Direct Lending Reconciliation: Tools & Steps

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1 Direct Lending Reconciliation: Tools & Steps 2010 RMASFAA Conference Grand Forks, ND Matt Staples, Federal Student Aid

2 Topics for Today Basic Concepts of DL Processing G5 & Funding Rj Rejects What is Direct Loan Reconciliation? Monthly Reconciliation & Program Year Close Out Resources & Contact Info 2

3 Direct Loan Reconciliation The process by which the Direct Loan Cash Balance recorded on the Department of Education system is reviewed and compared with a school s internal records on a monthly basis. The school must: identify and resolve discrepancies, and document reasons for their Ending Cash hbl Balance (ECB) 3

4 Ending Cash Balance (ECB) Total lntd Net Drawdowns Total Net Booked Disbursements = Ending Cash Balance 4

5 Reconciliation: Three Key Components Financial Aid Office Business Office G 5 COD 5

6 Key Actions Communication among school staff Registrar, Business office, Financial Aid Drawing funds, reporting actual disbursements, making adjustments, monthly reconciliation Program Year Close out Cease sending records, drawing funds Confirm zero balance 6

7 Follow the money Loan Disbursements Disbursement Records COD Funding Data Funding G-5 7

8 Basic Concepts Booking a loan: Accepted origination record Accepted signed promissory note Accepted actual disbursement If PLUS, accepted credit Booked loan transfers liability from the school and becomes a binding obligation between the borrower and ED 8

9 The Direct Loan ID or Award ID (created during the loan origination) 21 characters Loan Type S, U, P DL School code S11G SSN Award year Trailing (1011) Sequence # 9

10 DL Disbursement Criteria Must submit an origination record to COD Must have an accepted and signed Master Promissory Note on file COD will reject any disbursements for loans without an accepted MPN Disbursements are made by payment period 10 10

days of crediting the student s t account Adjustments within 30 days of the

11 Report Disbursements to COD Anticipated disbursements Actual disbursement date and amount As early as 7 days before the actual date of disbursement Within 30 days of crediting the student s t account Adjustments within 30 days of the change (30 Day reporting requirement) 30 Day Warning Report designed to assist you 11 11

12 12 30 Day Warning Report

13 13 Response files and Reports

14 COD Enrollment Designate a School Security Administrator Manages school user accounts see: 1UpdatedCODWebsiteSchools.html 14

15 15 Setting Report Options in COD

16 16 Services/ COD reports

17 Who s Job is it to Perform Reconciliation? Well everyone who does any DL processing has some responsibility for DL reconciliation You determine what that is it s not for ED to dictate Logically the person or office tasked with making or entering a transaction is the one best equipped to resolve an unreconciled transaction of that type 17

18 G5 & Funding Department of Education s payment system Used dto obtain DL funds Formerly known as GAPS Provides location for all school funding processes Drawdowns Drawdown adjustments Refunds G5 funding reports 18 18

19 Establish G5 Account Have a DUNS Number Call or Complete a D U N S Request Form at Award ddocument ID 11 Character unique ID P268K11#### Set up bank information Enroll in Automated Clearing House (ACH) using Direct Deposit Sign Up Form (SF 1199A), or FEDWIRE by enrolling with CFO, Department of Education Obtain user ID and password ED mails User IDs and passwords to payee s business address 19

20 Bank Accounts Instructions on how to set up banking are located at in the FAQ section Will process banking once all documentation is received

21 G5 Bank Accounts May have one account for all purposes May have one account for all purposes except DL and one account for DL May have multiple accounts May have separate account for refunds 21

22 Bank Account for Refunds G5 now requires that a bank account be designated das the account from which h you will send refunds back via G5 May be same account as used for other G5 processes May be different account First attempt to refund will direct you to designate the refund account Provide your bank with ACH Company ID

23 G5 Homepage

24 Request funds via G

25 25 G5 Online Training

26 Funding and Disbursement Which method will you choose? Report Disbursements to COD > Payment Request in G5 > Credit the Student s Account Credit the Student s Account > Report Disbursements to COD > Payment Request in G5 Payment Request in G5 > Credit the Student s Account > Report Disbursements to COD 26

