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

Session #37

Disbursing Title IV Funds

Dave ElliottGreg Martin

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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)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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Checking Eligibility at Time of Disbursement

• Before disbursing Title IV funds, schoolmust 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

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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

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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

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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

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Payment Periods for Clock Hour Programs• Program less than an academic year

– 1st payment period is period of time in which student completes the first half of the program

– 2nd payment period is period of time in which student completes the second half of the program

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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

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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

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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 – 1st payment period is period of time in

which student completes first half of the academic year

– 2nd payment period is period of time in which student completes second half of the academic year

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Clock Hour Examples880 clock hour program, 900 clock-hour academic year

440 Clock Hours440 Clock Hours

880 Clock-Hour Program880 Clock-Hour Program


1200 clock hour program, 900 clock-hour academic year

1200 Clock Hour Program1200 Clock Hour Program

450 Clock Hours450 Clock Hours 450 Clock Hours450 Clock Hours 300 Clock Hours300 Clock Hours

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Clock Hour Examples




450 Clock Hours450 Clock Hours 450 Clock Hours450 Clock Hours



450 Clock Hours450 Clock Hours 450 Clock Hours450 Clock Hours 450 Clock Hours450 Clock Hours

400 Clock Hours400 Clock Hours400 Clock Hours400 Clock Hours

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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

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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 1st

day of class for the payment period– 1st day of classes for the payment

period if balance occurred on or before the 1st day of classes

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Title IV Credit Balances ExampleAllowable 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 studenthave a Title IV credit balance?

No

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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 studenthave a Title IV credit balance?

Yes

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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

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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

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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 1st day of classes for the payment period; or date student completed the previous payment period

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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Disbursements—Advance Funded

COD

GAPS

StudentSchool

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Disbursements—Report Driven

COD

GAPS

StudentSchool

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Disbursements—School Funded

COD

GAPS

StudentSchool

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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)

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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

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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

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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

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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

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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

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ContactsWe appreciate your feedback and comments.

We can be reached at:

Greg Martin• Phone: (215) 656-6452 • Email: [email protected]

Dave Elliott • Phone: (214) 661-9453 • Email: [email protected]

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Please provide any comments regarding this training or the trainers

to:

Jo Ann BorelTitle IV Training Supervisor

[email protected]

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

Documents

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