DIRECT LOAN RECONCILIATION

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Kory French
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1 DIRECT LOAN RECONCILIATION 1

2 AGENDA What is it? Who is responsible? Funding FSA can help So how can I do this better? COD and G5 websites New Stuff Help! 2

3 WHAT IS IT? FSA generally defines direct loan reconciliation as the process by which the direct loan data as recorded on the Department of Education system(s) is reviewed and compared with the school s internal data A school must Identify and resolve discrepancies Document reasons for any ending cash balances KNOW WHERE THE MONEY IS 3

4 WHAT IS IT? Financial Aid Office Business Office Reconcile Internally Reconcile with COD Reconcile with COD COD G 5 (Resource) 4

5 WHAT IS IT? When it comes to who does what and who is responsible for what, anyone and everyone that touches direct loan funds has a part to play with it comes to reconciliation The Financial Aid Office (FAO) and the Business Office determine what that means for your reconciliation process Define responsibilities Document procedures Revisit frequently 5

6 WHAT IS IT? Internal reconciliation compares the data found on student accounts with the origination and disbursement data found on financial aid office (FAO) system(s) Disbursement is defined in 34 CFR (a) an institution makes a disbursement of title IV, HEA program funds on the date that the institution credits a student s account at the institution or pays a student or parent directly with (i) funds received from the Secretary; (iii) institutional funds used in advance of receiving title IV, HEA program funds. 6

7 WHAT IS IT? The internal reconciliation ensures that what is posted to student accounts (both amount and date) matches exactly the data in the FAO financial aid software Net Drawdowns (ND) = Net accepted and posted disbursements (NAPD) Cash is not held beyond cash management requirements Internal cash transactions match school bank statements 7

8 WHAT IS IT? External reconciliation compares your internal reconciliation results to COD and G5 Disbursement transactions Internal school disbursement data, including disbursement adjustments, in both the both business office and FAO match exactly to disbursement and disbursement adjustment data in COD Cash transactions Drawdowns, adjustments, and refunds found in your internal reconciliation match exactly that found in COD and G5 8

9 WHAT IS IT? Each direct loan school is required by regulation to complete monthly reconciliation and as a sidebar is recommended for ALL Title IV programs 34 CFR (b) Direct Loan Origination options And you must comply with all Cash Management regulations 34 CFR Subpart K 9

10 FUNDING At the start of each new award year, FSA will generate an initial authorization for Advanced Funded schools* Reflected in your Current Funding Level (CFL) calculated and displayed on the COD website CFL will increase/decrease through the course of the award year Corresponding available balance displayed on the G5 website Direct Loan refunds will NOT be reflected in the available balance displayed on the G5 website *for award year and forward, a school under heightened cash management will NOT receive an initial CFL 10

11 FUNDING Generally speaking, an advanced funded Direct Loan school will see an increase in their initial CFL in November or, if needed sooner, by Submitting actual disbursement data Up to 7 days in advance of actual disbursement date Increases by amount that exceeds current CFL Contacting COD Customer Service or your Federal Loan School Support Point of Contact (POC) to request an increase Originations exceed CFL No prior year positive balance for Pell, TEACH, ACG/SMART, or D/L 11

12 FUNDING An advanced funded Direct Loan school will see a decrease in their CFL for a particular award year immediately following the closeout deadline of that award year The reduction for direct loan award year 2010/2011 was completed this past August, 2012 Authorization in G5 was reduced to Net Draws (ND) No available balance remains The closeout deadline for direct loan award year will be July 31,

13 FUNDING There is no reason to delay your program year closeout as most schools should be able to reconcile and complete processing well before the closeout deadline Remember, timely reporting means transmitting to COD, and COD accepting, disbursements, and adjustments to disbursements, within 30 calendar days of the event Follow all cash management regulations for drawing and disbursing funds 13

14 FSA CAN HELP FSA provides a multitude of tools to help you in your reconciliation task Direct loan reports Tech Ref, Volume VI, Section 8 Pending & Actual Disbursement List (SAIG & web) Monthly School Account Statement (SAIG) Weekly School Monitoring Report (SAIG & web) Unsubstantiated cash COD website and customer service Action Queue (web) Financial screens Reconciliation Specialists Direct Loan Tools software 14

15 FSA CAN HELP The Pending Disbursement List identifies disbursements that perhaps should have been flagged as actuals or reduced to $0 The Action Queue displays ALL pending disbursements and can be used to run an ad Hoc pending disbursement list at any time The Actual Disbursement List assists you in monitoring your accepted actual disbursements and amounts Compare to the disbursement data posted to student accounts on a weekly basis 15

16 FSA CAN HELP The 30-day Warning Report identifies loan originations (LORs) that do not have a linked Master Promissory Note (MPN), or have not been disbursed, or both Data stays on the report for 90 days or until the needed data is associated with the LOR It also identifies submitted MPNs that do not have a linked LOR Data stays on the report for 30 days or until a LOR is submitted and linked 16

