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Session 47
Direct Loan Reconciliation
and Closeout
PresentersIsiah Dupree – Direct Loan OperationsWendy Jerreld – COD School Relations Center
2
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
3
2002/2003 – 1205 schools in the program
Total Loan Disbursed = $11,199,012,627.00
Number of schools closed out at 7/31/2004 = 473
39%
Direct Loan Closeout Under COD
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2003/2004 – 1165 schools in the program
Total Loan Disbursed = $11,754,850,525.00
Number of schools closed out at 7/31/2005 = 865
74%
Direct Loan Closeout Under COD
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2004/2005 – 1172 schools in the program
Total Loan Disbursed = $12,074,537,461.00
Number of schools closed out at 7/31/2006 = 966
82%
Direct Loan Closeout Under COD
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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?
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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?
10
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?
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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?
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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?
13
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?
15
Summary of the Various Areas that Affect Reconciliation
• Cash Receipts and Refunds
• Disbursements and Adjustments
• Booking a Loan
• Monitoring Your Process
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Cash Receipts and Refunds
To understand monthly reconciliation, we must first understand the cash management life cycle and our own daily processing …
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Advance Funded Cash Management Life Cycle
COD
Borrower
Treasury/FRB
GAPSRequest Funds
Cash Receipts Disbursem
entsChanges
Disburse
ments
Adjustmen
ts
DLSCPayments
Refund of Cash (optimal)
Cas
h T
ran
s
Book
ed L
oans
Follow the MoneyReporting
Refund of Cash
School
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Pushed Cash Management Life Cycle
COD
Borrower
Treasury/FRB
GAPS
DLSC
Book
ed L
oans
Follow the MoneyReporting
School
Disburse
ment R
ecord
s
Funded Disb
ursemen
t List
Pay
men
t R
equ
est Cash Receipts
Disbursem
ent
Payments
Adjustments
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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
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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
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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
23
Refunds of Cash
• Methods of Return
– Electronically through GAPS (http://e-grants.ed.gov/gapsweb/)
– Check, mail to:COD School Relations CenterAttn: Refunded CashP.O. Box 9001Niagara Falls, NY 14302
– For more information, see DLB 06-09
For more information, review 34 CFR, 668.166
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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 EducationDirect Loan Servicing CenterATTN: Payment CenterP.O. Box 530260Atlanta, GA 30353-0260
– For more information, see DLB 06-10
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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
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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
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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
28
Booking a Loan
• Booked vs. Unbooked Disbursements
– Award + MPN + Disbursement = Booked
– Loans must book to transfer liability from the
school to the student
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Computing Your ECB: The Direct Loan Cash Equation
BeginningCash
Balance
CashReceipts
Refunds of
Cash+ -
=-EndingCash
Balance
BookedAdjust-ments*
BookedDisburse-
ments-
* Downward Adjustments are negative; upward adjustments are positive.
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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
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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
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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
35
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
36
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
37
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
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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
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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
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For more information, review IFAP Announcement datedMay 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
42
For more information, review DLB – 05-14
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
43
For more information, review DLB – 05-14
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
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For more information, review DLB – 05-14
Direct Loan Operations – Monitoring Procedures
• Schools with unsubstantiated balances for closed
years
– Manual review flag into GAPS for all current
award years
46
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
47
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
48
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
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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
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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
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Session 40 Hands On Tour of DL ToolsSession 41 Best Practices in Using DL LSDASession 42 DL Funding & Cash Management A-ZSession 43 Best Practices for Processing DL at Your SchoolSession 44 Direct Loans A – ZSession 45 Direct Loans – How to Get StartedSession 46 What’s New in Direct Loans: Grad PLUS and
other HERA Related ChangesSession 48 Direct Loan Reports & Reference Materials-Tools
of the TradeSession 49 How Direct Loan Servicing is Improving the
Financial Aid Experience for You and Your Students
Other Direct Loan Sessions
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Contact Information
We appreciate your feedback and comments.
Isiah Dupree can be reached at:
• Phone: 202-377-3137
• Fax: 202-275-3476
• E-mail: [email protected] or
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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: [email protected]