Jeff Baker | Dec. 2013 U.S. Department of Education 2013 FSA Training Conference for Financial Aid...
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Transcript of Jeff Baker | Dec. 2013 U.S. Department of Education 2013 FSA Training Conference for Financial Aid...
Jeff Baker | Dec. 2013
U.S. Department of Education
2013 FSA Training Conference for Financial Aid Professionals
Cash Management Requirements
Session 20
Agenda
General Funding Process Disbursing Title IV Funds Prepaid Debit Cards & Stored-Value Cards Managing Title IV Funds Q & A
2
Standards of Conduct
School is a fiduciary of Title IV funds Subject to the highest standards of care and
diligence in administering the programs and accounting for the funds received
School is a trustee of federal funds May not use Title IV funds for other than their
intended purposes May not use Title IV funds as collateral
Applies to school’s third-party servicer
4
Separation of Duties and Internal Controls
Schools must divide the functions of authorizing payments and disbursing funds Organizationally independent Not members of the same family
Schools must have adequate systems of internal controls
See 34 CFR 668.16(c)
5
Accounting and Recordkeeping School must maintain financial records that
reflect all Title IV program transactions General ledger control accounts and related
subsidiary accounts must identify all program transactions and separate those transactions from all other transactions
See 34 CFR 668.24(b)
6
Accounting and Recordkeeping School must maintain documentation relating to
each student’s (or parent borrower’s) receipt of Title IV funds
The date and amount of each disbursement of Title IV grant or loan funds
The date and amount of each payment of FWS wages
The payment of any overpayment or return of Title IV funds
7
Federal Funds Account Schools must maintain Title IV funds in a
federally insured account that is identified as containing federal funds
Perkins Loan Revolving Fund must always be in an interest-bearing account
Other Title IV funds must be in an interest bearing account unless the school drew down less than $3 million in Title IV funds in prior award year and expects to draw down less than $3 million in current award year
8
Garnishment of Title IV Funds Prohibited
No Title IV grant, loan, or work assistance can be subject to garnishment or attachment Schools must oppose any garnishment order they
receive Schools must notify any off-campus FWS employers
of this requirement
Note: FWS wages may, with the student’s authorization, be used to pay any costs of attendance the student owes the school or that will become due and payable during the period of the award
9
Escheating of Title IV Funds Prohibited
Schools must return any Title IV program funds it attempts to disburse directly to a student if the student does not receive the funds
Schools must have a process to ensure Title IV funds never revert to the school, escheat to the state or to any party
If a credit balance check is not cashed, schools must return the funds no later than 240 days after issuing the check - See 34 CFR 668.164(h)
10
Funding Basics – Pell, TEACH, and IASG
Generally, funding is not student specific, allocations based on COD-G5 processing
Timelines and deadlines for reporting disbursements to the Common Origination & Disbursement (COD) System
Actual disbursements may be reported up to seven days prior to disbursement date and must be reported no later than 15 days after the disbursement date or change to previously reported disbursement
12
Funding Basics – Campus-Based Funding is specific for each program and for
each award year – not student specific School allocations are the result of FISAP data No student level reporting except for Perkins
Loans reported to NSLDS Campus-Based program level data reported
through the eCampus-Based system, including the FISAP Generally, October 1 following end of award year
13
School makes or schedules actual disbursements to student accounts
School reports actual disbursements to COD
COD accepts actual disbursement records and raises Current Funding Level (CFL) to amount of accepted actual disbursements
COD sends CFL amount to G5. G5 adjusts authorization to match COD CFL amount
School requests funds from G5 for transfer to school’s bank
G5 transfers funds to school’s federal funds account
School transfers funds from federal funds account to operating account
School funds actual disbursements to student accounts
Funding Process – Direct Loans and Grants
Methods for Requesting Funds Method is determined by ED
Advance Heightened Cash Monitoring 1 (HCM 1) Heightened Cash Monitoring 2 (HCM 2) ReimbursementHCM1, HCM2, and Reimbursement require the school to disburse student’s eligible funds to student’s account and then request Title IV funds from ED - See 668.162(e)
15
Funding – Advance Pay Pell, TEACH, and Iraq-Afghanistan Service
Grant are records first: COD must accept actual disbursement records to
create funding in G5 Schools may submit actual disbursements or
change anticipated disbursements to actual disbursements up to seven calendar days prior to actual disbursement date
16
Funding – Advance Pay Direct Loan
Schools with prior year history of disbursements in spring received initial G5 authorization in late March/early April
All other schools received initial G5 authorization in June, based on prior year disbursements
17
G5 Payment System – ED OCFO Provides financial management support
services Provides online capability for schools to
Request payments Adjust drawdowns Access current grant and payment information Return funds
All transactions by Title IV program and award year designation
18
Managing Federal Title IV Funds
Schools must not request Title IV funds that exceed their immediate need for those funds
