Anthony (Tony) Laing | Dec U.S. Department of Education 2013 FSA Training Conference for Financial Aid Professionals Title IV Loan and Grant Funding Process Session 2

2 Agenda Title IV Funding Commonalities Title IV Programs o Direct Loan o Pell Grant o TEACH Grant o Iraq and Afghanistan Service Grant (IASG) o Campus-Based Programs G5

Title IV Funding Commonalities Cash requested and returned through G5 o Banking o Funds associated with school’s DUNs number Funds are award year and program specific Managing FSA funds o 3-day rule o 15-day reporting requirement (NEW) o Reconciliation requirements 3

Follow the Money 4 Payment Data Disbursement Records / FISAP Payment COD eCB G5

Department of Education’s payment system Provides location for all school payment processes o Drawdowns o Drawdown adjustments - only to correct mistakes o Refunds - submit electronically o G5 funding reports Recommend Read Only Access for FAAs G5 – Obtain Title IV Funds 5

Bank Accounts G5 must have a designated bank account to which it can send Title IV cash Schools may establish one or multiple federal funds bank accounts o Must be able to identify different types of Title IV funds Designate a bank account for processing refunds 6

Grantee vs. Payee DUNS Typically Grantee and Payee DUNS numbers are the same Variance occurs when a Grantee selects another DUNS to manage their payment/refund/adjustment requests 7 Grantee DUNS Number DUNS number of the recipient who applied for and was awarded Title IV aid Payee DUNS Number DUNS number used to process payments Linked to bank account(s) Users register with their Payee DUNS when requesting access to process payments/refunds/adjustments via G5

Duns Registration System for Award Management (SAM) o Must renew within 12 months of your previous registration o Registration reminder s are sent to user 60, 30, and 15 days prior to expiration Need help? Check out the SAM FAQs o How do I confirm my information is accurate and up to date? o How do I view my registration status? o What is a DUNs number and how do I obtain one? 8

G5 Award Numbers G5 award numbers are program and award year specific Example for 2013/2014 award year 9 ProgramG5 Award NumberAward Year Direct LoanP268K14####Trailing Year TEACH GrantP379T14####Trailing Year Pell GrantP063P13####Leading Year IASGP408A13####Leading Year Campus-BasedFWS: P033A13#### SEOG: P007A13#### Leading Year

Managing Title IV Funds 10

Fiduciary Responsibility Schools have a responsibility to: o Safeguard FSA funds o Ensure FSA funds are used for intended purposes o Return funds on student’s behalf to loan programs o Return to ED funds that cannot be used as intended 11

Title IV Excess Cash Schools must disburse Title IV funds to a student within 3 business days of receiving the funds in its federal funds bank account Title IV funds that are not disbursed before this deadline are Title IV excess cash and must be returned immediately 12

Cash Management NEW 15 day reporting requirement o Used to be 30 days Federal Register published July 8, 2013 o Applies to ALL Title IV programs o Notice of Deadline Dates for Reports and Other Records 3 day cash rule o CFR (b) Monthly reconciliation o CFR (b) Direct Loan 13

Recovery of Unclaimed Funds Student credit balance check mailed and comes back or EFT rejected o School has 45 days to either return funds to ED or to try to disburse again o May continue trying so long as unclaimed funds are returned to ED within 240 days of when check or EFT was issued Student credit balance check mailed but is never cashed o School has 240 days to return funds to ED FSA Handbook Volume 5 page 20 14

COD Daily Funding Process Disbursement records drive Current Funding Level (CFL) Deadlines 10:00 a.m. ET in COD – Same day in G5 10:00 p.m. ET in COD – Next day in G5 15

16 DL Funding Lifecycle Funding Methods Monthly Reconciliation FSA Initiated Global Jobs Year End Reconciliation for DL

DL Funding Methods Advance Funding o Initial authorization - Spring o Subsequent increase late November and additionally as needed Foreign Schools/HCM1 o No initial authorization o Accepted actual disbursements increase funding HCM2/Reimbursement o Funds requested by FSA 17

DL Funding Example Initial authorization o March/April 2013 for advance funded schools with early disbursements o Late June 2013 for all advance funded schools Daily processing o Once COD accepts Direct Loan records for Monthly reconciliation Closeout - July 31, 2015 o Remaining available funds reduced to net drawdowns 18

DL Advance Funded Approximately 60-65% of the amount of the disbursement records on file from the previous year Increase in mid-year Need additional funds? o Send in actual disbursements up to seven days in advance o Call COD Customer Service to request an increase (must not have any unsubstantiated funds) 19

DL Funding Information Funding can be at the location level o Example: Gcode or Ecode Award in G5 is specific to the Direct Loan school code that originated the loan Actual disbursements will only be accepted if origination record is linked to an active Promissory note 20

Funding Approaches Draw Funds from G5 School Disburse Funds School Disburse Funds School Disburse Funds COD Report Disbs COD Report Disbs COD Report Disbs 3 Business Days 15 Days 3 Business Days Advanced funding approach Records First – self reimbursing approach Records First – future-dated disbursement approach 21

