Direct Loan Processing: Making COD Work for You Session 19 Direct Loan Processing: Making COD Work for You Chuck Hirman | Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals

Agenda COD Release 14.0 – new award year Funding Loan Origination Fees PLUS Loans Disbursements Loan Period & Academic Year Reporting SULA Fundamentals, Tips, Coming Soon Rejects Reports Resources

COD Release 14.0 Implementation 3/27 – 3/29/2015 2015-16 award year functionality added Direct Loan Funding ~April: Initial authorization for advance funded schools with early disbursements ~June: 60% of anticipated funding needs for the year ~November: Remaining 40% Daily processing: CFL increases when COD accepts 2015-16 actual disbursements Need additional funds? COD report settings StudentLoans.gov preferences

G5 Award Numbers for 2015-16 G5 award numbers are program and award year specific Program G5 Award Number Award Year Direct Loan P268K16#### Trailing Year TEACH Grant P379T16#### Pell Grant P063P15#### Leading Year IASG P408A15#### Campus-Based FWS: P033A15#### SEOG: P007A15#### #### - Your school’s 4-digit G5 identification number

COD Report Settings for Award Year ’15-’16 Confirm COD reports for the new year will arrive in the format you want Don’t forget to check the SAS too

StudentLoans.gov Preferences Manage StudentLoans.gov in COD School Options School/ School Information/ Options Your choice whether to use any/all SLG functionality Or, do those functions yourself on campus Everything a borrower does in SLG is communicated School responses COD reports COD website search functionality SLG COD

Non-Award Year Specific COD Options for Managing StudentLoans.gov

Award Year Specific COD Options for Managing StudentLoans.gov

Electronic Announcement posted 4/2/2013 Paper Refund Checks We’re getting close (end of 2014) when they will no longer be accepted Too often are mailed to the wrong place Slower, more costly to process than electronic refunds Treasury has ordered a complete discontinuation If you haven’t done so yet – arrange to return funds to G5 electronically Cash management regulations have long required refunds of $100,000 or more to be returned electronically Electronic Announcement posted 4/2/2013

COD Cash Management Screens COD website has a number of screens to help you track your funding and cash management School Summary Information Cash>NAPD School Funding Information CFL, Available Balance, NAPD Net Draws, Cash>NAPD School Summary Financial Information Same info and format as SAS Cash Summary page Cash Activity Printer friendly button in right corner Lists all drawdowns and refunds COD.ED.GOV

Electronic Announcement posted 9/4/2014 Loan Origination Fees Changes due to Sequestration COD calculation/truncation rules are not changed Electronic Announcement posted 9/4/2014 Earliest Disb Date Sub/Unsub Orig Fee PLUS Orig Fee Before 7/1/2913 1.0% 4.0% 7/1/2013 – 11/30/2013 1.051% 4.204% 12/1/2013 – 9/30/2014 1.072% 4.288% 10/1/2014 – 9/30/2014 1.073% 4.292%

Electronic Announcement posted 9/4/2014 Origination Fees - New New Reject-213 Actual Disbursement Submitted with EDD after an Established Date The next “established date” we currently know of is 10/1/2015 We know the loan fees will be changing then but until we know what they will be we won’t accept the actual disbursements CROF System-Generated Response Once new fee percentages are known COD will correct records having only anticipated disbursements CROF15OP = 2014-15 award year Electronic Announcement posted 9/4/2014

Final Regulations posted 10/23/2014 PLUS Loans - New Adverse credit criteria to include if one/more debts have a total combined outstanding balance greater than $2085 90 days or more delinquent, or Charged-off or placed in collections within past two years Credit checks valid for 180 days PLUS borrowers with adverse credit who appeal based on extenuating circumstances or obtain an endorser – must complete PLUS loan (credit) counseling Final Regulations posted 10/23/2014

Disbursement Reporting Requirement 15-day reporting requirement Federal Register posted 2/28/2013 Disbursements and adjustments made on/after 4/1/2013 Pell LEU and SULA all need prompt reporting to COD For now COD edits are still looking at 30 days but the Regulations are tighter, 15 days School Monitoring Report 30-Day Warning Report Warning Edit 055 No. Edit Type Block Message 055 W Disbursement Disbursement Information Received 30 Days after Date of Disbursement

Disbursement Date Reporting The actual disbursement date is the date a school credits the student’s account or pays the student or parent directly Actual disbursement date reported to COD must be accurate due to interest calculations and various timeframes, deadlines, and a number of regulatory triggers (i.e. loan fees, interest rates) We are seeing schools merely flipping the DRI to True but not first updating the disbursement date Warning edit 055, School Monitoring Report, other implications Electronic Announcement posted 1/29/2014

