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Session FF-10. Disbursing Title IV Funds Jamie Malone U.S. Department of Education. What Is A 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

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Session FF-10

Disbursing Title IV Funds

Jamie Malone

U.S. Department of Education


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What Is A 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

    • Funds received from an FFEL lender

      or

    • School funds labeled as Title IV funds in advance of receiving actual federal funds


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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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Methods of Disbursement

  • Crediting student’s account at the institution

  • Direct Payment

    • Releasing FFEL lender check directly to student/parent

    • Issuing a check to student/parent

    • EFT to student or parent bank account

    • Dispensing cash with signed receipt


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Crediting the Student’s Account

  • 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/parent authorization, may use Title IV funds to credit student’s account to satisfy current charges for other educationally related charges


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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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Crediting Account With School Funds

  • If credit account with school’s funds earlier than 10 days before first day of classes of the payment period

    • Not considered a Title IV disbursement until the 10th day before first 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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Direct Payment

  • Issuing a check

    • ED considers check to be issued on date it is mailed or date of notification to student that it is available for pickup

    • Notification to student must provide specific location for pickup

    • Checks may be held for pickup for up to 21 days after notification to student

      • After 21 days, mail check or return to Title IV program


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Notification of Disbursement

  • School must notify student/parent of Perkins, FFEL/DL, and TEACH Grant disbursements credited to student’s account

    • Date and amount of disbursement

    • Student’s/parent’s right to cancel all or portion of disbursement

    • Procedures and time by which student/parent must notify school of desire to cancel


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Notification Of Disbursement

  • For schools that obtain affirmative confirmation prior to disbursement

    • Notification must be made no earlier than 30 days before or no later than 30 days after disbursement

    • Student/parent must be given 14 days to cancel


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Notification Of Disbursement

  • For schools that do not obtain affirmative confirmation prior to disbursement

    • Notification must be made no earlier than 30 days before or no later than 7 days after disbursement

    • Student/parent must be given 30 days to cancel


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FFEL/DL Disbursements

  • For schools with cohort default rates of 10% or greater

    • May not make first disbursement to first year first time borrower until 30 days after first day of program of study

    • Must make multiple disbursements of one-term only loans


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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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Disbursements to Students on Leave of Absence

  • May not disburse FFEL/DL

  • May disburse

    • Pell Grant

    • ACG

    • National SMART Grant

    • FSEOG

    • Perkins Loan

    • Title IV credit balances


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Payment Periods

  • Academic term is payment period for programs offered in

    • credit hours and standard terms

    • credit hours and non-standard terms that are substantially equal*

  • All Title IV disbursements except FWS are made by academic term

  • Terms are substantially equal in length if no term is more than 2 weeks of instructional time longer than any other term in the program


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Payment Periods

  • Non-standard terms not substantially equal

    • Academic term is payment period for Title IV grants and Perkins

    • For FFEL/DL, each academic year is divided into two payment periods

      • Payment periods are same as those for non-term credit hour programs


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Payment PeriodsClock hour and Non-Term Credit hour programs

  • For clock hour and non-term credit hour programs less than an academic year

    • First payment period is period of time in which student successfully completes half of credit/clock hours and half of weeks of instructional time in program

    • Second payment period is period of time in which student successfully completes remainder of program in credit/clock hours and weeks


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Payment PeriodsClock hour and Non-Term Credit hour programs

  • Programs equal to or multiples of one academic year

    • First payment period is period of time in which student successfully completes half of credit/clock hours and half of weeks in academic year

    • Second payment period is period of time in which student successfully completes remainder of credit/clock hours and weeks in academic year


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Payment PeriodsClock hour and Non-Term Credit hour programs

  • For any remaining portion of a program that is more than half of an academic year but less than a full year

    • Period of time in which student successfully completes half of credit/clock hours and half of weeks of instructional time

  • For any remaining portion of a program that is not more than half of a year

    • Payment period is the remainder


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Clock Hour Examples

Academic year is 900 clock hours and 30 weeks

Program is 750 clock hours and 25 weeks

375 Clock Hours/13 weeks

375 Clock Hours/12 weeks

Program is 1200 clock hours and 40 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

300 clock hours/10 weeks


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Clock Hour Examples

Academic year is 900 clock hours and 30 weeks

Program is 1700 clock hours and 68 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

400 clock hours/ 19 weeks

400 clock hours/ 19 weeks

Program is 1800 clock hours and 60 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks


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Title IV Credit Balance

  • Occurs when Title IV funds credited to student’s account exceed allowable charges

  • Must be paid to student/parent no later than 14 days after

    • first day of class for the payment period if credit balance occurred on/before the first day of class

    • date credit balance occurred if credit balance occurred after first day of class for the payment period


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Title IV Credit Balance Example

Allowable charges are $5,000

The following aid is credited to the student’s

account

Does this studenthave a Title IV credit balance?