DL Reconciliation Monthly reconciliation required o Documentation of efforts o School Account Statement  YTD, monthly or both via SAIG  Cash, loan, and disbursement detail by award year School monitoring from COD 22

DL Reconciliation vs. Closeout Monthly reconciliation required o Compare your records with the Department’s to identify and account for discrepancies o Ending Cash Balance (ECB) allowable at $0 DL Year End Closeout o Ensure that all records are processed and all cash is accounted for and reconciled o ECB must = $0 o Occurs end of July the year following award year, i.e will be closed July 31,

COD Initiated Activity for DL 24 WhatWhenHow Initial Authorizations All schoolsSpring prior to award year start date COD funding information screen IFAP Announcement G5 Funding Adjustments The schools submit disbursement information throughout the award year FSA initiated second increase With funded disbursement activity Late November COD funding information screen G5 Closeout Global reduction to the greater of G5 drawdown amount or Net Accepted & Posted Disbursements (NAPD) Award year closeout date (July 31, 2014) for Award Year COD funding information screen IFAP Announcement G5 Unsubstantiated Cash Cash funds that are drawn in G5 but student-level records supporting the drawdown are not received within 30 days DailyCOD customer service calls and s Reconciliation Report - SAS Cash and loan/disbursement level summary, monthly, YTD or both disbursement by award year Sent to schools on a monthly basis via SAIG Message Classes: Fixed-length Flat File Disbursement Level- DSDF14OP Comma-Delimited Disbursement Level- DSDD14OP Pipe-Delimited Disbursement level- DSDD14OP

25 Pell Grant Funding Lifecycle Records First Daily Production and Reconciliation Global Jobs Year End Reconciliation for Pell Grant

26 Pell Grant Processing Funding is through the main campus only Accepted actual disbursements drive funding o i.e. “records first” o Submit actual disbursements up to seven days in advance Must resolve rejected records to increase funding Reconciliation will be an ongoing process

Pell Lifetime Eligibility Used (LEU) LEU requirements have created a de facto reconciliation process If Net Accepted and Posted Disbursements (NAPD) and G5 Drawdowns are not equal submit decreases to (NAPD) for prior years 27

28 Pell Grant Admin Cost Allowance Three times during an award year cycle For : March 2014 August 2014 August 2015 NO DRAWDOWNS o Payments sent directly to bank accounts by G5 for ACA only

29 Pell Individual School Reduction Potential Overaward Process (POP) o Occurs when more than one attended school reports disbursements for a student o COD system checks to make sure that the student has not received more than 100% of his/her eligibility COD generates MRR to schools involved Schools have 30 days to resolve o If not resolved, all Pell Grant funds for that student reduced at both schools for the entire award year

30 Pell Grant “W” Verification Reduction Students selected for verification and reported with a status of ‘W’ must be updated to either ‘S’ (selected but not verified) or ‘V’ (verified) o Warning of reduction o Reduction if code is not updated Why should you care? o Negative Disbursement (ND) sent to school o Reduces available balance in G5 (unprocessed deobligation/excess cash) o Pell LEU problem

31 Pell Grant “W” Verification Reduction Schedule for Award Year DateOperational Task April Pell First Verification W Warning and Update August Pell Second Verification W Warning and Update October Pell Third Verification W Warning and Update

Global Job Messages 32

33 Unprocessed Deobligation Excess cash Created when a school submits or COD creates a decrease CFL transaction below the amount already drawn

34 Unprocessed Deobligation Example for School ABC: 1. School submits a $1,000 decrease = a $1,000 UD 2. School must refund $1,000 to G5, or submit a correction record in COD CFL$1,000,000 Drawdown$1,000,000 Available Balance in G5$0 Available Balance in G5$0 School Submits Decrease-$1,000 Available Balance/Unprocessed Deobligation (UD) -$1,000

School Funding Information 35 This is for a program year that should have been reconciled to zero

36 Reduction to Net Drawdown School Funding Information

G5 Award Balance 37 G5 displays $0 current available balance.

G5 External Award Activity 38 Notice the reduction to authorization for this 0809 award made on 3/16/2011

39 Post-Deadline Processing Post-deadline processing is provided for extended processing, audit adjustment, and resolution of POP situations o By September 30, data must be submitted following the end of the award year in which the Pell Grant is processed o Schools request on the COD website - School menu o Request only when you are ready to submit

TEACH Funding Lifecycle Funding MethodsReconciliation Year End Reconciliation for TEACH 40

TEACH Funding Lifecycle No initial authorization - Records first Recipient must complete TEACH Grant entrance counseling and new agreement to serve each year before disbursements will accept Reconciliation similar to Direct Loans o SAS produced monthly o Year end close out July 31 o Available balance reduced to net draws 41

IASG Funding Lifecycle Iraq & Afghanistan Service Grant School submits disbursement as anticipated on COD Website (DRI = ‘false’) FSA generates award in G5 Manual SOA generated School creates payment request in G5 Reconcile SOA with G5 No COD initiated activity 42

Campus-Based Lifecycle FISAPFunding FSA Initiated Global Jobs 43

eCampus-Based Homepage /CBSWebApp Provides information on Perkins, FSEOG, and FWS eCampus-Based System 44