17 FSA CAN HELP 17

18 FSA CAN HELP 18

19 FSA CAN HELP The School Account Statement (SAS) displays the official Ending Cash Balance as calculated by FSA as well as summary level and detailed cash and disbursement data Generated the first FULL weekend of each month Reflects data up to the end of the previous month Year-to-date version or month-to-date or both You MUST reconcile monthly to the balances reflected on the SAS and MUST document that you have done so 19

20 FSA CAN HELP The Cash Summary contains both monthly and year-to-date cash and loan disbursement SUMMARY level data You are reconciled if SAS summary level data = FAO/Business Office data SAS summary level data DOES NOT match because of known timing issues with cash or disbursements and/or disbursement adjustments that have yet to post in COD If neither is the case, investigate further via the cash detail or loan/disbursement detail data 20

21 FSA CAN HELP Use the Cash Detail data to ensure drawdowns and refunds have posted to the appropriate award year and in the correct amount Use Loan Detail data (loan level or disbursement level) to ensure that accepted COD data = your school data Both disbursement date and amount reported to COD MUST MATCH data posted to student account 21

22 DIRECT LOAN TOOLS SOFTWARE Direct Loan Tools software can be used as a stand alone application or with your resident software Import the SAS to compare cash and disbursement data between COD and your school Import the SAS to view or print SAS reports Available free at fsadownload.ed.gov 22

23 SO HOW CAN I DO THIS BETTER? FAO and Business Office colleagues should check-in with each other on a daily/weekly basis Disbursements reported = disbursements posted? Drawdowns/returns = disbursements posted? School banking data = G5 drawdown/refund data? Return funds to G5 electronically, accurately, and to the appropriate award year Establish a refund back account with G5 Return unclaimed funds (stale dated checks) within 240 days of issue date 34 CFR

24 SO HOW CAN I DO THIS BETTER? If funds are being returned through G5 for a regulatory reason you MUST send a downward disbursement adjustment to COD* If funds are being returned due to an audit or program review liability you MUST follow directions per the final audit or program review determination letter* *The 120-day rule does NOT APPLY when returning funds due to regulatory/statutory requirement 24

25 SO HOW CAN I DO THIS BETTER? If exceptional circumstances exist that mandate returning direct loan funds via a paper check Check payable to the U.S. Department of Education Separate check for EACH award year Note the School DUNS number, Direct Loan School Code, and award year on each check Provide the information as required on the Direct Loans Refunds of Cash document found at the end of Volume 4, Chapter 4, page 7, in the FSA Student Aid Handbook The mailing addresses are on the document 25

26 SO HOW CAN I DO THIS BETTER? Daily/weekly monitoring of edit code rejects received on data submitted to COD Monitor your import edit reports or review rejects via the batch screens on the COD website Warning edits alert you data processes Hard reject edits identify data that doesn t meet required criteria data does NOT process Rejected disbursements = unsubstantiated cash Once internal reconciliation is accurate and complete begin EXTERNAL reconciliation with COD/G5 26

27 SO HOW CAN I DO THIS BETTER? Search by date range or SSN Review rejected and duplicate data Scroll down and filter for rejected data 27

28 COD/G5 WEB SCREENS COD School Menu School Summary Information School Funding Information Summary Financial Information Cash Activity Endorser Search COD Batch Menu Batch Search Action Queue G5 External Award Activity Report 28

29 COD/G5 WEB SCREENS Keep contacts current! First view of cash 29

30 COD/G5 WEB SCREENS 30

31 COD/G5 WEB SCREENS Reconciliation tool or Search forward or backward ad Hoc pending disbursement list 31

32 COD/G5 WEB SCREENS 32

33 COD/G5 WEB SCREENS 33

34 COD/G5 WEB SCREENS 34

35 COD/G5 WEB SCREENS xxxxxxxxx School DUNS number 35

36 COD/G5 WEB SCREENS 36

37 COD/G5 WEB SCREENS 37

38 CH CH CH CH CH CHANGES In the words of that great American philosopher, Bob Dylan, The times they are a changin and some things in the Direct Loan Program will change as well New on-demand SAS Disbursement Detail Report SAIG mailbox and school newsbox Format and date options No initial funding authorization for HCM1 schools beginning in Records First processing 38

39 HELP! FSA handbook - Volume 4 COD technical reference Implementation guide, edit code rejects, reports, DL tools IFAP announcements - you must monitor IFAP to be considered administratively capable Detailed recorded training materials available 39

40 HELP! COD reconciliation team Your CSR Reconciliation specialists Federal Loan School Support Team (FLSST) Me

41 QUESTIONS? 41

Managing Title IV Funds

Managing Title IV Funds 1 Agenda Funding Reconciliation Basics Tips and Tools Final Reconciliation and Closeout What s ahead? 2 Funding for all Title IV Programs Initial Authorizations Increases Decreases