Session 47

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% 39% 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?

14. 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. Refund of Cash (optimal) Request Funds CashReceipts Cash Trans Changes Disbursements Adjustments Disbursements Refund of Cash Booked Loans Payments Advance Funded Cash Management Life Cycle School GAPS Treasury/FRB COD Borrower DLSC Follow the Money Reporting

18. Cash Receipts Booked Loans Payments 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

19. 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 borrower’s 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.gov/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 school’s 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 borrower’s 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 borrower’s 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

29. Beginning Cash Balance Cash Receipts Refunds of Cash Booked Disburse-ments Booked Adjust-ments* Ending CashBalance 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

35. 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

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

38. 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 month’s 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

50. Funding Screen