Session DL-1

1. Session DL-1 Direct Loan Fundamentals David Hebrank Wood Mason U.S. Department of Education

2. Agenda Roles and Responsibilities Direct Loan Basics Processing What’s New for 2009-2010 Tools and Resources 2

3. Roles and Responsibilities • Students • Meet eligibility requirements • Complete counseling • Sign Master Promissory Note • Receive and repay

4. Roles and Responsibilities • Schools • Certify eligibility • Educate borrowers about their responsibilities • Deliver proceeds • Send/receive financial and student data to/from Federal Student Aid • Funds management and reconciliation

5. Roles and Responsibilities • Federal Student Aid provides operational, system, and service support to schools • School Eligibility • Funding • Reconciliation/Closeout • Communications/Publications • Software/Web-based services • Customer Service

6. Roles and Responsibilities • Federal Student Aid also provides operational, system, and service support to borrowers • Loan Servicing • Communications/publications • Web-based services • Customer Service

7. Agenda Roles and Responsibilities Direct Loan Basics Processing What’s New for 2009-2010 Tools and Resources 7

8. Subsidized and Unsubsidized Loans • Eligibility • MPN • Fees/Rebate • Loan Limits • Interest

9. PLUS Loans Eligibility MPN Credit Check Fees/Rebate Loan limits Interest

10. Consolidation • Eligibility requirements vary • Application and MPN completed through Direct Loan Consolidation Center • www.loanconsolidation.ed.gov

11. Agenda Roles and Responsibilities Direct Loan Basics Processing What’s New for 2009-2010 Tools and Resources 11

12. Promissory Note Reconcile Originate Disburse (including funding)

13. Master Promissory Note (MPN) Legal agreement Multi-year, multi-loan notes Exceptions Plain Language Disclosures Disclosure Statements

14. School Options for MPN Multi-year vs. Single-year Recommend Multi-year Electronic vs. Paper Recommend Electronic COD Print vs. School Print Recommend COD Print

15. eMPN Web site-- www.dlenote.ed.gov

16. eMPN Web site--School options

17. eMPN Web site--Search

19. Promissory Note Reconcile Originate Disburse (including funding)

20. COD Processing School confirms eligibility, awards, and disburses aid School creates student record Common Record or COD Web site School sends information to COD COD processes/edits and returns response Error correction, when necessary

21. Processing with the COD System • Schools submit records via batch or via the COD Web site • Must include person, award, and anticipated disbursement information • Direct Loan awards must be created with correct information • 21 character ID consisting of SSN, Award type, Award year, G or E code, and sequence number • Xxxxx1234S09G12345001

22. Processing with the COD System • Person data • Identifying information • Eligibility information • Award data • Award type • Award start/end dates • Award amount

23. Responses • Schools receive a response that indicates whether the records were accepted or rejected • If rejected, an edit code tells the school what is wrong • For PLUS Loans, the response includes the results of a credit check • Schools receive a response that provides the status and expiration date of the MPN

24. Processing with the COD System • COD Web Site • Promissory note searches • Perform credit checks and do credit check searches • View and update direct loan origination and disbursement data

25. COD-Promissory Note Search

26. 222442222 Betty Rubble 01/01/1950 Credit Check Decision

27. Direct Loan Information Person

28. 30

30. Promissory Note Reconcile Originate Disburse (including funding)

31. Processing with the COD System • Disbursement data • Anticipated vs. Actual • Disbursement date • Disbursement amount

32. 34

34. Pending Disbursement Listing • What –Pending disbursements for that period • When – Weekly • Where – SAIG or COD Web • Why – Identify disbursements to be used in funding calculations

35. Processing with the COD System • Funding • Advanced Pay • School-initiated drawdown • School determines amount needed • Pushed Cash • COD System-initiated drawdown • COD System determines amount needed

36. Funded Disbursement Listing • What –Funded disbursements for that day • When – Daily, as needed • Where – SAIG or COD Web • Why – Identify disbursements used in funding calculation

37. Promissory Note Reconcile Originate Disburse (including funding)

38. Reconciliation and Closeout • Schools must reconcile each month • Like balancing the checkbook, but at the school level • Use reports and SAS to research and determine timing differences • Schools must complete closeout and the balance confirmation process each year • Total Net Drawdowns – total net disbursements = $0 Ending Cash Balance

39. University School Cash Activity

40. COD Report Selection Screen

41. SAS Options Screen

42. SAS Report Example

43. Direct Loan Tools Software available to all schools with specialized tools for Direct Loan Processing Reconciliation-compare program Rebuild Cash Management Tools Available from fsadownload.ed.gov

45. COD Reports

46. Direct Loan Newsbox

47. Agenda Roles and Responsibilities Direct Loan Basics Processing Recent Changes and Reminders What’s New for 2009-2010 Tools and Resources 47

48. What’s New for 2009-2010 • Mask SSN on Direct Loan correspondence • First five digits will be masked with x’s • 111111111 will become xxxxx1111 • All disclosure statements and non-legal correspondence • MPNs will still contain full SSN in the MPN ID and Award ID

49. What’s New for 2009-2010 • Up-front Rebate Reduction • Rebate reduced to 1.0% in 2009 • Subsidized and unsubsidized awards only disbursed on or after July 1, 2009 • PLUS award rebate remains 1.5%

50. What’s New for 2009-2010 • Loan limits have been changed in recent legislation, the last change was in the ECASLA • COD System has been updated but additional changes will take place March 2009 • Edit 167 (new) • Edit 157 (modified) • Edit 39 (modified)