1. Session #37 Disbursing Title IV Funds Dave Elliott Greg Martin

2. 2 Date of Disbursement A disbursement occurs when a school credits a student’s account or pays a student or parent directly with: –Title IV funds received from the Department or an FFEL lender, or –School funds labeled as Title IV funds in advance of receiving actual FSA program funds –Note: Exceptions exist (see following slides)

3. 3 Notification of Disbursement School must notify a student of the amount of funds he or she can expect to receive and how those funds will be disbursed –Notification must be sent before the disbursement is made –If funds include Stafford Loans (FFEL or DL) notice must indicate which funds are from subsidized and which funds are from unsubsidized loans

4. 4 Crediting Accounts With School Funds If credit account with own funds earlier than 10 days before first day of classes for the payment period –Not considered a Title IV disbursement until the 10th day before 1st day of classes –Stafford borrowers subject to 30 day delay – not considered a disbursement until 30th day after beginning of the payment period

5. 5 Memo Entries and Estimated Aid Memo entries for billing purposes that do not identify a Title IV credit, e.g. “estimated Federal Pell Grant” are not considered disbursements Memo entries are often needed to prepare billing statements and/or allow students to register for classes

6. 6 Method of Disbursement Direct Payment –Releasing FFEL check directly to student or parent –Issuing a check to student or parent –EFT to student or parent bank account –Dispensing cash with signed receipt Crediting student’s account at the institution

7. 7 Notification of Disbursement School must notify student in writing (paper or electronic) when Perkins, Stafford or PLUS loans are being credited to student’s account –Must be no earlier than 30 days before and no later than 30 after crediting student account –Must include: date and disbursement amount; student right to cancel all or part of loan or disbursement; and procedures and time by which student must notify school of desire to cancel

8. 8 Cancellation Procedures Borrower must inform school of desire to cancel all or part of loan –School must honor request if received prior to start of payment period or within 14 days after the date notice was sent to the borrower – school may but is not required to honor late requests Student must be informed of outcome of any cancellation request School is not responsible for returning portion of loan directly disbursed to student

9. 9 Required Authorizations School must obtain authorization from student before: –Disbursing FSA funds by EFT to a bank account designated by the student –Using FSA funds to pay allowable charges other than tuition, fees, and room and board (if student contracts with school) –Holding an FSA credit balance –Applying FSA funds to minor prior year charges

10. 10 Required Authorizations School may not require or coerce students to provide an authorization Authorization may be modified or cancelled at any time (procedure must be explained) –Cancellation or modification is not retroactive Authorization may remain in effect for entire period of enrollment – unless cancelled or modified

11. 11 Electronic Processes for Notifications/Authorizations Schools may provide notifications or obtain authorizations electronically Reasonable safeguards must be adopted E-Sign Act governs electronic signatures –Provides that a signature, contract etc. may not be deemed invalid solely because it is electronic

12. 12 Checking Eligibility at Time of Disbursement Before disbursing Title IV funds, school must confirm that: –Recipient is an eligible student –Student is enrolled for the period –For loans, student is enrolled at least half-time –Student has begun attendance if disbursement occurs on/after first day of classes

13. 13 Checking Eligibility at Time of Disbursement Stafford and PLUS – students’ eligibility is certified when loan is certified/originated –School must ensure continuous eligibility has been maintained before loan is disbursed –School must have system in place to check enrollment status –If student drops below ½ time temporarily, disbursement may be made when ½ time status resumes assuming student still qualifies for loan amount

14. 14 Disbursements to Students on Leave of Absence School may not disburse FFEL/DL to students on an LOA School may disburse Federal Pell Grant, ACG, National SMART, FSEOG and Perkins funds to students on an LOA Title IV credit balances may be disbursed to students on a leave of absence

15. 15 Payment Periods For programs offered in semester, trimester, quarter or non-standard terms with credit hours, payment period is term For programs measured in clock hours, payment periods vary depending upon length of the program (discussed on an upcoming slide) Title IV disbursements (except FWS) must generally be made on a payment period basis

16. 16 Payment Periods for Clock Hour Programs Program less than an academic year –1 st payment period is period of time in which student completes the first half of the program –2 nd payment period is period of time in which student completes the second half of the program

