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| Procedure: Federal Direct Loan Processes.                             |
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| **This section is required                                            |
| [685.304](http://frwebgate.access.                                    |
| gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=685&SECTION=304&TYPE=TEXT), |
| [685.306](http://frwebgate.access.                                    |
| gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=685&SECTION=306&TYPE=TEXT), |
| [685.309](http://frwebgate.access.gp                                  |
| o.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=685&SECTION=309&TYPE=TEXT).** |
|                                                                       |
| Required information:                                                 |
|                                                                       |
| **Counseling Borrowers:**                                             |
|                                                                       |
| 1.  **Initial Counseling:** Determine the method that initial         |
|     counseling is conducted with each Direct Subsidized Loan or       |
|     Direct Unsubsidized Loan student borrower unless the student      |
|     borrower has received a prior Direct Subsidized, Direct           |
|     Unsubsidized, Federal Stafford, or Federal SLS Loan (i.e., in     |
|     person, audiovisual presentation or interactive electronic        |
|     means). If interactive electronic means is the method, your       |
|     procedures include reasonable steps to ensure that each student   |
|     borrower receives the counseling materials and participates in    |
|     and completes the initial counseling.                             |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| a.  Procedures to ensure staff member with expertise in the Title IV  |
|     programs to be reasonable available shortly after the counseling  |
|     to answer questions.                                              |
|                                                                       |
| b.  Include procedures to ensure borrowers enrolled in correspondence |
|     programs or study abroad programs to provide written counseling   |
|     materials before the loan proceeds are disbursed.                 |
|                                                                       |
| c.  Develop counseling materials to include all of the elements       |
|     outlined in                                                       |
|     [685.304(a)(3)](http://frwebgate.access.                          |
| gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=685&SECTION=304&TYPE=TEXT). |
|                                                                       |
| d.  If the school adopts an alternative approach for initial          |
|     counseling as part of the school's quality assurance plan         |
|     described in                                                      |
|     [685.300(b)(9)](http://frwebgate.access.                          |
| gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=685&SECTION=300&TYPE=TEXT), |
|     develop materials in accordance with                              |
|     [685.304(3)](http://frwebgate.access.                             |
| gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=685&SECTION=304&TYPE=TEXT). |
|     In addition, the materials are designed to target borrowers who   |
|     are most likely to default, and must include performance measures |
|     that demonstrate the effectiveness of the alternative approach    |
|     [685.304(4)](http://frwebgate.access.                             |
| gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=685&SECTION=304&TYPE=TEXT). |
|                                                                       |
| e.  Maintain documentation of initial counseling in each student's    |
|     file.                                                             |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| 2.  **Exit Counseling:** Determine the method that exit counseling is |
|     conducted with each Direct Subsidized Loan or Direct Unsubsidized |
|     Loan borrower shortly before the student borrower ceases at least |
|     half-time study at the school (i.e., in person, audiovisual       |
|     presentation or interactive electronic means). If interactive     |
|     electronic means is the method, your procedures include           |
|     reasonable steps to ensure that each student borrower receives    |
|     the counseling materials and participates in and completes the    |
|     exit counseling. Note: GRAD PLUS Exit requirement -- If a school  |
|     is conducting exit counseling for a borrower who has also         |
|     received a Stafford Loan, GRAD PLUS information must be included  |
|     in the Exit counseling.                                           |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| a.  Procedures to ensure staff member with expertise in the Title IV  |
|     programs to be reasonable available shortly after the exit        |
|     counseling to answer questions.                                   |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| f.  Include procedures to ensure borrowers enrolled in correspondence |
|     programs or study abroad programs to provide written counseling   |
|     materials within 30 days after the student borrower completes the |
|     program.                                                          |
|                                                                       |
| g.  Include procedures to ensure borrowers who withdraw from the      |
|     school without the school's prior knowledge or fail to complete   |
|     exit counseling are provided with exit counseling through         |
|     interactive electric means or by mailing written counseling       |
|     materials to the borrower's last know address within 30 days      |
|     after the school learns the borrower has withdrawn or failed to   |
|     complete the required exit counseling.                            |
|                                                                       |
| h.  Develop exit counseling materials to include all of the elements  |
|     outlined in                                                       |
|     [685.304(b)(3)](http://frwebgate.access.                          |
| gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=685&SECTION=304&TYPE=TEXT). |
|                                                                       |
| i.  Develop procedures to ensure that the information required in     |
|     [685.304(b)(4)(x)](http://frwebgate.access                        |
| .gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=685&SECTION=304&TYPE=TEXT) |
|     is provided to the Secretary within 60 days after the borrower    |
|     provides the information.                                         |
|                                                                       |
| j.  Maintain documentation of exit counseling in each student's file. |
|                                                                       |
| **Payment of a Refund or Return of Title IV:**                        |
|                                                                       |
| 1.  Include procedures for the school to pay a portion of the         |
|     student's refund or return of title IV, HEA program funds that is |
|     allocable to a Direct Loan to the Secretary.                      |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| 3.  Provide simultaneous written notice to the borrower if the school |
|     pays a refund or return of title IV, HEA program funds to the     |
|     Secretary on behalf of the borrower.                              |
