Direct Loan Reconciliation and Closeout

1
Session 47

• Direct Loan Reconciliation and Closeout

Presenters Isiah Dupree Direct Loan
Operations Wendy Jerreld COD School Relations
Center
2
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

3
Direct Loan Closeout Under COD
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
4
Direct Loan Closeout Under COD
2003/2004 1165 schools in the program
Total Loan Disbursed 11,754,850,525.00
Number of schools closed out at 7/31/2005 865
74
5
Direct Loan Closeout Under COD
2004/2005 1172 schools in the program
Total Loan Disbursed 12,074,537,461.00
Number of schools closed out at 7/31/2006 966
82
6
2002/2003
2003/2004
2004/2005
74
82
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Give yourself a hand
7
Questionnaire on Best Practices
8
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?

9
Establish Internal Policies and Procedures

• 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?

10
Establish Internal Policies and Procedures

• 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?

11
Establish Internal Policies and Procedures

• 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?

12
Establish Internal Policies and Procedures

• 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?

13
Establish Internal Policies and Procedures

• 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?

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Summary of the Various Areas that Affect
Reconciliation
15
Summary of the Various Areas that Affect
Reconciliation

• Cash Receipts and Refunds
• Disbursements and Adjustments
• Booking a Loan
• Monitoring Your Process

16
Cash Receipts and Refunds

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

17
Advance Funded Cash Management Life Cycle
School
GAPS
Treasury/FRB
COD
Borrower
DLSC
Follow the Money
Reporting
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Pushed Cash Management Life Cycle
School
GAPS
Payment Request
Treasury/FRB
Disbursement Records
Funded Disbursement List
Disbursement
COD
Adjustments
Borrower
DLSC
Follow the Money
Reporting
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Cash Management Life Cycle

• Cash Receipts
• Refunds of Cash

• Disbursements
• Adjustments

20
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

21
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
22
Refunds of Cash

• Reasons
• Received more funds than disbursed
• Disbursement adjustment to borrowers account
• Regulations
• Returning or reusing funds

For more information, review 34 CFR, 668.166
23
Refunds of Cash

• Methods of Return
• Electronically through GAPS (http//e-grants.ed.g
  ov/gapsweb/)
• Check, mail to COD School Relations
  Center Attn Refunded Cash P.O. Box
  9001 Niagara Falls, NY 14302
• For more information, see DLB 06-09

For more information, review 34 CFR, 668.166
24
Payment to Servicing

• Does not impact schools cash balance
• May be made by school or by borrower
• Should be sent to U S Department of
  Education Direct Loan Servicing Center ATTN
  Payment Center P.O. Box 530260 Atlanta, GA
  30353-0260
• For more information, see DLB 06-10

25
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
26
Disbursement Adjustments

• Reasons
• Eligibility changes
• Return at borrowers request
• Reporting Adjustments
• 30 days from date of adjustment
• Returning funds

For more information, review 34 CFR, 668.164-165
27
Reporting Disbursement Adjustments

• Downward adjustments to borrowers account must
  be accompanied by
• Returning funds as a refund of cash or
• Reusing/recycling funds for another eligible
  borrower

28
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
-

-
-

Downward Adjustments are negative upward
adjustments are positive.
30
Monitoring Your Process
31
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

32
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

33
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

34
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 gt 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

36
The COD School Relations Center Solution

• 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

37
The COD School Relations Center Solution

• 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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The COD School Relations Center Solution

• How do I know I am finished?
• All discrepancies have been identified and
  resolved
• Timing issues are tracked for reconciliation in
  next months SAS
• All monthly reconciliation efforts have been
  documented

39
The COD School Relations Center Solution

• School Monitoring - what is its purpose?
• Program integrity and fiscal responsibility are
  of primary importance for the Department of
  Education and Federal Student Aid

40
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

For more information, review IFAP Announcement
dated May 19, 2004
41
Direct Loan Operations Monitoring Procedures
42
Direct Loan Operations Monitoring Procedures

• 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

For more information, review DLB 05-14
43
Direct Loan Operations Monitoring Procedures

• 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

For more information, review DLB 05-14
44
Direct Loan Operations Monitoring Procedures

• Schools with unsubstantiated balances for closed
  years
• Manual review flag into GAPS for all current
  award years

For more information, review DLB 05-14
45
Direct Loan Program Year Closeout
46
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

47
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

48
Balance Confirmation Screen

• 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

49
Balance Confirmation Screen
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Funding Screen
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Correspondence Screen
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School General Screen
53
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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Other Direct Loan Sessions
Session 40 Hands On Tour of DL Tools Session
41 Best Practices in Using DL LSDA Session 42 DL
Funding Cash Management A-Z Session 43 Best
Practices for Processing DL at Your
School Session 44 Direct Loans A Z Session
45 Direct Loans How to Get Started Session
46 Whats New in Direct Loans Grad PLUS and
other HERA Related Changes Session 48 Direct
Loan Reports Reference Materials-Tools of the
Trade Session 49 How Direct Loan Servicing is
Improving the Financial Aid Experience for You
and Your Students
56
Contact Information

• We appreciate your feedback and comments.
• Isiah Dupree can be reached at
• Phone [phone]
• Fax [phone]
• E-mail Isiah.Dupree_at_ed.gov or dlops_at_ed.gov

57
Contact Information

• We appreciate your feedback and comments.
• COD School Relations Center can be reached at
• Phone [phone]
• Fax [phone]
• E-mail codsupport_at_acs-inc.com