Funds must be disbursed to students within three business days of receipt
19
Excess Cash Any amount of Title IV funds not disbursed to
students by the end of the third business day after receipt
For circumstances beyond the school’s control (change in enrollment status, change in award because of verification), school may maintain excess cash to make disbursements within seven additional days
20
Excess Cash Allowable excess cash tolerances
School may maintain for up to seven days funds that do not exceed 1% of total amount the institution drew down in the prior year
Consequences for retaining excess cash Require school to reimburse ED for costs ED
incurred in making those funds available to the school
Put the school in HCM 1, HCM 2, reimbursement payment method
21
Disbursement Defined as the date a school credits a student’s
account at the school or pays a student or parent directly with –
Title IV funds received from the ED School funds used in advance of receiving funds from the Department
Disbursement date reported to COD must be the actual date of disbursement
23
Disbursement Reporting Deadline Actual disbursement records reported to COD
must be submitted to COD no later than 15 calendar days after making the disbursement or adjustment to a previously reported disbursement
Applies to the 2013-14 award years – will likely apply to subsequent award years
See July 8, 2013 Federal Register Notice
24
Required Notices
25
What Who is Notified
When Required Elements
Type and amount of Title IV funds student
will receive
Student Prior to disbursement
Type and amount of Title IV funds available; How and when funds will be disbursed; If Direct Loan funds, amount of subsidized and unsubsidized
Credit of any loan funds to student’s
account if affirmative confirmation
obtained*
Student (or parent, if Parent PLUS loan)
Within 30 days of disbursement (either before or after the disbursement)
Date and amount of disbursement; Right of borrower to cancel all or portion of loan; Procedures and deadlines for borrower to cancel the loan
Credit of any loan funds to student’s
account if affirmative confirmation is NOT
obtained
Student (or parent, if Parent PLUS loan)
No earlier than 30 days before, and no later than seven days after disbursement
Date and amount of disbursement;Right of borrower to cancel all or portion of loan;Procedures and deadlines for borrower to cancel the loan;
Required Notices
26
Affirmative confirmation School obtains written confirmation that the student
wants the loan before the school credits the student’s account with loan funds
Borrower must be given at least 14 days from the date of notification to respond
If affirmative confirmation is not received, borrower must be given at least 30 days from date of notification
See 34 CFR 668.165(a)
Required Authorizations
27
Use of Title IV funds to pay for allowable charges other than tuition, fees, and room and board
Holding Title IV credit balances Disbursing Title IV funds by EFT to a bank
account designated by the student or parent Use of a stored-value card or a similar
instrument for issuing a Title IV credit balance See 34 CFR 668.165(b)
Required Authorizations
28
Language must be clear and conspicuous Authorization must be voluntary Must be completed prior to action Valid for student’s entire enrollment Student (or parent) can refuse, cancel, or
modify at any time
Notices and Authorizations
29
Generally, schools may provide notice or receive authorizations electronically May direct students to secure website that contains
the required information
Must notify each student every year that function is performed electronically Identify information to be provided Provide address where information can be found
Allowable Charges
30
May only credit account for allowable charges Current charges for tuition, fees, and room and
board if contracted with the school
Other current institutional charges if the student and/or parent provides written authorization Includes books, supplies, and other equipment
Prior-Year Charges
31
Title IV funds can be used to pay minor prior year institutional charges up to $200
Student/Parent cannot provide authorization to pay for more than $200
For Title IV grants, the year is the award year For Direct Loans, the year is the loan period
Early Disbursements
32
Term-based credit-hour program 10 days before the first day of classes of the term
Clock-hour and non-term credit-hour programs Later of –
10 days before the first day of classes of the payment period, OR
The date the student completed the previous payment period
Late Disbursements
33
If student no longer eligible and only if – School received an ISIR with an official EFC
while the student was still eligible and - For Direct Loans and TEACH, the school originated
the loan while the student was still eligible For FSEOG and Perkins, the school awarded the
aid while the student was still eligible
Late Disbursements
34
Must be made no later than 180 days after the student became ineligible
If student is eligible, school must attempt to make late disbursement
Late Disbursements
35
For Direct Loan recipients, a disbursement made after the student is no longer enrolled at least half-time May not originate a new loan or increase an
existing loan amount May not make a second or subsequent
disbursement unless student completed the loan period
First-time first-year borrowers must complete 30 days of program
Title IV Credit Balance
36
Title IV funds credited exceed total allowable charges assessed by the institution
Institutional Charges = $ 3,000 Credits to account = $ 6,172 Pell $1,900
Direct Loans$3,272Scholarship $1,000
Title IV Credit Balance = $ 2,172
Institutional Charges = $ 3,000 Credits to account = $ 6,172 Pell $1,900
Direct Loans$3,272Scholarship $1,000
Title IV Credit Balance = $ 2,172
Institutional Charges = $ 9,738 Credits to account = $ 9,000 Pell $3,500