27 Returning Direct Loan Funds Overpayments Student withdrawals (R2T4) DL funds with no expectation of disbursing to eligible borrowers within 3 business days Cancellation or reduction of loan 27 27

28 Initial Authorization Initial authorization in early Spring Approximately 60 65% of the amount of the disbursement records on file from the previous year Possible increase in mid year 28

29 Reporting Disbursements Anticipated vs Actual Watch your rejects Rejected disbursements = unsubstantiated bt titdfunds Use your software import edit report or Review your batches on COD 29

30 FSA Handbook Volume 4 30

31 Submit Actual Disbursements Disbursement release indicator= true Withschool softwareandand send via batch process On COD website Must be the actual amount and date funds were made available to student Substantiates draw downs Need more cash? Send in actual disbursements or contact COD 31

32 Adjustments or corrections Inactivating a loan Reduce to zero Changes needed to fees Increasing loan amount approved Decreasing loan amount Adjustments to a specific disbursement Date adjustments Disbursement amount adjustments Refunds = no cents = rounding rules 32

33 Resolve Rejects You can do it the easy way or the hard way Easy (well easier anyhow): resolve them as they come in and have a clean SAS to reconcile Hard: let them pile up and get old and have a complicated SAS to reconcile 33 33

34 Response Files & Reports Decide who on your staff will import response files from COD Decide who will work edit code warnings and rejects All DL reports are available on the COD web, except the School Account Statement (SAS) Decide who will access reports and work them 34

35 Resolving Rejected Records View import edit reports View batch detail on COD Use COD technical reference Volume II Section 4 Edit code rejects 35

36 36 COD Welcome Screen

37 Batch Search: SSN Enter SSN and choose specific award year or select all award years for complete history 37

38 38 Batch Search: SSN

39 Batch Search: Date Range Results Enter entity ID and choose specific date range, then click on Search 39

40 40 Batch Search Date Range Results

41 Filter Batch by Rejects 41

42 COMMON RECORD ENTITY PERSON AWARD DISB Common Record and Nesting 42

43 Example Record Reject Identified in Response but also in COD 43

44 44 COD Technical Reference Edits

45 Monthly Reconciliation & Program Year Close Out 45

46 Reconciliation Schools must reconcile each month Similar to balancing a checkbook Use reports to research and determine timing differences between COD and School 46

47 Direct Loan Reconciliation Monthly activity Sh School reconciles internally, FAA and Business offices School reconciles externally with COD Reconcile cash summary, loan and disbursement detail Document your reconciliation Aids to Reconciliation i COD Website screens and reports Sh School laccount Statement (SAS) Direct Loan Tools Software (FSA Download site) COD Reconciliation i specialists ili 47

Recommended Steps Around 25 th of the month:

accepted status Resolve as many rejected

pending actual disbursements that t should

COD Export/transmit all records/batches d/bth

48 Recommended Steps Around 25 th of the month: Run a report to view all records not in an accepted status Resolve as many rejected records as possible Identify and enter pending actual disbursements that t should ldhave been entered into system and sent to COD Export/transmit all records/batches d/bth Import all acknowledgements/responses Reconcile internally 48

49 Internal Reconciliation Compare Business Office/FAO Records to Direct Loan System Develop procedures/schedule for internal reconciliationandassign and assign responsibilities Compare based on overall cash/disbursement totals and/or student detail Troubleshoot discrepancies Tools: Student Files Financial Aid Office Reports Business Office Reports 49

50 50 School Summary Financial

51 DL Tools General Functionality Multi-Year: 2008/2009, 2009/2010, 2010/2011 Functionality: i Cash Management SAS Rebuild Disbursement Measurement Tool Report 51

52 Download DL Tools from d d 52

53 DL Tools Internal Ending Cash Balance Report May want to print tthis report before importing the SAS

54 Reconciliation: Process Flow School Receives SAS Compare Cash Detail NO Compare Cash Summary Mth Match? YES NO Compare Loan Detail Resolve Issues Resolved? YES DONE 54