Upward Disbursement Adjustments Should only be made to correct an erroneously reported actual disbursement Interest is calculated from the sequence 01 date If you give additional funds make a new disbursement for that additional amount

Disbursements – 120-Day Rule For any loan type (Sub, Unsub, PLUS) if the borrower returns funds asking the disbursement be reduced you may accept those funds up to 120 days from the disbursement date Reduce disbursement and report to COD Re-disburse or return the money to G5 Borrower gets a break on interest and loan fees of returned amount You are not required to do this beyond the regulatory right to cancel timeframes. However, a lower debt burden is a default less likely Does not apply to returns required for regulatory reasons Those must be made no matter when they’re discovered

Loan Periods & Academic Years Correct reporting crucial to accurate SULA calculations 2013-14 & forward – all borrowers, all loan types Loan periods should include only terms/payment periods in which the borrower received (and retained) funds Loan Period: period of enrollment for which the loan is intended Academic Year: period used to track annual loan limits Updates required in many instances if circumstances change Dear Colleague Letter GEN-13-13 posted 5/10/2013

Why Updating the Loan Period Matters Loan Period Reporting Why Updating the Loan Period Matters Example: Fall: 9/10/2014 – 12/10/2014 Spring: 1/10/2015 – 5/10/2015 School originates fall-spring loan, full-time attendance SAY, summer trailer, summer attendance not required SUP: #days in LP/#days in AY = 242/242 = 1.0 Years But borrower doesn’t return in the spring School needs to update LP to fall-only SUP: #days in LP/#days in AY = 91/242 = 0.4 Years

Academic Year Reporting Your academic year is school-defined Minimum of 30 weeks of instruction and 24 semester/ 36 quarter credit hours for a credit-hour based program No hour minimum for a graduate level program Minimum of 26 weeks and 900 clock hours of instruction for a program measured in clock hours Why is this significant for SULA? We’re seeing loans with AY’s that are too short, even some less than half that Since SUP = LP/AY … calculations are too high Plus, are these schools also awarding new annual loan limits too soon?

The Loan Period/Acad Year Fraction Subsidized Usage Period (SUP) = # Days in the Loan Period ….. if too high SUP is too high # Days in the Academic Year ….. if too low SUP is too high

Updating LP & the Annual Loan Limit Exception Annual Loan Limit Exception to SUP = LP/AY Standard-term programs and non-standard-term programs that are substantially equal and each at least nine weeks in length If borrower receives full annual loan limit for grade level And loan period < academic year A SUP of 1.0 Years will be calculated, regardless of the LP/AY calculation

Annual Loan Limit Exception - Continued Example – loan originated with 2 anticipated disbs Loan amount: $3500 LP = AY: 9/10/2014 – 5/10/2015 SUP = 1.0 Years Fall disb made, student withdraws before spring disb School correctly updates LP per GEN-13-13 LP = Fall, AY = Fall-Spring SUP = 1.0 Years still! Why? The annual loan limit exception was triggered Solution: zero out the unused second disbursement and reduce the loan amount

Updating Unused Loans Example: Loan was originated and an actual disbursement was made but later backed out COD processing rules: An actual Subsidized Usage Period (SUP) will be calculated if the incoming record has any actual disbursements When an award is inactivated the actual Subsidized Usage Period (SUP) is cancelled What does this mean? Once you’ve reported an actual disbursement on a loan the only way for the SUP to be fully removed is to inactivate the loan Reduce all disbursements to zero Reduce the loan amount to zero

150% – Terms & Concepts SULA First-time borrower Maximum Eligibility Period (MEP) Subsidized Usage Period (SUP) Remaining Eligibility Period (REP) XML Schema Tags SULA Calculations COD – system of record for loan records NSLDS – system of record for enrollment reporting

SULA Fundamentals SULA: Subsidized Usage Limit Applies First-time borrower: Any borrower who had no balance on a DL/FFEL on 7/1/2013 or afterwards at the time they obtain a loan Maximum Eligibility Period (MEP): Set at 150% the published length of the program the borrower is enrolled in Subsidized Usage Period (SUP): The loan’s subsidized usage, which is basically length of loan period divided by length of academic year Remaining Eligibility Period (REP): The borrower’s remaining eligibility for subsidized loans: MEP - ∑SUPs = REP