No


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Title IV Credit Balance Example

Allowable charges are $5,000

The following aid is credited to the student’s account

Does this studenthave a Title IV credit balance?

Yes


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Title IV Credit Balance

  • Excess parent 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 only with parent authorization

  • School determines which Title IV funds created a credit balance


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Prior Award Year Charges

  • May never pay prior award year charges in excess of $200

  • No student/parent authorization required to pay prior award year charges for tuition/fees and contracted room/board

  • With student/parent authorization, may pay prior award year charges for other educationally related charges


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Early Disbursements

  • Credit hour term-based programs

    • Earliest date to disburse is 10 days before the first day of classes for the payment period

  • Clock-hour and non-term credit hour programs

    • Earliest date to disburse is later of 10 days before first day of class for the payment period or date student completed the previous payment period


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Student Who Never Begins Attendance

  • Student who never begins attendance is not Title IV eligible

  • School must return all Pell, ACG, National SMART Grant, TEACH Grant, FSEOG and Perkins funds disbursed

  • School must return FFEL/DL funds that it has retained


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Student Who Never Begins Attendance

  • Funds must be returned no later than 30 days after school becomes aware of failure to attend

  • School must notify lender/Secretary of FFEL/DL funds disbursed directly to student

    • Lender/Secretary will issue final demand letter


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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/TEACH Grant disbursements for a completed term are based on hours completed 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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Excess Cash

  • Funds must be disbursed within 3 business days of receipt of funds from ED

  • Tolerance of 1%

    • May maintain excess cash not to exceed 1% of funds drawn in prior award year for up to 7 days

  • Definition expanded to include Title IV funds received from ED and transferred into school’s federal account as a result of award cancellation, adjustment, or recovery


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Late Disbursements

  • Must be made within 180 days of date student becomes ineligible

  • Student is considered ineligible

    • for FFEL/DL, when no longer enrolled at least half-time

    • for Pell Grant, ACG, National SMART Grant, TEACH Grant, FSEOG and Perkins Loan, when no longer enrolled at the school


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Conditions for a Late Disbursement

Prior to student becoming ineligible

  • CPS must have processed SAR/ISIR with official EFC (except parent PLUS)

  • FFEL/DL must have been certified/originated

  • TEACH Grant must have been originated

  • FSEOG and Perkins award must have been made to student


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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 Disbursement of FFEL/DL

  • Second or subsequent late disbursement is prohibited unless

    • Student has graduated or successfully completed the loan period

  • If school is subject to 30 day delay, late disbursement to a first-year, first-time borrower is prohibited unless student withdrew beyond 30th day


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Recovery of Unclaimed Funds

  • When student/parent does not receive or negotiate direct disbursement, credit balance, or FWS payment

    • For checks not cashed, school must return funds no later than 240 days after date check is issued

    • For returned checks or rejected EFT, school must return funds no later than 45 days after return/reject


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Recovery of Unclaimed Funds

  • May make additional attempt to disburse returned checks or rejected within 45 days. If fails, must return funds within 240 days of original issue

  • School only returns federal portion of FWS wages


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Disbursements - Funding

  • Schools receive funds from ED through the G5 system

    • 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 To COD

  • Schools submit a common record that reports anticipated and/or actual disbursements COD

  • Actual disbursements must be reported

    • Pell - within 30 days of the date of disbursement (before or after)

    • ACG, SMART, TEACH – no earlier than 7 days before disbursement date and no later than 30 days after disbursement date


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Resources

  • 2008-2009 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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Contact Information

Your feedback and comments are appreciated.

Jamie Malone

Training Officer

312-730-1528

[email protected]


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