17. 17 Payment Periods for Clock Hour Programs Program longer than an academic year with a remaining portion less than or equal to one-half an academic year –First and any subsequent complete academic years – follow guidance on the previous slide –Final payment period is the remaining portion of the program

18. 18 Payment Periods for Clock Hour Programs Program longer than an academic year with a remaining portion more than one-half an academic year in length, but less than a full academic year –First and any subsequent academic years – follow guidance on slide 16 –Remaining portion of program is divided into equal payment periods

19. 19 Payment Periods for Clock Hour Programs Program equal to or more than two academic years in length - first academic year and any subsequent academic year –1 st payment period is period of time in which student completes first half of the academic year –2 nd payment period is period of time in which student completes second half of the academic year

20. 20 Clock Hour Examples 880 clock hour program, 900 clock-hour academic year 440 Clock Hours 880 Clock-Hour Program 440 Clock Hours 1200 clock hour program, 900 clock-hour academic year 1200 Clock Hour Program 450 Clock Hours 300 Clock Hours

21. 21 Clock Hour Examples 1700 clock hour program, 900 clock-hour academic year 1700 Clock Hour Program 450 Clock Hours 1800 Clock Hour Program 1800 clock hour program, 900 clock-hour academic year 450 Clock Hours 400 Clock Hours

22. 22 Crediting the Student’s Account Without student authorization, school may use Title IV funds to credit student’s account to satisfy current charges for: –Tuition and Fees –Room and board (if the student contracts with the institution) With prior student authorization: –Other allowable current charges

23. 23 Title IV Credit Balances Occur when Title IV funds credited to student’s account exceed allowable charges Must be paid to student or parent no later than 14 calendar days after: –Date balance occurred – if after 1 st day of class for the payment period –1st day of classes for the payment period if balance occurred on or before the 1 st day of classes

24. 24 Title IV Credit Balances Example Allowable charges are $5,000 The institution receives and credits his account with the following aid: Pell$1,500 Stafford$2,000 FSEOG$1,000 Institutional Scholarship $2,500 Does this student have a Title IV credit balance? No

25. 25 Title IV Credit Balances Example Allowable charges are $5,000 The institution credits her account with the following aid: Pell$1,000 Stafford$1,500 FSEOG$1,000 Perkins $2,000 Does this student have a Title IV credit balance? Yes

26. 26 Title IV Credit Balances Excess PLUS Loan funds (not Grad PLUS) must be returned to the parent –If school determines PLUS Loan funds created the credit balance – balance goes to parent –School may disburse excess PLUS funds to student with parent authorization School determines which Title IV funds created a credit balance

27. 27 Minor Prior Year Charges In general, Title IV funds may be used to pay only current educational expenses With student authorization, Title IV funds may be used for paying prior-year charges less than $100 Prior-year charges equal to or greater than $100 may be paid with an authorization and documentation that payment would not prevent student from paying current educational expenses

28. 28 Early Disbursements Standard-term, credit-hour programs –Earliest date to disburse is 10 days before the 1st day of classes for the payment period Clock-hour programs and credit-hour programs without standard terms –Earliest date to disburse is later of 10 days before the 1 st day of classes for the payment period; or date student completed the previous payment period

29. 29 Student Who Fail to Begin Attendance Student who withdraws before beginning attendance is not entitled to any Title IV aid School must return Pell, ACG, National SMART, FSEOG and Perkins disbursed to student who fails to begin attendance School must return Stafford/PLUS credited to the account of student who fails to begin attendance

30. 30 Stafford/PLUS Disbursements Standard terms and substantially equal nonstandard terms –More than one term in the loan period - loan must be disbursed equally over all terms in loan period –Only one term in loan period Must be disbursed in equal amounts at beginning of the term and at the term’s calendar midpoint With default rate < 10% for three most recently published years, may be disbursed in one payment

31. 31 Stafford/PLUS Disbursements Credit hour non-term or non-standard terms not substantially equal in length AND clock hour programs –Loan must be disbursed in two substantially equal amounts with the first disbursement at the beginning of the loan period –Second half of loan may not be disbursed until later of calendar midpoint, or date student successfully completes clock hours in the loan period or completes half the credit hours