FISAP FISAP = Fiscal Operations Report and Application to Participate Complete an online FISAP to: o Apply for campus-based funds for the coming award year o Report campus-based expenditures for the prior award year FISAP deadline October 1 45

Campus-Based Deadlines 46 Submission and Funding ScheduleDeadline FISAP on the Web available to schoolsAugust 1, 2013 FISAP Reallocation Submission to EDAugust 16, 2013 FISAP Submission to EDOctober 1, 2013 The Work Colleges Program Report to EDOctober FISAP Edit Corrections Due to EDDecember 13, 2013 Tentative Awards Posted on the WebFebruary 1, 2014 Underuse of Funds Waiver Request DeadlineFebruary 7, 2014 Work Colleges Application and Agreement to EDMarch 7, 2014 Final Awards Posted on the WebApril 1, 2014 FWS Community Service Waiver Request to EdApril 25, 2014

Allocation of Funds Based on statutory formulas and program funding Tentative allocation posted in eCB by February 1 Final allocation information by April 1 st Unexpended funds must be refunded back to G5 Federal share/non-federal Share (school funds) o FWS= 75% federal/25% non-federal o FSEOG= 75% federal/25% non-federal o Perkins= $0 Federal Capital Contribution (FCC) 47

Transfer of Funds Up to 25% of the school’s FWS allotment to the school’s Perkins or FSEOG allotment Up to 25% of the school’s FSEOG allotment to the school’s FWS allotment Any FWS or SEOG funds transferred must be drawdown from G5 from the original program but no further adjustment is needed in G5 48

Carry Forward/Carry Back

FSA CB Initiated Global Jobs FISAP reduction to G5 net drawdown for award year o April 2014 Supplemental o September 2014 o Deobligations for and reallocations for NOTE: Check available balances in G5

G5 – Obtain Title IV Funds G5 Homepage 51

All Programs – G5 Reports

G5-External Award History Report Notice the Current Available Balance for a award is set to cancel 9/30/

Campus Based Funding Reminders G5 does not allow Campus-based Drawdown adjustments Perkins – school should not hold onto excess liquid capital Refund to Treasury if > $100,000 Refund to one of two accounts in G5 if under < $100,000 –“Federal Perkins (NDSL) Liquidation” or –“Excess cash” if not liquidating 54

Additional G5 Training G5 online training o Click on “Main” o Click on “Online Training” Recorded G5 training module o o Choose link for “Participation and Funding” 55

Electronic Refunds Posts to G5 within three business days Updates in COD within 5-7 days Schools control the process Schools direct from which bank account the money is refunded Multiple refunds on one screen and at one time Electronic processing reduces human error and delays 56

Set Up Refund Bank Account 57

Wrong Year Drawdowns COD and the Internal Controls Division (ICD) are seeing numerous multiple years out of balance Make sure you draw from the year in G5 that you are disbursing to When students return funds or withdraw and R2T4 funds are refunded o Either return them to the year they were drawn from o Or re-disburse them to another borrower – but for that same program and program year 58

Refunds When to return Direct Loan return funds to G5 1. You drew down too much –Borrower not eligible within 3 business days 2. Borrower’s absolute right to cancel 3. Borrower returns funds to you within 120 days –If you choose to accept 4. R2T4 calculations 5. You’ve drawn from the wrong year 6. You’ve drawn from the wrong program When to send DL funds to the loan servicer…Never 59 If a borrower brings funds back to you after 120 days of the disbursement, direct them to their loan servicer instead

Returning Funds Two more reminders: o If returning funds as the result of an audit of Program Review liability follow the directions in the final audit or Program Review Determination Letter o The 120-day rule is not applicable if you are returning Direct Loan Program funds due to regulatory or statutory requirements 60

Paper Refund Checks Are a problem! Schools too often mail them to the wrong place They are far slower than electronic G5 refunds If $100,000 and over cash management regulations require funds be returned electronically – some schools are not doing so Guidance in a 4/2/13 electronic announcement 61 Any good reasons for paper refund checks?

What’s Ahead? NO Direct Loan initial authorization for HCM1 schools beginning with the award year Move to all-electronic refunds of cash by end of day reporting requirement changed to 15 days Drawdown adjustment feature in G5 disabled for Campus- based programs Direct Loans Initial Authorization for advance funded schools will continue 62

Related FSA Conference Sessions Session #Session Title 3Pell Grant Duration of Eligibility Limitation 4Loan Counseling Tools 6COD Hands-On 8Title IV Reconciliation: What You Need to Know 9PLUS Processing A to Z 11Direct Loan Processing Tips & Troubleshooting 20Cash Management 28 What FAAs Must Know About 150% Direct Subsidized Loan Limits 63

Need Funding Help? COD School Relations Center Grants Phone Number: Direct Loans Phone Number: Applicant Services Phone Number: Foreign Schools Phone Number: Campus Based Call Center URL: Phone: G5 Help Desk URL: Phone:

Contact Information 65 Anthony (Tony) Laing Director, Internal Controls Division (ICD)

QUESTIONS? 66