SULA Information - Responses SULA usage communicated in two response types: System-generated response: CRSU Person, Award, or Disbursement level 1. Response File 2. System-Generated Response Origination of awards Maintenance on awards Activity on another loan for a student at your school Changes in enrollment status Changes to Non-Credential Teacher Certification Program data Discharge of a loan Payment to Servicer

SULA Information - Web Pages Two new SULA web pages have been added to the COD website: Subsidized Eligibility Information page Link on the Person Direct Loan Information page Subsidized Usage Limit Applies Request page Request the most recent SULA information via CRSU Reachable via Batch tab, left navigation panel NOTE: Privacy information shown in next pages is fake data from our test database

Subsidized Eligibility Information Page COD website Person Tab Subsidized Eligibility Search SULA MEP SUP REP

SULA Request Page COD website/ Batch Tab/ SULA Request COD will generate a CRSU and send to TG Mailbox

SULA Calculator – Coming Soon Working on it now, implemented in Spring On the COD website Allows you to plug in subsidized loan values either for loans already on the system or new loans you are going to send Won’t create/build/change any loans – it’s just a calculator to help you see if a loan can make it through when remaining eligibility is in question Won’t need to keep sending the loan, getting it rejected Optional

SULA Loss Dispute Process - Soon Working on it now, implemented in Spring On the COD website Forward to FSA’s attention when SULA particulars need correcting on a loan and the former school can’t (won’t?) do so Intended for closed-school loans By far the most efficient means of getting former loans corrected is by a courtesy call directly from financial aid office to financial aid office

COD Technical Reference, Volume II, Section 4 - Edits COD Rejects & Warnings Rejects – record not built and will not be in Person/Award search on COD website Warnings – record was processed, FYI concerning your processing/timing Watch your rejects Rejected disbursements = unsubstantiated funds Use your software’s import edit report Review batches on the COD website COD Technical Reference, Volume II, Section 4 - Edits

Top Hits – Rejects & Warnings Edit Some of the Top Edits # of Hits W-54 Disbursement Date Within 7 Days or Passed, Disbursement Release Indicator Set To “False” 17,627,962 W-55 Disbursement Information Received 30 Days after Date of Disbursement 8,199,110 R-50 Disbursement Date Outside Allowable Window 917,828 R-140 Incorrect Origination Fee Percent and/or Interest Rebate Percent on New Awards 705,854 W-36 PLUS Credit Decision Status is not accepted for this PLUS award 595,949 COD Technical Reference, Volume II, Section 4

Resolving Your COD Rejects Response Work the Response when you import it Query your system for rejects Most systems will keep resending rejected records until they are accepted COD website Batch Search functionality Since rejected records were not “built” they will not be found in Person/Award Search Batch Search will tell you what the rejects were

COD Batch Search Enter school ID and date range (up to 60 days) Or, enter SSN and choose specific award year or select all award years for complete history

Some SULA-Related Rejects Reject Code Trigger Reject 050 Disbursement Date Outside Allowable Window Reject 204* Incorrect Program CIP Code Submitted Reject 205* Payment Period Start Date (PPSD) is outside the Loan Period Reject 206* Remaining Subsidized Eligibility is less than zero for this award *Electronic Announcement posted 10/31/2014

Electronic Announcement posted 8/22/2014 Reject Edit 050 Disbursement Date Outside Allowable Window – Update Disbursement must be no earlier than 10 days before the loan period start Disbursement must be no later than 180 days after the loan period end But schools were hitting this reject after zeroing out an actual disbursement and updating the loan period to remove term/payment period per DCL GEN-13-13 COD “off-cycle” change on 9/14/2014 Now COD will ignore actual disbursements reduced to $0 Electronic Announcement posted 8/22/2014

Electronic Announcement posted 8/22/2014 Reject Edit 205 Payment Period Start Date is Outside the Award Begin and End dates Issue: Per GEN-13-13 schools are required to shorten the LP to exclude terms/payment periods where no disbursement is made (or one was made but later zeroed out) But each term/payment period has its own PPSD and when the LP is shortened and “orphans” a PPSD – Edit-205 fires Solution: COD R14.0 will relax the edit as long as the disbursement = $0 Until then zero out the disbursement, change the PPSD to fall within the new LP dates, and then update the LP Electronic Announcement posted 8/22/2014

Reject Edit 206 Remaining Subsidized Eligibility is less than zero for this award You’ve sent a Subsidized loan to COD and it came back rejected with Edit 206 Of course, everything could be reported optimally and the borrower simply has insufficient SULA eligibility so … award unsubsidized Check the reporting of this rejected loan and make updates if necessary Confirm that prior loans already on the COD system were reported and updated correctly

Reject Edit 206 - Continued Has this loan been reported so the borrower can receive the maximum amount of subsidized funds for which they are eligible? Maximum Eligibility - ∑SUPs = Remaining Eligibility Subsidized Usage Period = LP/AY Academic Year – at least the 26 or 30 week minimum? Loan Period – includes only terms/payment periods where the borrower receives loan funds? Enrollment Status – will the borrower be attending half-time or three-quarters-time? Loan Amount – is the annual loan limit exception being triggered?

