1. Foreign Schools: Direct Loans and the COD System
Session #54
Foreign Schools: Direct Loans and the COD System
Wood Mason | Dec U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals

2. Agenda
Originating
Disbursing
Batch Screens
Reconciliation

3. Direct Loans & COD for Foreign Schools
ALL schools originate and disburse Direct Subsidized, Unsubsidized, and PLUS Loan awards via COD
Some schools use a resident software application and originate and disburse multiple awards for multiple students via the “batch” mode
Some schools contract with a Third Party Servicer (TPS) to process their origination and disbursement data for them
Some schools originate and disburse via the COD Reporting Website
Direct Loan Origination Tool
Legacy Origination Process
Data resides on the COD database the same way either way

4. Direct Loans & COD for Foreign Schools
An embedded utility that allows a school to build and submit a “quasi-batch” of Direct Loan origination and disbursement data for up to 100 students online via the COD reporting website
It calculates award amounts based on published loan limits, cost of attendance, and individual student information taken from CPS data
Expected Family Contribution (EFC)
Grade Level
Dependency Status
For schools with less than 8,000 students

5. Direct Loans & COD for Foreign Schools
First you must determine that your student/borrower is Title IV eligible
34 CFR 668 – Student Assistance General Provisions –
Subpart C
You MUST secure an “output” document before you originate an award
Institutional Student Information Record – ISIR
Student Aid Report – SAR
You can view the student’s CPS data (Transactions) via the COD Reporting Website as well
Person tab/Applicant Search

6. Direct Loans & COD for Foreign Schools

7. Direct Loans & COD for Foreign Schools

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16. Direct Loans & COD for Foreign Schools
Step 2 allows you to assign a Cost of Attendance (COA) Profile or create a new one for a particular student or group of students

17. Direct Loans & COD for Foreign Schools
Step 3 allows you to assign an Award Profile you’ve created, or create a new one to assign, for a particular student or group of students

18. Direct Loans & COD for Foreign Schools
Step 3 allows you to assign an Award Profile you’ve created, or create a new one to assign, for a particular student or group of students

19. Direct Loans & COD for Foreign Schools
Reviewing the award detail prior to submission of the batch

20. Direct Loans & COD for Foreign Schools

21. Direct Loans & COD for Foreign Schools
Direct Loan awards can be created and submitted individually via a legacy origination and disbursement process on the COD Reporting Website
Borrower/student must be created if not already on the COD website
If already on the database some demographic data will be pre-filled
ALL required award data are provided by the school user
Award ID
Amount
Disbursements
No automated application of award data

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29. Direct Loans & COD for Foreign Schools

30. Direct Loans & COD for Foreign Schools
Disbursement

31. Direct Loans & COD for Foreign Schools
Disbursement can be accomplished from the Award Disbursement Information screen OR the Action Queue
ALL Pending disbursements are displayed on the Action Queue
Batch tab then Action Queue link
Multiple search functionality
The Disbursement Release Indicator (DRI) on a Pending disbursement can be changed to = TRUE by checking the box next to it on either screen
Either will transmit the actual disbursement data to COD
Make sure the date of disbursement you are transmitting to COD is the ACTUAL date of disbursement

32. Direct Loans & COD for Foreign Schools
Schools may use the disbursement screen on an individual award to process actual disbursement data when appropriate.
Remember, actual disbursement data can be transmitted to COD up to 7 days ahead of the actual date of disbursement

33. Direct Loans & COD for Foreign Schools

34. Direct Loans & COD for Foreign Schools
Before you can disburse any award you must again confirm eligibility of the student and all tasks have been completed
Required entrance counseling
No COD edit
First-year, first-time borrowers AND first-time GRAD/Professional Student PLUS Loan
Secured an endorser, or successfully appealed, a denied credit check
COD warning edit #036 on origination
COD reject edit #080 on disbursement
Completed and submitted a Master Promissory Note (MPN)
COD reject edit #081

35. Direct Loans & COD for Foreign Schools

36. Direct Loans & COD for Foreign Schools
The Counseling Report is generated and posted weekly to your School NewsBox in CSV format

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38. Direct Loans & COD for Foreign Schools

39. Direct Loans & COD for Foreign Schools
Credit Checks

40. Direct Loans & COD for Foreign Schools
Federal Direct PLUS Loan borrowers require a credit check
Credit check result can be
Accepted
Denied
Pending
PLUS loan with credit declination can be accepted and displayed on COD but with an unacceptable credit decision
Can’t disburse unless and until credit denial is cured by a successful appeal via COD or by borrower securing an endorser

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43. Direct Loans & COD for Foreign Schools

44. Direct Loans & COD for Foreign Schools
A denied credit check based on adverse credit history can be appealed
Appeal on errant data on the credit report
Appeal based on extenuating circumstances
34 CFR
Borrower submits specific documents requested by COD
Reconsideration appeal
Borrower was denied ONLY for Charge-Off Accounts and/or Collection Accounts and/or a 90-day delinquent account AND the total outstanding balance is equal to, or less than, $2,085 OR
The borrower has at least one active accepted award on file with an EDD on or after 7/1/2010 and before 07/30/2013 with at least one funded disbursement and no endorser

45. Direct Loans & COD for Foreign Schools
A Direct PLUS Loan borrower can secure an endorser
CANNOT be the student for whom the loan is intended
Endorser undergoes a credit history check
Endorser CANNOT appeal denial due to an adverse credit history
Endorser completes an Endorser Addendum
Endorser promises to pay outstanding principal balance, accrued interest, and any penalties, AND any collection costs
Paper or electronic via StudentLoans.gov
An endorsed loan is reported to the credit bureau
School receives a “CO” common record response coded “E” for endorser

