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### REMITTING FUNDS THROUGH ACH

#### Q & A'S

As a result of Treasury Department requirements, Federal Student Aid
(FSA) has changed how we accept electronic payments for quarterly FFEL
Lenders' Interest & Special Allowance (LaRS), monthly FFEL Consolidation
Loan Rebate Fee (CLRF), and Funding Request Participation Interest
(FRPI) payments. As of September 9, 2007, Lenders and Servicers moved
from the previous ACH & wire processes to paying online through FSA's
Financial Management System (FMS) using the Pay.gov functionality. The
information below explains how this change affects the payment,
settlement, and reporting processes.

# GENERAL QUESTIONS

**What is Pay.gov for FMS?**\
Pay.gov is a U.S. Department of Treasury web-based application, used by
many agencies to process payments. Now that FSA has integrated Pay.gov
with FSA's Financial Management System (FMS), lenders may use online FMS
remittance forms to make secure quarterly LaRS payments, monthly CLRF
payments, and FRPI payments by ACH debit from a checking account. FMS
will use the Pay.gov application to process and settle ACH payments
between a Lender's bank account and Treasury's bank account. More
information about Pay.gov is available at the following site:
<https://www.pay.gov/paygov/>

**Is the system secure?\
**Yes. FMS interfaces with Pay.gov through Secure HTTP to protect
transaction information.

Pay.gov resides within the Treasury Web Applications Infrastructure
(TWAI) -- a highly secure environment provided by the Federal Reserve
Information Technology (FRIT) to support several enterprise-wide
Treasury applications. The TWAI is compliant with the Federal
Information Processing Standard (FIPS) 140-2. All communications between
Pay.gov and FSA FMS is conducted via dedicated lines, virtual private
networks, or 128-bit, hardware-based (on Pay.gov's side), version 3-only
Secure Sockets Layer (SSL) encryption.

**Are there security requirements that affect lenders?**

Yes. Lenders/Servicers will need to enable access through their
firewalls to connect with FMS. If Lenders/Servicers are already using
FMS, they may not need to make any system changes. The bank also must be
part of the Federal Reserve System and must ensure that there are no ACH
blocks on their accounts.

**When will I be able to use the system?**

The new application became available on September 9, 2007.

## [ACCESS TO FMS]{.underline}

**What's my first step...or how do I access FMS?\
**All users must be registered through FMS to initiate payments. Access
to FMS is available through the following URL:
<http://www.fp.ed.gov/PORTALSWebApp/fp/fms.jsp>.

Updated registration & system security forms will be available through
the Financial Partners Portal, at
<http://www.fp.ed.gov/fp/attachments/fms_data_nslds/FSAFMSSYSSECURITY2006.doc>

FMS will provide online forms for submitting payments to FSA. FMS will
interact with Pay.gov behind the scenes. Lenders will not have to access
the Pay.gov site to make payments.

# **What if I already use FMS to submit my LaRS Billing Report?**

Users may continue using their current user id and password to login to
FMS. However, Lender/Servicer users who need to initiate ACH payments
through FMS will need to request access to the new "FSA LARS
Lender/Servicer Payment Submission" responsibility by updating their
system security forms.

# MAKING A PAYMENT

**When will the system be available?\
**FMS payment forms will be available 24 hours a day, 7 days a week
(holidays included) for users to submit payments. ACH payments submitted
by 8:55 PM Eastern Standard Time will settle in users accounts the
following business day. ACH payment processing will follow the Federal
Reserve holiday schedule. Payments will not settle on the Federal
Reserve designated holidays listed at:
<http://www.clevelandfed.org/about/Holidays.cfm>

**What forms will be available?\
**Users will have a choice between the LaRS remittance form, the CLRF
remittance form, and the FRPI remittance form. The LaRS payment form
will be associated only with quarterly FFEL Lenders' Interest & Special
Allowance (LaRS) collections. The CLRF form will be used to report
monthly FFEL Consolidation Loan Rebate Fees. The FRPI form will be used
to make payments for Participation Interest funding.

**Will I be able to schedule recurring, or future payments?\
**FMS will not support recurring payments, or saving payments for future
submission.

**If I have to make several payments will I need to fill out a form for
each of them?\
**Yes. Users will have to fill out a form for each payment.

**What account types can be used?**

FSA will only accept business checking accounts.

**What do I do if I entered the wrong amount?\
**It will not be possible to overpay a quarterly LaRS account balance or
FRPI account balance. If a user underpays, they will be allowed to make
a second payment. CLRF payment amounts will be based on calculations
derived from the loan information entered on the form. If the
information and payment total are incorrect, users should contact
<fsa_lr@ed.gov> for assistance.

**How do I change or cancel a payment?\
**When submitting a payment, users will see a confirmation page asking
them to review the information prior to completing the transaction. Once
a user confirms a payment, they **WILL NOT** be able to change or cancel
it.

**What should I do if I cannot find the form I am supposed to fill out?\
**Users who cannot find the correct form likely do not have the correct
security profile. They should contact FMS Operations for information
about which form is appropriate for their needs or situation, and to
determine security requirements for that responsibility. FMS Operations
may be reached through <FMS_Operations@ed.gov>

# OTHER QUESTIONS

**How will I know there is a bill to pay?\
**Lenders will continue to receive a weekly e-mail Statement of Account
for quarterly LaRS activity. Upon logging into the LaRS payment form in
FMS, users will see their existing balance.

Lenders that hold Consolidation Loans will also receive an email
reminder for monthly rebate fee payments based on the previous quarter's
consolidation activity.

**How will I know my payment was successful?\
**After submitting a payment, users will receive a confirmation number,
and the payment status will change to indicate a payment was submitted.
FMS will update the payment status as each payment moves through the
collection process.

**How will I know my payment was unsuccessful?\
**Unsuccessful payments will be handled according to specific rules.
When a payment fails due to a technical error or failed validation,
users will receive an email message stating the nature of the issue
(e.g., incorrect ABA #). When a payment fails to clear the bank due to
an incorrect account number or insufficient funds, Pay.gov will notify
FMS through a daily activity file, and FMS will subsequently notify the
lender via e-mail. FMS will also update the status of the payment in the
payment screen. Lenders/Servicers will then be able to initiate a new
transaction with correct information in FMS.

**How will I view payments I\'ve already submitted?\
**Users will log in to FMS and select the "FSA LARS Lender/Servicer
Payment Submission" responsibility. Once the LaRS, CLRF, or FRPI form
opens, users may query for prior payments. Please reference the Pay.gov
funds remittance guide at
http://www.fp.ed.gov/PORTALSWebApp/fp/Manuals.jsp

**How long will I be able to view my submitted payments?\
**Users will be able to view payments for up to three (3) years.

**Will a servicer be able to use FMS to make a LaRS payment or FRPI
payment on behalf of a lender?**

No. Servicers will not be able to make ACH LaRS or FRPI payments on
behalf of lenders through FMS. Servicers may utilize the lockbox process
to remit a LaRS payment by mail. Only custodians may initiate a FRPI
payment.

**Will a servicer be able to use FMS to make a CLRF payment on behalf of
a lender?**

Yes. Servicers will be able to make ACH CLRF payments on behalf of
lenders. The Lender must establish the correct relationship in FMS in
order to enable CLRF payments from a specific servicer.