2. Session 47 Direct Loan Reconciliation and Closeout Presenters Isiah Dupree – Direct Loan Operations Wendy Jerreld – COD School Relations Center

3. 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

4. 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

5. 4 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

6. 5 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

7. 6 39% 74% 82% Give yourself a hand 2002/20032003/20042004/2005

8. Questionnaire on Best Practices

9. 8 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?

10. 9 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?

11. 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?

12. 11 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?

13. 12 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?

14. 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

16. 15 Summary of the Various Areas that Affect Reconciliation Cash Receipts and Refunds Disbursements and Adjustments Booking a Loan Monitoring Your Process

17. 16 Cash Receipts and Refunds To understand monthly reconciliation, we must first understand the cash management life cycle and our own daily processing …

18. 17 Advance Funded Cash Management Life Cycle COD Borrower Treasury/FRB GAPS Request Funds Cash Receipts Disbursements Change s Disbursements Adjustments DLSC Payments Refund of Cash ( optimal ) Cash Trans Booked Loans Follow the Money Reporting Refund of Cash School

19. 18 Pushed Cash Management Life Cycle COD Borrower Treasury/FRB GAPS DLSC Booked Lo ans Follow the Money Reporting School Disbursement Records Funded Disbursement List Payment Request Cash Receipts Disbursement Payments Adjustments

20. 19 Cash Management Life Cycle Cash Receipts Refunds of Cash Disbursements Adjustments

21. 20 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

22. 21 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

23. 22 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

24. 23 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

25. 24 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

26. 25 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

27. 26 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

28. 27 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

29. 28 Booking a Loan Booked vs. Unbooked Disbursements –Award + MPN + Disbursement = Booked –Loans must book to transfer liability from the school to the student

30. 29 Computing Your ECB: The Direct Loan Cash Equation Beginning Cash Balance Cash Receipts Refunds of Cash + - = - Ending Cash Balance Booked Adjust- ments* Booked Disburse- ments - * Downward Adjustments are negative; upward adjustments are positive.

31. Monitoring Your Process

32. 31 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

33. 32 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

34. 33 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 Relation Center Solution

36. 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

37. 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

38. 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

39. 38 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

40. 39 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

41. 40 For more information, review IFAP Announcement dated 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

42. Direct Loan Operations – Monitoring Procedures

43. 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

44. 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

45. 44 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

47. 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

48. 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

49. 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

50. 49 Balance Confirmation Screen

51. 50 Funding Screen

52. 51 Correspondence Screen

53. 52 School General Screen

54. 53 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

55. 54 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

56. 55 Session 40Hands On Tour of DL Tools Session 41Best Practices in Using DL LSDA Session 42DL Funding & Cash Management A-Z Session 43Best Practices for Processing DL at Your School Session 44Direct Loans A – Z Session 45Direct Loans – How to Get Started Session 46What’s New in Direct Loans: Grad PLUS and other HERA Related Changes Session 48Direct Loan Reports & Reference Materials-Tools of the Trade Session 49How Direct Loan Servicing is Improving the Financial Aid Experience for You and Your Students Other Direct Loan Sessions

57. 56 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

58. 57 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