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47. Direct Loans & COD for Foreign Schools
Federal Direct PLUS Loan - Endorser
Endorser data and endorsed amount displayed on the COD Award Detail Information screen
Cannot disburse more than the lesser of the endorsed amount or loan amount approved
Endorsed amount is displayed on response from StudentLoans.gov
CANNOT increase a PLUS loan with an endorser
Must create and originate a subsequent PLUS loan
A new credit history on borrower and endorser if last credit check is older than 90 days*
*180 days with COD Release 14.0

48. Direct Loans & COD for Foreign Schools

49. Direct Loans & COD for Foreign Schools
Federal Direct Subsidized, Unsubsidized, and Direct PLUS Loan Master Promissory Note (MPN)
Foreign schools use single-year functionality of the MPN
Your borrower MUST execute a new MPN for each academic year
BOTH loan types can link to this MPN
Loans link to the MPN with a match on the borrower’s SSN, DOB, first two characters of his or her first name AND your Direct Loan School Code
The Direct Loan School Code on the MPN must match the Direct Loan School Code in the loan ID
If multiple loans for one academic year are originated and disbursed they link to the same MPN with the above criteria AND the same academic year start/end dates

50. Direct Loans & COD for Foreign Schools
Federal Direct Subsidized & Unsubsidized, PLUS Loan MPN
Unique MPN for each loan type
XXXXXXXXXN14GXXXXX001 - PLUS Loan MPN ID
XXXXXXXXXM14GXXXXX001 – Sub/Unsub MPN ID
Direct PLUS Loan MPN contains borrower and/or student data
Parent Direct PLUS Loan links on the SSN, DOB, and first two characters of the first name of both borrower and student
Unique MPN for each parent/student “pair” if multiple dependent students
ALL MPNs Expire 10 years from date of receipt at COD
12 months if there’s no disbursement on a linked loan

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55. Direct Loans & COD for Foreign Schools
Batch Screens

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60-day search window

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60. Direct Loans & COD for Foreign Schools
Reconciliation

61. Direct Loans & COD for Foreign Schools
Reconciliation is the process by which Title IV aid (Direct Loans) recorded on Department of Education systems is reviewed and compared with your school’s internal records
ALL Direct Loan schools MUST reconcile monthly
Discrepancies are identified and resolved
Reasons for remaining cash balances are documented
Keep this in mind…ALL Foreign schools are “Records First” schools
No CFL can be generated, and no available balance at G5 can be generated, until you submit, and COD accepts, actual disbursement data
Unless you have reduced a Direct Loan amount and NOT returned the cash you should NOT have unsubstantiated cash

62. Direct Loans & COD for Foreign Schools
Key Reconciliation Players
Financial
Aid
Office
Business
Office
Reconcile Internally
Reconcile with COD
Reconcile with COD G 5
COD
Resource 62

63. Direct Loans & COD for Foreign Schools
Internal reconciliation takes place regularly between the financial aid office and the business/bursar/comptroller office (money office)
Dollars and dates on the financial aid system match EXACTLY dollars and dates on the money office system
Reasons for remaining cash balances are documented
Be mindful of cash management regulations
Drawn funds MUST be disbursed within 3 days of receipt at your bank
External reconciliation compares your school data to that found on Department of Education systems (COD & G5)

64. Direct Loans & COD for Foreign Schools
Key Internal Reconciliation Players
Financial
Aid
Office
Business
Office
Reconcile Internally

65. Direct Loans & COD for Foreign Schools
If you can receive and use the School Account Statement you need to reconcile to that document
Provides the Department’s official monthly Ending Cash Balance (ECB)
Generated the first FULL weekend of the month
Data up to the end of the previous month
Can be downloaded from EDConnect and imported into DL Tools software for display
You MUST reconcile monthly to the balances reflected on the SAS and you MUST document that you have done so

66. Direct Loans & COD for Foreign Schools
School Receives SAS NO
Compare Cash Detail
Compare Loan Detail NO
Resolve Issues
Resolved ?
Match ?
Compare Cash Summary
YES
YES
DONE
(Documentation) 66

67. Direct Loans & COD for Foreign Schools
If you cannot receive and use the School Account Statement COD has reports and financial screens to assist you
Pending Disbursement Listing
Identifies pending disbursements that should be actual disbursements
Or should be reduced to $0
Lists pending disbursements 45 days in the future and all in the past
Direct Loan Actual Disbursement List
Displays actual disbursements posted in COD for reported week (Saturday – Friday)
Do actual disbursements and amounts posted to COD match EXACTLY what is posted to student accounts

68. Direct Loans & COD for Foreign Schools
COD has reports and financial screens to help you
30-Day Warning Report
Identifies Loan Origination Records (LORs) received at COD that do not have a linked MPN or actual disbursement
Identifies MPNs received that are in a Pending status
No LOR received that can link to the MPN

69. Direct Loans & COD for Foreign Schools
Check this
page often
for all awards
and award years
to make sure there
is no
Cash>Accepted
and Posted
Disbursements.
Check Prior award
Years Too!!!
Please keep contact information updated!

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71. Direct Loans & COD for Foreign Schools
Mirrors the SAS
Cash Summary
Updated Daily
This is a “dynamic” screen, meaning it changes whenever there has been financial activity
Can’t receive the SAS? Well here’s an emulation of the Cash portion of the document

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73. Direct Loans & COD for Foreign Schools
At the end of the Program Year, you must “closeout” via the Balance Confirmation Screen on the COD website
Becomes “live” after you receive your $0 Balance
You can closeout after you receive your last SAS with a $0 ECB
The screen displays net draws and net disbursements
When your last SAS reflects a $0 ECB, and you are done processing for that award year, you should closeout!
David is going to speak on the mechanics of monthly reconciliation in his session

74. QUESTIONS?
Wood Mason