32. 32 Retroactive Disbursements School must pay retroactively for any completed payment periods within award year if student was eligible for payment in those periods Pell/ACG/SMART Grant disbursements for a completed term are based on hours competed by the student Stafford Loan certifications may include an earlier period of eligibility only if student completed a half-time course load during that period

33. 33 Late Disbursements Generally, a student becomes ineligible to receive Title IV funds on the date that: –For FFEL/DL, student is no longer enrolled at least half-time –For Pell Grant, ACG, National SMART, FSEOG and Perkins Loan, student is no longer enrolled at the school If certain circumstances are met, student may qualify for late disbursements after they become ineligible

34. 34 Conditions for a Late Disbursement SAR/ISIR with an official EFC processed before the student became ineligible for all Title IV aid except parent PLUS FFEL or DL must have been certified or originated prior to the student’s becoming ineligible FSEOG and Perkins awards must have been made prior to the student’s becoming ineligible

35. 35 Mandatory vs. Optional Late Disbursements School must offer a late disbursement of Title IV funds to student who successfully completes the payment period or period of enrollment School may offer a late disbursement of FFEL/DL to student who does not withdraw but ceases to be enrolled on a half-time basis

36. 36 Limitations on Late Disbursements Second or subsequent late disbursement is prohibited unless: –Student has successfully completed the loan period, or –Student has graduated Late disbursement to a first- year, first- time borrower is prohibited if he/she withdraws before 30th day of the program* * Only if the school is subject to 30 day delay

37. 37 Limitations on Late Disbursements Late disbursements of Pell, ACG and National SMART Grant may only be made to students who have a valid SAR/ISIR by the deadline established Late disbursements must be made no later than 120 days after date student became ineligible –ED may approve school requests for late disbursements later than 120

38. 38 Disbursements - Funding Schools receive funds from ED through the Grants Administration and Payment System (GAPS) –Advance payment method –Reimbursement or cash monitoring Schools receive FFEL funds directly from lenders –EFT –Master check –Individual paper checks

39. 39 Reporting Disbursements COD –Schools submit a common record that reports anticipated or actual disbursements to COD –Direct Loan records submitted to COD must have anticipated and/or actual disbursement dates –Schools are required to report “actual” disbursements of Pell, ACG, National SMART Grant and Direct Loans within 30 days of the date of disbursement

40. 40 Disbursements—Advance Funded COD GAPS Student School

41. 41 Disbursements—Report Driven COD GAPS Student School

42. 42 Disbursements—School Funded COD GAPS Student School

43. 43 Adjusting Disbursements Disbursement adjustments may be necessary for various reasons –Verification –Change in estimated financial assistance (resources) –Cost of attendance adjustment –Professional judgment –Withdrawal (R2T4) –Required recalculation based on actual attendance –POP (Pell Overpayment Process)

44. 44 Adjusting Disbursements Adjustments to disbursements must be made within 30 days of determination that an adjustment is necessary –Report Pell, ACG, National SMART and Direct Loan adjustments to COD Also may need to adjust GAPS draw downs –Report FFEL adjustments to the lender

45. 45 Disbursement Reporting to NSLDS Pell, ACG, and National Smart Grant disbursements are reported to NSLDS through COD daily Direct Loan disbursements are reported to NSLDS by the DL Servicer

46. 46 Overpayments Overpayments of disbursed funds must be reported to NSLDS using NSLDS on-line access –Unresolved overpayment information in NSLDS results in student ineligibility –Reported to schools via ISIR Financial Aid History

47. 47 Disbursement Reporting - FISAP No reporting of student level disbursements of campus based funds required Total expenditures for the campus based programs are reported on the FISAP –This is reconciled with GAPS draw downs

48. 48 Resources 07-08 Federal Student Aid Handbook –Volume 4, Chapter 2 Code of Federal Regulations –34 CFR 668.164 The Blue Book (October 2005) –Chapter 14

49. 49 Contacts We appreciate your feedback and comments. We can be reached at: Greg Martin Phone: (215) 656-6452 Email: gregory.martin@ed.gov Dave Elliott Phone: (214) 661-9453 Email: dave.elliott@ed.gov

50. 50 Please provide any comments regarding this training or the trainers to: Jo Ann Borel Title IV Training Supervisor joann.borel@ed.gov 202-377-3930