Direct Loans$5,500Scholarship $1,000
Title IV Credit Balance = $ 0
Institutional Charges = $ 9,738 Credits to account = $ 9,000 Pell $3,500
Direct Loans$5,500Scholarship $1,000
Title IV Credit Balance = $ 0
Paying Title IV Credit Balances
37
School must pay credit balance to student/parent no later than – 14 calendar days after balance occurs, if it occurs
after first day of classes of payment period 14 calendar days after first day of classes if it
occurs on or before the first day of classes of payment period
Payments via check are considered paid on date school mails check or notifies student
Paying Title IV Credit Balances
38
Schools are prohibited from charging students a fee for receiving Title IV funds
If students/parents are required to open a bank account, or the school opens a bank account for the student, student/parent consent is required
Paying Title IV Credit Balances
39
If a school delivers Title IV funds by crediting funds to a school-issued debit card, students cannot be charged a fee for making withdrawals of Title IV funds from the card
Student must not incur any cost in making cash withdrawals from convenient bank branch or ATM See 34 CFR 668.164(c)(3) and page 4-42 of 2013-
14 FSA Handbook
Holding Title IV Credit Balances
40
Student or parent may voluntarily authorize school to hold credit balance
School must – Identify amount of funds held for each
student/parent in subsidiary ledger account Maintain cash equal to credit balances held
School may retain interest earned on retained funds
Holding Title IV Credit Balances
41
School must release any remaining Title IV credit balance upon request of the student (parent)
School must release any remaining Title IV credit balance of- Direct Loan funds by the end of the loan period Grants and Perkins Loans by the end of the award
year
See 34 CFR 668.165(b)(5)(iii)
Disbursements for Books & Supplies
Must provide a method for Pell-eligible students to obtain books & supplies no later than the seventh day of a payment period if - Title IV funds could have been disbursed 10 days before beginning of payment period, and
All Title IV aid would have created a Title IV credit balance
See 34 CFR 668.164(i)
42
Disbursements for Books & Supplies
Must provide the lesser of: The Title IV credit balance, or Amount needed by student, as determined by the school
Must determine the method(s) for assisting students with purchasing books & supplies
If student utilizes the method, the student is considered to have authorized the use of funds, for this purpose only
43
Prepaid Debit/Stored-Value CardA prepaid debit/stored-value card may be used to disburse FWS wages or a Title IV credit balance if the school is in compliance with the regulations at 34 CFR 668.164(c) and the information on page 4-46 of 2013-14 Federal Student Aid Handbook
45
Card Requirements - Overview Card must be –
Free to student/parent Widely accepted Able to be converted to cash May not be a credit cardAble to withdraw cash from an easily accessible ATM
Able to be used to purchase goods from a merchant
46
Card Requirements - More
School must have student’s authorization to use the prepaid debit/stored-value card for paying FWS wages or Title IV credit balances
Value of card must be convertible to cash Student must not incur any fees for
withdrawing cash Student must not be charged for having card
issued
47
Card Requirements - More
Underlying account must be Federally insured and must be unique to each student
School must not be able to make claims against the funds on the card
Card must not be marketed as a credit card School must inform student of any terms or
conditions associated with accepting or using the card
48
Card Requirements - More
Use of card must comply with all timeframes associated with disbursing FWS wages or Title IV credit balances
Student’s access to funds cannot be conditional upon continued enrollment, academic status, or financial standing with the school
49
Returning Funds Direct Loan funds are school and award-year
specific Funds not disbursed to a student, or returned
from a student’s institutional account, may be disbursed to another eligible student within the regulatory timeframes
Returned funds that cannot be disbursed to another eligible student must be returned to ED This is referred to as a refund in both G5 and COD
51
Returned Title IV Funds ED considers a school to have returned Title IV funds when the school
has – Deposited or transferred the funds into its federal funds account Initiated an electronic funds transfer to ED using the “Refund” function in G5
Issued a check to EDA school has not satisfied this requirement until the bank used by ED has processed the check
Reconciliation Completion Reconciliation is complete when –
All discrepancies have been identified and resolved
Timing issues are tracked for reconciliation in next month’s SAS
All monthly reconciliation efforts have been documented
Reasons for any Ending Cash Balance have been identified
53
Program Year Closeout Should begin as soon as final disbursements
are made One final month of reconciliation Must resolve any remaining ending cash
balance Final deadline: Last business day of July of
year following the end of the award yearDeadline for 2013-2014 is July 31, 2015
54
Regulatory References
34 CFR 668.16(c); Standards of Administrative Capability
34 CFR 668.24(b); Record Retention, Fiscal Records
34 CFR 668.82; Standard of Conduct 34 CFR 668 Subpart K (668.161 to 668.166);
Cash Management
55
Important Phone Numbers
COD School Relations Center 1-800-848-0978
G5 Helpdesk 1-888-336-8930
Campus Based Call Center 1-877-801-7168
57
Contact Information
58
We appreciate your feedback and comments. We can be reached at:
Rene TiongquicoE-mail: [email protected]
Kerri Moseley-HobbsE-mail: [email protected]