55 School Account Statement (SAS) The SAS is a monthly statement listing the school s DL processing activity it as reported to (and accepted by) COD Import the DSLF or DSDF Each SAS import overwrites previous SAS information stored in the DL Tools database Generated the first full weekend of the month Separate SAS for each open award year

56 Cash Summary School Account Statement Total drawdowns (info sent from G5 to COD) Total returns (info from G5 to COD) Total booked disbursements (school to COD) Ending Cash Balance (ECB) Total unbooked disbursements (school to COD) Cash > accepted/posted disbursements Cash Detail Loan/Disbursement Detail Ask for monthly and/or YTD 56

57 Setup SAS Options for use with DL Tools YTD COD.ED.GOV DSDF or DSLF

58 School Account Statement (SAS) Cash Summary YTD 58

59 Cash Discrepancies: Common Causes Timing 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 award year Funds from a different program (i.e. Pell) 59

60 Cash Discrepancies: Research Tools SAS Cash Detail Cash Detail Comparison Report Cash Management: DL Tools COD Website Business Office Cash Report Bank kstatementst t Cancelled Checks 60

61 SAS Cash Detail

62 Cash Comparison

63 63 Cash Activity

64 Disbursement Discrepancies: Common Causes Unsent/unacknowledged disbursement batches Rejected disbursements Disbursements not entered in any system (pending actuals) Disbursements recorded in business office but not in FAsystem Unbooked records School data loss 64

65 Disbursement Discrepancies: Research Tools Financial aid office disbursement report Business office disbursement report SAS Disbursement detail dtil Disbursement detail comparison COD Website award/disbursement detail Student account files Business office ledgers/statements of account 65

66 SAS Disbursement Detail

67 Disbursement Comparison

68 Disbursement Comparison

69 Disbursement Comparison

70 Reconciliation: Action Item List Monthly Reconciliation Action Items Month Ending: 4/30/2010 Program Year: No Action Item Date Due Date Completed 1. Post 5/5 Disbursements totaling $2402 in Financial Aid System Batch and Send to COD. 5/11/2010 5/15/ Business office must return $725 in G5 for George 5/06/2010 Washington 3. Verify $3264 future dated disbursements book on COD and drawn down by business office 5/06/

71 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 Reasons for any Ending Cash Balance have been identified All monthly reconciliation efforts have been documented (nothing is sent to ED) DONE 71

72 Program Year Close Out Is just the final month of regular monthly reconciliation, plus: School and COD show a cash balance of $0 COD records match all school DL records and business office system transactions, School Account Statement (SAS)reflectsa $0 unbooked balance. 72

73 Program Year Close Out The process by which schools complete final processing for a Direct Loan award year. Culmination of the monthly reconciliation process Final deadline: last processing day in July of the year following end of the award year (7/29/2011 for 09/10 award year) 73

74 Closing out the DL Program Year COD website balancebalance confirmation screen No unsubstantiated cash Close out means no more reporting of disbursements, no more draws of cash, no more reports Can re open the year if needed 74

75 75 Balance Confirmation

76 Tools and Resources for General DL Processing and for Reconciliation COD Customer Service Customer Service Representative Weekly monitoring e mails Reconciliation i Team or codsupport@acs inc.com COD web screens and reports 76

77 77 School Monitoring

78 Resources Blue Book FSA Handbook, Vol. 3 & 4 Direct Loan School Guide 34 CFR 668 Subpart K, Cash Management Regulations COD Tech Ref IFAP Electronic Announcements 78 78

79 Questions and Comments Matt Staples FSA, Kansas City DL Onboarding Team (816)

Robert Vallas Training Officer US Department of Education

Robert Vallas Training Officer US Department of Education Agenda Daily Processing - Start Reconciliation Closeout - Finish Closeout Reconciliation Daily Processing 1 2 3 2 Closeout Reconciliation Daily