|                                                                       |
| 4.  In determining the portion of s student's refund or return of     |
|     title IV, HEA program funds that is allocable to a Direct Loan,   |
|     the school follows the procedures established in                  |
|     [668.22](http://frwebgate.acces                                   |
| s.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=668&SECTION=22&TYPE=TEXT) |
|     for allocating and paying a refund or return of title IV, HEA     |
|     program funds that is due.                                        |
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| Procedure: Federal Direct Loan Processes.                             |
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| **Administrative and Fiscal Requirements:**                           |
|                                                                       |
| 1.  Establish and maintain proper administrative and fiscal           |
|     procedures and all necessary records related to Direct Loan and   |
|     as set forth in 34 CFR part 668 and submit all such reports to    |
|     the Secretary.                                                    |
|                                                                       |
| ```{=html}                                                            |
| <!-- -->                                                              |
| ```                                                                   |
| 5.  Procedures to complete and submit Student Status Confirmation     |
|     Reports to the Secretary within 30 days of receipt.               |
|                                                                       |
| 6.  Unless the school expects to submit its next student status       |
|     confirmation report to the Secretary within 60 days, the school   |
|     must develop procedures to notify the Secretary within 30 days if |
|     it discovers that a Direct Loan recipient:                        |
|                                                                       |
|     Enrolled at the school but has ceased to be enrolled on at least  |
|     a half-time basis.                                                |
|                                                                       |
| 7.  Has been accepted for enrollment at the school but failed to      |
|     enroll on at least a half-time basis for the period for with the  |
|     loan was intended.                                                |
|                                                                       |
| 8.  Has changed his or her permanent address.                         |
|                                                                       |
| 9.  **Record Retention Requirements:** Develop procedures to ensure   |
|     that the record retention and examination requirements for Direct |
|     Loan are followed in accordance with                              |
|     [668.24](http://frwebgate.access                                  |
| .gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=668&SECTION=24&TYPE=TEXT). |
|                                                                       |
| 10. **Accounting Requirements:** Develop procedures to ensure that    |
|     accounting requirements are followed in accordance with           |
|     [668.24(b)](http://frwebgate.access                               |
| .gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=668&SECTION=24&TYPE=TEXT). |
|                                                                       |
| 11. **Direct Loan program bank account:** Develop procedures for      |
|     maintaining funds in accordance with                              |
|     [668.163](http://frwebgate.access.                                |
| gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=668&SECTION=163&TYPE=TEXT). |
|                                                                       |
| 12. **Division of functions:** Develop procedures for divisions of    |
|     functions in accordance with                                      |
|     [668.16(c)](http://frwebgate.access                               |
| .gpo.gov/cgi-bin/get-cfr.cgi?TITLE=34&PART=668&SECTION=16&TYPE=TEXT). |
|                                                                       |
| 13. **Limit on use of funds:** Ensure that all Direct Loan funds      |
|     received by a school are used only to make Direct Loans to        |
|     eligible borrowers and are not used or hypothecated for any other |
|     purpose.                                                          |
|                                                                       |
| You may want to consider completing the [FFEL/Direct Loan File        |
| Review](http://www.i                                                  |
| fap.ed.gov/qadocs/policiesandprocedures/ffeldirectloanfilereview.doc) |
| Activity to ensure compliance on an individual student level.         |
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| Description of Policy and Procedure:                                  |
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| Offices that need to be involved:                                     |
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| **Lead Persons to Coordinate Policy and Procedure:**                  |
|                                                                       |
| Name: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Name:          |
| \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_                      |
|                                                                       |
| Title: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Title:    |
| \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_                    |
|                                                                       |
| Phone Number: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Phone Number:        |
| \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_                                      |
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| Start Date (mm/dd/yy):                                                |
|                                                                       |
| Anticipated Completion Date:                                          |
|                                                                       |
| Actual Completion Date:                                               |
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| Did you review and test the procedure for accuracy?                   |
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| Was the policies and procedures manual updated to reflect appropriate |
| changes? Yes or No                                                    |
|                                                                       |
| 1.  If Yes, what section was updated?                                 |
|                                                                       |
| 2.  Enter the date that the Policies and Procedures Manual was        |
|     updated to reflect these changes:                                 |
|                                                                       |
| 3.  Were staff members properly trained about new procedures? Yes or  |
|     No                                                                |
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| *We recommend that your school annually review your policies and      |
| procedures and revise accordingly. Remember, you must consistently    |
| follow all policies and procedures developed\                         |
| by your school.*                                                      |
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