PREPARING FOR DIRECT LOAN CLOSEOUT

Schools must complete final reconciliation of their 2015-2016 Direct Loan program by the closeout deadline of July 31, 2017.

Schools are required by regulatory requirements to reconcile every month. Doing so simply helps schools meet all of the cash management and disbursement reporting requirements. Reconciliation is a team effort between the Business Office and the Financial Aid Office which both have information that is needed to reconcile. The purpose of reconciliation is to make sure that internal and external accounts are consistent and agree with one another. Some schools reconcile more frequently and as a result, those schools are able to identify issues sooner and resolve them before they become more systemic problems.

In preparation for the 2015-2016 Direct Loan Closeout, schools should make sure that all of the following information is verified during the reconciliation process.

Disbursement Dates – The Disbursement Date is the date that a school credits a student’s account at the school or pays a student directly with Title IV funds. This is the date that a school must report to COD as the actual disbursement date. Be careful that you are not reporting the anticipated date. The anticipated disbursement date is the date that a school expects to disburse Direct Loan funds. The actual disbursement date is the date the funds are made available to the borrower. In many cases, the anticipated disbursement date that a school initially reports to the COD System may not be the same as the actual disbursement date.

Loan Periods and Academic Years – The 150% Direct Subsidized Loan Limit rules require schools to report Direct Loan Periods and Academic Year information to COD. What some schools forget is that there are a number of scenarios in which a student’s reported loan period and/or academic year must be updated. For example:

  • The borrower requests that a loan, or a disbursement of a loan, be cancelled;
  • The borrower does not begin attendance, or does not begin attendance on at least a half-time basis, in a payment period that was included in the originally reported loan period and the school did not make any disbursements of the loan for that payment period;
  • The school determines that the borrower is not eligible to receive a Direct Loan for a payment period that was part of the originally reported loan period. Reasons why the a borrower may have lost eligibility for the loan include: the borrower’s failure to meet the school’s satisfactory academic progress (SAP) standards, the borrower has a grant overpayment, or a change in financial circumstances that makes the borrower ineligible for a Direct Subsidized Loan;
  • The borrower withdraws during a payment period that was included in the originally reported loan period and, as a result, the entire amount of the loan that was intended for that payment period is returned under the Return to Title IV aid calculation (R2T4); or
  • For clock-hour programs, non-term credit hour programs, and certain types of non-standard term credit-hour programs, the borrower fails to progress to the next payment period or academic year as scheduled.

Stale Dated and Uncashed Checks – When students’ credit balances are disbursed to them by check, your school needs to track those checks to ensure that any unclaimed credit balances are returned to the Department. As part of your regular reconciliation process, return unclaimed funds to ED and process the corresponding downward adjustments to disbursements. Read our blog post on preventing fraud here:

According to ED, schools should be able to reach a zero Ending Cash Balance within a month of making their final disbursements if they are meeting all of the cash management, disbursement reporting, and monthly reconciliation requirements.

To be considered successfully closed out, the school must:

  • Reconcile to an Ending Cash Balance of $0 and Total Net Unbooked Disbursements of $0, as reflected on your monthly School Account Statement Report and in your school’s internal records; and
  • Complete the Balance Confirmation form on the COD Web Site.

The Balance Confirmation form can be completed after the school has reconciled to a $0 balance and has received a Zero Balance Letter, which is sent to the school via email. Once the letter is received, the school should log in to the COD Web Site. Click on the Balance Confirmation link from the School options menu on the left-hand side of the page, and follow the instructions on the Balance Confirmation screen.

Read The Full Text Of Today’s Gainful Employment Announcement Here

Accreditation Consultants ACICS, ACCET, NEASC

The U.S. Department of Education made a major announcement regarding the controversial Gainful Employment Regulations today when it delayed a number of the rule’s requirements until July 1, 2017. The Department states “this action is taken to allow the Department to further review the GE regulations and their implementation,” a firm signal of what’s likely to come as the administration eyes key regulations for repeal.

You can read the full text of the Department’s IFAP announcement below:

Posted Date: March 6, 2017

Author: Lynn Mahaffie, Acting Assistant Secretary for Postsecondary Education

Subject: Gainful Employment Electronic Announcement #105 – Additional Time for Submission of an Alternate Earnings Appeal and to Comply with Gainful Employment (GE) Disclosure Requirements

We are announcing that the Department is allowing additional time, until July 1, 2017, for institutions to (1) submit an alternative earnings appeal to the GE Debt-to-Earnings rates that were released by the Department on January 9, 2017, and (2) comply with the GE program disclosure requirements as noted in Gainful Employment Electronic Announcement #103, published on January 19, 2017. This action is taken to allow the Department to further review the GE regulations and their implementation.

Alternate Earnings Appeal

Gainful Employment Electronic Announcement #101, published on January 6, 2017, provided information on alternate earnings appeals, and reminded institutions that final appeal documentation was to be submitted to the Department on or before March 10, 2017. The date by which final appeal documentation must be submitted to the Department is now July 1, 2017. It should be noted that institutions seeking to appeal a zone or failing rate were required to provide a Notice of Intent to appeal by January 23, 2017. This January 23, 2017 deadline is not affected by the provision of additional time for submission of final appeal documentation.

GE Disclosure Template

Gainful Employment Electronic Announcement #103 announced the release of the 2017 GE Disclosure Template and informed institutions that they would have until April 3, 2017 to update disclosures for each of their GE programs using the 2017 GE Disclosure Template. The date by which disclosures for any GE program must be updated using the 2017 GE Disclosure Template is now July 1, 2017. Likewise, institutions must begin complying with distribution requirements related to the 2017 GE Disclosure Template no later than the revised July 1, 2017 deadline established for posting the new template.

Contact Information

The Gainful Employment Information Page on the IFAP website contains information on GE, including Frequently Asked Questions (FAQs). If you have a policy question about the GE regulations that has not already been addressed in the FAQs section of the Gainful Employment Information Page, please submit the question to ge-questions@ed.gov.