Schools which participate in the Direct Loan program are required by the terms of their Program Participation Agreement (PPA) to implement a quality assurance program within their financial aid office.

A school should have a quality assurance process in place that documents that the school is:

  • Reporting loan records, disbursements, and adjustments to disbursements correctly to the Common Origination and Disbursement (COD) System,
  • Disbursing and returning loan funds in accordance with regulatory requirements,
  • Disbursing the correct loan amount to the correct student,
  • Completing monthly reconciliation and Program Year Closeout.

The Department of Education does not specify the method that schools must follow to meet the quality assurance requirement so each school may develop their own solution.  Schools may have institutional-designed assessments and quality assurance processes in place to ensure that the Direct Loan quality assurance requirement is met.

Regardless of the method or tools a school chooses, it is important for a school to have a clearly documented quality assurance process, to review this process on a regular basis, and document that the process is being used.  The quality assurance documentation should be easily accessible and readily available to Department reviewers in the case of a program review or audit.

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