Reject Edit 206 - Continued Have previous loans been reported and updated correctly? Although outside your control you can still be instrumental in getting those loans updated by contacting the former school So, as a professional courtesy, if you are that former school please update the loan promptly If the previous loan is from a now closed school – we’re working on it

COD Reports – Can Help You Manage: Loan Origination Process Duplicate Student Borrower report Completed PLUS Application report* Counseling report* Subsidized Loan Usage Change report Master Promissory Notes Completed MPN report* Expired MPN report MPNs Due to Expire report MPN Discharge report Disbursement Process Actual Disbursement list Pending Disbursement list COD Action Queue 30-Day Warning report Inactive Loans report *From activity completed on StudentLoans.gov

COD Reports – COD Technical Reference FSADownload.ed.gov What the report can be used for Business Rules Formats Message classes When it’s generated Record Layouts What data is included Mock-up Samples

COD Reports – Format & Delivery

COD Website - Newsbox

COD Website - Newsbox

COD School Monitoring Report Produced weekly if any of the following conditions occur: Pell POP 30-day reporting missed (should be 15 days anyhow!) Unsubstantiated cash > 30 days Posted to your COD Newsbox (DL and Pell) Also sent to your SAIG Mailbox (SCHMONOP) We check for those conditions weekly so schools should check for that report that often too

Direct Subsidized Loan Usage Change Report Displays Subsidized loans for a borrower when there is a change to SULA calculated values Generated weekly on borrowers have changes to: Maximum Subsidized Eligibility Period Actual (or Anticipated) Subsidized Usage Period Actual (or Anticipated) Non-Credential Teacher Certification Subsidized Usage Period COD Newsbox CSV format COD Technical Reference, Volume 6, Section 8

Electronic Announcement posted 1/28/2014 Report Readers Simplified way of importing some COD files into Excel SAS Disbursement Detail on Demand Pell Grant Reconciliation File Pell Grant YTD File Readers & instructions COD website “COD Resources” Request “fixed-length” files Electronic Announcement posted 1/28/2014

1314 Direct Loan Program Year Closeout Deadline 7/31/2015 Closeout completed on the COD website by submitting the Balance Confirmation Form Made available when the School Account Statement (SAS) reflects $0 ending cash balance If you miss the deadline and haven’t requested Extended Processing a Final Demand Letter will be issued After that a Receivable is produced – billing the school the remaining balance plus interest

Resources: New COD Communications Page COD website “File Share & Messages” File share FSA e-mail campaigns with student-specific information Customized reports E-mail will alert schools to file availability Broadcast messages Log into COD/ School tab/ School Summary Info page File Share/Messages link on left side of page Also, “Today’s Update” renamed “COD Resources” Electronic Announcement dated 6/20/2014

SULA Resources Reporting of Loan Periods & Academic Years Federal Loan School Support Team Dear Colleague Letter GEN-13-13 Electronic Announcements & Webinar recording E-mail: DLOps@ed.gov 150%/SULA Regulations & Processing Federal Registers, Electronic Announcements, Webinar recordings, NSLDS Newsletters, COD Technical Reference E-Mail: 150Percent-Questions@ed.gov

COD Computer-Based Training Some CBT’s have been updated with SULA Locating Direct Loan Information Updating and Creating Records Working the Action Queue IFAP/ Tools for Schools/ COD Computer-Based Training Electronic Announcement posted 10/3/2014

School Contact Information at COD Contact information is too often outdated and inaccurate We don’t know who to contact when we see a problem developing COD outreach FSA efforts to be proactive Financial Aid Administrator, CFO, President Update E-App in eligcert.ed.gov Direct Loan and Pell contacts Update directly on the COD website

Contact Information Chuck Hirman Federal Student Aid Seattle, WA 206-615-3643 Chuck.Hirman@ed.gov

QUESTIONS?