FINAL RECONCILIATION OF A PELL GRANT AWARD YEAR

Reconciliationa nd CLoseout Procedures for Federal Student Aid

In addition to regular monthly reconciliation of Pell Grant data, a final reconciliation should be performed as soon as possible after final scheduled disbursements have been made for the award year. This final reconciliation should ensure that all data is correct, and that Total Net Drawdowns equal Net Accepted and Posted Disbursements in the COD System (Cash > NAPD balances should equal $0.00). This process must be performed within the applicable data submission deadline (defined below), as well as immediately following processing of any additional data by the school (for example, eligible late disbursements or disbursement adjustments made within regulatory timeframes, but which occur after the data submission deadline). There are two deadlines which impact this process:

Data Submission Deadline – The data submission deadline is published annually in a Federal Register Notice. It is generally the end of September following the end of the award year. For example, the 2016-2017 Award Year will close on September 29, 2017.  After this date, the COD System will not accept upward awards or disbursement adjustments without prior approval for an extension to the established data submission deadlines (downward adjustments will continue to be accepted). If your school needs to request an extension to the data submission deadline, this request may be submitted via the COD Web Site at https://cod.ed.gov.

Funding Cancellation Deadline – Pell Grant funding availability is canceled five years after the data submission deadline for the award year. For example, for the 2011-2012 Federal Pell Grant Award Year (July 1, 2011 – June 30, 2012), the funding cancellation date is September 29, 2017 [2012 + 5 = 2017]. After that time, schools will be unable to draw down or adjust further funds via the G5 website (although refunds of cash will still be accepted), and the COD System will be completely closed to any further award or disbursement processing for that award year. As such, schools must complete all final reconciliation activities well before this final deadline and in accordance with disbursement reporting timelines and the data submission deadline defined above.

RECONCILING PELL GRANTS

Pell Grant Reconciliation is the process by which a school reviews and compares Pell Grant data recorded on the Department of Education’s (the Department’s) systems with the information in the school’s internal records. This process should be performed on a regular basis, and is recommended at least monthly.

The two types of reconciliation are:

Internal Reconciliation

This is the reconciliation of disbursement transactions (actual disbursements and adjustments) and related cash transactions (Drawdowns, Drawdown Adjustments, Refunds of Cash, and Returns) between your Business Office records and Financial Aid system. If discrepancies are found, your school should document these and resolve them in a timely manner.

External Reconciliation

This is the reconciliation of internal disbursement and cash balances from the Business Office and Financial Aid Office with disbursement and cash balances from the Common Origination and Disbursement (COD) System. At a minimum, this reconciliation should be completed at least monthly to ensure that data is correct in all systems and that cash management and disbursement reporting timelines are being met. If you have completed your internal reconciliation first, your school will have fewer discrepancies to resolve when you perform this external reconciliation. The Department offers various tools to assist you with external reconciliation. More information about these tools is provided in the attachment to this announcement.

Schools may perform internal reconciliation and external reconciliation in either order. However, if a school has completed internal reconciliation first, your school will have fewer discrepancies to resolve when you perform the external reconciliation. The Department offers various tools to assist you with external reconciliation, as outlined in Question 9 in the attached Pell Grant Program Reconciliation Questions and Answers.

It is very important for schools to maintain good communication between the Business Office and the Financial Aid Office to successfully reconcile both internally and externally. Reconciliation is a shared responsibility. It requires joint action by the Financial Aid and Business Office to identify discrepancies and any missing data, and to correct these in a timely manner.

Schools should document their reconciliation process and the resolution of any identified discrepancies. For specific information to assist your school in reconciling the Pell Grant program check out the Department’s new Q & A here: http://bit.ly/2m8afFd

MONTHLY DIRECT LOAN RECONCILIATION REQUIREMENTS

Reconciliation is the process by which a school reviews and compares Title IV aid (grants, loans, and campus-based aid) recorded on the Department’s systems with the information in the school’s internal records. Through reconciliation, disbursement and cash discrepancies are identified and resolved in a timely manner to ensure the school meets all regulatory requirements. Schools must document their reconciliation efforts and retain this documentation for auditing purposes.

