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The Hitchhikers Guide to Direct Loan Processing

The Hitchhikers Guide to Direct Loan Processing. Brenda D. Hicks RMASFAA Financial Aid Odyssey October 2010. “The Guide is definitive. Reality is frequently inaccurate.”. Douglas Adams The Hitchhikers Guide to the Universe.

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The Hitchhikers Guide to Direct Loan Processing

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  1. The Hitchhikers Guide to Direct Loan Processing Brenda D. Hicks RMASFAA Financial Aid Odyssey October 2010

  2. “The Guide is definitive. Reality is frequently inaccurate.” Douglas Adams The Hitchhikers Guide to the Universe

  3. “He felt like his whole life was some kind of dream and he sometimes wondered whose it was and whether they were enjoying it.” Douglas Adams The Hitchhiker’s Guide to the Universe

  4. The Guide Terminology Scrubbing the Data Handling Rejects Report Overload Denying the PLUS Closing Out Default Management

  5. Terminology • Certify (FFEL) A loan is not a loan until it is “certified” by a lender. When schools sent electronic files to be processed, they were making a request to set up the loan. Certify (v): To confirm formally as true, accurate or genuine. • Originate A loan is a loan when a school says it is a loan. When schools send electronic files to COD to be processed, they are reporting a loan that is already set up. Originate (v): To bring into being; create.

  6. Scrubbing the Data Is the ISIR transaction you use to report the origination accurate? Enrollment (Fr, So, Jr) Program (Call a grad a grad) PLUS credit fields/additional unsub.

  7. Reject re ject (ree-jekt’) tr. v. rejected, rejecting, rejects To refuse to accept, submit, believe, or make use of. To refuse to consider or grant; deny. To refuse to recognize or give affection to (a person). To discard as defective or useless; throw away. To spit out or vomit.

  8. Rejects: Research and Resolve • More efficient processing • Avoid hitting duplicate rejects • Better cash flow • Easier reconciliation

  9. What can you find on COD….

  10. 60 day range Batch Search: Date Range

  11. COD Technical Reference: Edit/Reject Codes

  12. Timely Processing Set a daily or weekly schedule for origination reporting and disbursement processing with COD. Create a log of all file transmissions. Investigate and resolve all rejected records and discrepancies. Carefully choose reports to monitor and process. Set a monthly schedule for reconciliation.

  13. “In the beginning the Universe was created. This has made a lot of people very angry and been widely regarded as a bad move.” Douglas Adams The Hitchhiker’s Guide to the Universe

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  15. “The impossible has a kind of integrity to it which the merely improbable lacks.” Douglas Adams The Hitchhiker’s Guide to the Universe

  16. Monthly Reconciliation Objective CASH (DRAWDOWNS) = TOTAL BOOKED DISBURSEMENTS

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  18. Some suggestions…. • Many hands do NOT make light work for reconciliation. • Consider only reporting the origination of loans for those students who have completed entrance interviews and MPNs. • If not, place holds on accounts for students with missing promissory notes, and • Promptly cancel originated loans with no MPNs and loan entrances • Notify students immediately when prom notes are rejected by COD.

  19. Each Day/Week/Month Evaluate: • Timing Issues • Direct loan disbursements/adjustments/rejections • Unbooked loan records • Unsent transactions • Cash issues (transactions posted and refunds of cash posted to the wrong academic year)

  20. Drawing Funds from G5 Confirm accepted records, disbursements and adjustments Request funds that equal accepted and posted disbursements (or carry a negative balance) Maintain a spreadsheet of all pertinent information.

  21. “Flying is learning how to throw yourself at the ground and miss.” Douglas Adams The Hitchhiker’s Guide to the Universe

  22. What Can FAA Do? • Check COD screens and review booked disbursements • Check COD screens to ensure funds have been drawn that match booked disbursements • Work SAS report and other reports as necessary.

  23. Update your P&P • How and when are other offices (Accounting, Business Office, etc.) notified of disbursements & change records? • Who is responsible for reviewing and processing the various reports you decide to use? • Who gets a copy of the monthly SAS report?

  24. “Nothing travels faster than the speed of light with the possible exception of bad news, which obeys its own special laws.” Douglas Adams The Hitchhiker’s Guide to the Universe

  25. PLUS Loans Practicing your P’s PLUS PJ POTENTIAL

  26. “We demand rigidly defined areas of doubt and uncertainty!” Douglas Adams The Hitchhiker’s Guide to the Universe

  27. CANNOT Deny PLUS because: • Parents are unwilling to borrow one. • School has decided to not participate in PLUS program. • Personal belief that parent’s shouldn’t borrow PLUS. • Parent was denied PLUS in previous years.

  28. CAN Deny PLUS because: • Parent’s are not US Citizens. • Parent is incarcerated. • Parent’s whereabouts are unknown. • Parent filed for bankruptcy and cannot incur additional debt as part of agreement. • Parent’s income is limited to public assistance or disability. • Parent’s likely inability to repay due to existing debt burden or expected income-to-debt ratio.

  29. Steps to Professional Judgment • Back up your percentages • Industry standard is 38% (College Board, 2007) • Accredited Credit Counseling Agencies • Use best practices • Online calculators • Conservative numbers • Document. Document. Document. • Internal controls to guard against conflict of interest.

  30. Delinquency Management Late Stage Delinquency Assistance (LSDA) involves school personnel reaching out to seriously delinquent borrowers (240+ days), and facilitating the critical contact with the loan servicer to prevent loan default. Direct Loan School Services: (888) 877-7658

  31. “For a moment, nothing happened. Then, after a second or so, nothing continued to happen.” Douglas Adams The Hitchhiker’s Guide to the Universe

  32. Direct Loan servicing reports 33

  33. “I love deadlines. I especially like the whooshing sound they make as they go flying by.” Douglas Adams The Hitchhiker’s Guide to the Universe

  34. “You live and learn. At any rate, you live.” Douglas Adams The Hitchhiker’s Guide to the Universe

  35. DL Information on ifap.ed.gov • Tools for Schools • COD CBT • EDExpress WBT • Direct Loan/COD Listserve • Direct Loan Bulletins • Publications • COD technical reference • Blue Book • Laws and Regulations • Code of Federal Regulations (CFR 685) • Links • Direct Loan web site for ordering publications

  36. Direct Loan Assistance • COD customer service • 1.800.848.0978 • Codsupport@acs-inc.com • Direct Loan Operations • Dlops@ed.gov

  37. Resources • Department of Education DL Email List • Send an e-mail request to David Hebrank (david.hebrank@ed.gov) of the Direct Loan Operations team. • Include your name and school, complete e-mail address, and a request to be added to the listserv. • Direct Loan Discussion Email List • Send an e-mail request to majordomo@lists.uoregon.edu with the subject line and the body “subscribe dirloan2” (omit quotes) • Common Origination and Disbursement: • www.cod.ed.gov • Direct Loan Servicing: • www.dl.ed.gov • Direct Loan Software and Reference Material: • www.fsadownload.ed.gov • National Direct Student Loan Coalition • www.directstudentloancoalition.org

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