The closeout deadline for the 2018-2019 Direct Loan Program Year is Friday, July 31, 2020. This is the last processing day before the end of the program year. According to a recent reminder from Federal Student Aid, all school data must be received and accepted by this date to be included in a school’s final Ending Cash Balance for the year.
There are several basic steps that a school must undertake to successfully close out their Direct Loan program at the end of each award year.
First, schools should be sure to reconcile to an Ending Cash Balance of $0 and Total Net Unbooked Disbursements of $0, as reflected on your monthly School Account Statement (SAS) Report and in your school’s internal records. Once everything is in harmony and you have no more disbursements or returns to process, complete the School Balance Confirmation form on the Common Origination and Disbursement (COD) Web Site.
The Balance Confirmation form can be completed after the school has reconciled to a $0 balance both internally and externally. Once the school has completed their final reconciliation, the school should log in to the COD Web Site. From the School options menu click on the Balance Confirmation link on the left-hand side of the page and follow the instructions on the School Balance Confirmation screen.
To meet the closeout deadline, all records must be submitted to the COD System no later than 8:00 p.m. Eastern time (ET) on Friday, July 31, 2020 . After this deadline, Direct Loan records will not be accepted by the COD System and schools will no longer have Direct Loan funds available to draw down for the 2018-2019 Award Year. In other words, the Department of Education (the Department) will reduce the school’s Current Funding Level (CFL) to the greater of Net Drawdowns or Net Accepted & Posted Disbursements.
For more information check out the electronic announcement from FSA.
Interest rates are going down for new Federal Direct Student Loans beginning on July 1, 2020.
Interest rates for Direct Loans are based on a formula whereby the rates are indexed to the 10-Year Treasury Note plus an “add-on” percentage. This year’s auction of the 10-year Treasury note resulted in a “high yield” of 0.700%, a huge decrease over last year’s high yield of 2.479%. As a result, borrowers with new loans for the 2020-2021 award year will be paying much less in finance charges over the life of their loan. You can read all about it here in a recent electronic announcement from FSA. Don’t forget to update your borrower communications and consumer information!
Interest Rates for Direct Loans First Disbursed Between July 1, 2020, and June 30, 2021
- Direct Subsidized Loan 2.75%
- Direct Unsubsidized Loans 2.75%
- Direct PLUS Loans 5.30%
Graduate & Professional Students
- Direct Unsubsidized Loans 4.30%
- Direct PLUS Loans 5.30%
The Office of Management and Budget approved revised versions of the Master Promissory Notes for Direct Subsidized, Unsubsidized and Direct PLUS loans. The new MPN’s available in paper format expire on July 31, 2022. The Plain Language Disclosures have also been updated.
Federal Student Aid made these available on StudentAid.gov on April 26, 2020 and provided guidance for schools who wish to print and use the paper versions.
As a result of the ongoing national emergency, Federal Student Aid announced that the deadline for institutions to submit an appeal to their FY 2017 Draft Cohort Default Rates has been extended until June 30, 2020, pending publication of notice in the Federal Register.
The Annual Student Loan Acknowledgement is now live on StudentAid.gov. Borrowers will not be required to complete the Annual Student Loan Acknowledgement process until they begin receiving loans for the 2021–22 Award Year. In the meantime, FSA has provided operational guidance for schools, so they can get familiar with the new process and begin updating 20-21 award year publications to inform borrowers about the new requirements. Schools should start thinking about how to update their processes and procedures to ensure that borrowers complete the ASLA. FSA noted that they are still planning a webinar on the ASLA later this year.