eligible student must be returned to ED
  • This is referred to as a refund in both G5 and COD

Returned Title IV Funds
  • ED considers a school to have returned Title IV
    funds when the school has
  • Deposited or transferred the funds into its
    federal funds account
  • Initiated an electronic funds transfer to ED
    using the Refund function in G5
  • Issued a check to ED
  • A school has not satisfied this requirement until
    the bank used by ED has processed the check

Reconciliation Completion
  • Reconciliation is complete when
  • All discrepancies have been identified and
  • Timing issues are tracked for reconciliation in
    next months SAS
  • All monthly reconciliation efforts have been
  • Reasons for any Ending Cash Balance have been

Program Year Closeout
  • Should begin as soon as final disbursements are
  • One final month of reconciliation
  • Must resolve any remaining ending cash balance
  • Final deadline Last business day of July of
    year following the end of the award year
  • Deadline for 2013-2014 is July 31, 2015

Regulatory References
  • 34 CFR 668.16(c) Standards of Administrative
  • 34 CFR 668.24(b) Record Retention, Fiscal
  • 34 CFR 668.82 Standard of Conduct
  • 34 CFR 668 Subpart K (668.161 to 668.166) Cash

Cash Management Resources
  • The Blue Book
  • http//
  • FSA Handbook, Volume 2, Chapter 3 Volume 4
  • Direct Loan Reconciliation and Program Year
    Closeout Start to Finish (recorded webinar)
  • http//
  • Click on the left sidebar on Materials and
    Recordings gt Direct Loan Reconciliation and
    Program Year Closeout

Important Phone Numbers
  • COD School Relations Center
  • 1-800-848-0978
  • G5 Helpdesk
  • 1-888-336-8930
  • Campus Based Call Center
  • 1-877-801-7168

Contact Info
  • Tammy Hansen
  • Iowa State University
  • 515-294-5413
  • David A. Bartlett
  • U.S. Department of Education
  • 816-268-0434

Training Feedback
  • To ensure quality training we ask all
    participants to
  • please fill out an online session evaluation
  • Go to http//
  • Evaluation form is specific to David Bartlett
  • This feedback tool will provide a means to
    educate and
  • inform areas for improvement and support an
  • process for listening to our customers
  • Additional concerns about training can be
    directed to