# Presentation: 728314

## Session 47

**Direct Loan Reconciliation and Closeout**

**Presenters**
- Isiah Dupree – Direct Loan Operations
- Wendy Jerreld – COD School Relations Center

## 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

## Direct Loan Closeout Under COD

- Total Loan Disbursed  = $11,199,012,627.00

- Number of schools closed out at 7/31/2004 = 473

- 39%

## Direct Loan Closeout Under COD

- Total Loan Disbursed  = $11,754,850,525.00

- Number of schools closed out at 7/31/2005 = 865

- 74%

## Direct Loan Closeout Under COD

- Total Loan Disbursed  = $12,074,537,461.00

- Number of schools closed out at 7/31/2006 = 966

- 82%

## 82%

- 39%

- 74%

- Give yourself a hand

- 2002/2003

- 2003/2004

- 2004/2005

## Questionnaire on Best Practices 

## 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?

## 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?

## 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?

## 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?

## 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?

## 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?

## Summary of the Various Areas that Affect Reconciliation

## Summary of the Various Areas that Affect Reconciliation

- Cash Receipts and Refunds
- Disbursements and Adjustments
- Booking a Loan
- Monitoring Your Process

## Cash Receipts and Refunds

- To understand monthly reconciliation, we must first understand the cash management life cycle and our own daily processing ...

## Advance Funded Cash Management Life Cycle

**COD**

**Borrower**

**Treasury/FRB**

**GAPS**

**DLSC**

**Follow the Money**

***Reporting***

**School**

## Pushed Cash Management Life Cycle

**COD**

**Borrower**

**Treasury/FRB**

**GAPS**

**DLSC**

**Follow the Money**

***Reporting***

**School**

**Disbursement Records**

**Funded Disbursement List**

**Payment Request**

**Disbursement**

**Adjustments**

## Cash Management Life Cycle

- Cash Receipts
- Refunds of Cash

- Disbursements
- Adjustments

## 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

## 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

## 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

## 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

## 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

## 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

## 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

## 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

## Booking a Loan

- Booked vs. Unbooked Disbursements
- Award + MPN + Disbursement = Booked
- Loans must book to transfer liability from the school to the student

## Computing Your ECB: The Direct Loan Cash Equation

**+**

**-**

**=**

**-**

**-**

- * Downward Adjustments are negative; upward adjustments are positive.

## Monitoring Your Process

## 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

## 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

## 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

## The COD School Relation Center Solution

## The COD School Relations Center Solution

**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

## 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

## 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

## 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

## The COD School Relations Center Solution

**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

## School Monitoring Procedures

- May 19, 2004

**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

## Direct Loan Operations – Monitoring Procedures

## Direct Loan Operations – Monitoring Procedures

**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

## Direct Loan Operations – Monitoring Procedures

**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

## Direct Loan Operations – Monitoring Procedures

**Direct Loan Operations – Monitoring Procedures**

- Schools with unsubstantiated balances for closed    years
- Manual review flag into GAPS for all current 	  award years

## Direct Loan Program Year Closeout

**Direct Loan Program Year Closeout**

## 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

## 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

## 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

## Balance Confirmation Screen

## Funding Screen

## Correspondence Screen

## School General Screen

## Closeout Correspondence

**Closeout Correspondence**

- Remaining Balance Letter
- E-mail only; sent to Financial Aid Administrator
- Zero Balance Letter
-  E-mail only; sent to Financial Aid Administrator
- Notification Warning letter
- Paper letter only; sent to the President and Financial Aid Administrator
- Program Year Closeout Letter
- Paper letter only; sent to the President and Financial Aid Administrator

## Other Closeout Correspondence

- Negative Balance Letter
- Generated when school
- has not confirmed closeout, AND
- has a negative ending cash balance, AND
- award year is closed
- Change to Zero Balance Letter
- Generated when school
- makes invalid attempt to confirm closeout, OR
- ending cash balance changes after it confirms closeout

## Other Direct Loan Sessions

- Session 41	Best Practices in Using DL LSDA
- Session 42	DL Funding & Cash Management A-Z
- Session 43	Best Practices for Processing DL at Your School
- Session 44	Direct Loans A – Z
- Session 45	Direct Loans – How to Get Started
- Session 46	What’s New in Direct Loans: Grad PLUS and 		other HERA Related Changes
- Session 48	Direct Loan Reports & Reference Materials-Tools 		of the Trade
- Session 49	How Direct Loan Servicing is Improving the 		Financial Aid Experience for You and Your 			Students

**Other Direct Loan Sessions**

## Contact Information

- We appreciate your feedback and comments.
-  Isiah Dupree can be reached at:
- Phone:  	202-377-3137
- Fax:      	202-275-3476
- E-mail:	Isiah.Dupree@ed.gov or dlops@ed.gov

## Contact Information

- We appreciate your feedback and comments.
-  COD School Relations Center can be reached at:
- Phone: 	1-800-848-0978
- Fax:  	1-877-623-5082
- E-mail:  	codsupport@acs-inc.com