There are two types of reconciliation schools must perform on an ongoing basis:

Internal Reconciliation – This is the process where the business and financial aid offices compare the monthly financial aid office roster of scheduled disbursements to a monthly business office cash detail report that reflects funds drawn down and funds disbursed for the month. If discrepancies are found, your school should document and resolve them in a timely manner.

External Reconciliation – The school compares its reconciled internal records to the Department’s records of funds received and returned, and loans originated and disbursed to students at the school. At a minimum, this reconciliation must be completed at least monthly to ensure that data is correct in all systems and that cash management and disbursement reporting timelines are being met. If you have completed your internal reconciliation first, your school will have fewer discrepancies to resolve when you perform this external reconciliation. The Department offers various tools to assist you with external reconciliation. For more information, see the attachment to this announcement.

Direct Loan schools must also complete a final reconciliation to a zero ($0) Ending Cash Balance at the end of their processing year. This should occur shortly after you submit and the COD System accepts, your final disbursements but no later than the Program Year Closeout deadline, which is the last processing day in July of the year following the end of the Award Year.

FSA recently provided an updated FAQ offering solid pointers for schools to aid in their ongoing reconciliation efforts. http://bit.ly/2hzXT2K

ANNUAL REMINDER: DISBURSEMENT REPORTING, EXCESS CASH, AND RECONCILIATION,

FSA provided a reaffirmation of longstanding guidance related to cash management after a number of schools reviewed by ED were not able to adequately document they were meeting all of the regulatory requirements. The guidance below summarizes the general disbursement reporting, excess cash, and reconciliation requirements for all Title IV programs.  Because these requirements apply to disbursement and financial data, both the Financial Aid Office and Business Office should review the information.

Disbursement Reporting Requirements – a school must submit disbursement records no later than 15 days after making a disbursement or becoming aware of the need to adjust a student’s previously reported disbursement.

Excess Cash Requirements – Excess cash is any amount of Title IV funds that a school does not disburse to students or parents by the end of the third business day after the date the school (1) received the funds from the Department, or (2) deposited or transferred to its federal account previously disbursed Title IV funds received from the Department.  In some circumstances, cash may be held for up to an additional 7 calendar days if a school meets the excess cash tolerance and can disburse the aid to students within that time frame.  In no circumstance should cash balances remain beyond the additional 7-day period.

Reconciliation – Reconciliation is the process by which a school reviews and compares Title IV aid (grants, loans, and campus-based aid) recorded on the Department’s systems with the information in the school’s internal records.  Schools should reconcile both internally (between Business Office and Financial Aid Office data) and externally (between school data and the COD System/G5).  Through reconciliation, disbursement and cash discrepancies are identified and resolved in a timely manner to ensure the school meets all regulatory requirements.  Schools must document their reconciliation efforts and retain this documentation for auditing purposes. For more information click here: http://bit.ly/2gZyAva

ADMINISTRATIVE COST ALLOWANCE PAYMENTS

The Federal Pell Grant regulations provide for an Administrative Cost Allowance (ACA) payment of $5 to schools for each student who receives a Pell Grant at that school for an award year. These funds may only be used to defray the costs of administering the Pell Grant, SEOG, Work-Study, or Perkins Loan programs. ACA payments are made directly to the school’s Federal bank account.

The second Pell Grant ACA payments for the 2015-2016 Award Year began on August 24, 2016. http://bit.ly/2brPG3K

The third and final ACA payments for the 2014-2015 Award Year also began August 24, 2016. http://bit.ly/2cjXswB

Schools have likely already received these payments and those which have not, will see these payments deposited directly into their bank accounts during the next few weeks. Please be sure to check your Federal bank account on a regular basis to confirm these deposits, and to then transfer the funds into your general bank account.