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Direct Loan Processing: Making COD Work for You

Session 19. Direct Loan Processing: Making COD Work for You. Chuck Hirman | Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals. Agenda. COD Release 14.0 – new award year Funding Loan Origination Fees PLUS Loans Disbursements

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Direct Loan Processing: Making COD Work for You

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  1. Session 19 Direct Loan Processing: Making COD Work for You Chuck Hirman | Dec. 2014 U.S. Department of Education 2014 FSA Training Conference for Financial Aid Professionals

  2. Agenda • COD Release 14.0 – new award year • Funding • Loan Origination Fees • PLUS Loans • Disbursements • Loan Period & Academic Year Reporting • SULA Fundamentals, Tips, Coming Soon • Rejects • Reports • Resources

  3. COD Release 14.0 Implementation 3/27 – 3/29/2015 2015-16 award year functionality added • Direct Loan Funding • ~April: Initial authorization for advance funded schools with early disbursements • ~June: 60% of anticipated funding needs for the year • ~November: Remaining 40% • Daily processing: CFL increases when COD accepts 2015-16 actual disbursements • Need additional funds? • COD report settings • StudentLoans.gov preferences

  4. G5 Award Numbers for 2015-16 G5 award numbers are program and award year specific #### - Your school’s 4-digit G5 identification number

  5. COD Report Settings for Award Year ’15-’16 • Confirm COD reports for the new year will arrive in the format you want • Don’t forget to check the SAS too

  6. StudentLoans.gov Preferences • Manage StudentLoans.gov in COD School Options • School/ School Information/ Options • Your choice whether to use any/all SLG functionality • Or, do those functions yourself on campus • Everything a borrower does in SLG is communicated • School responses • COD reports • COD website search functionality SLG COD

  7. Non-Award Year Specific COD Options for Managing StudentLoans.gov

  8. Award Year Specific COD Options for Managing StudentLoans.gov

  9. Paper Refund Checks • We’re getting close (end of 2014) when they will no longer be accepted • Too often are mailed to the wrong place • Slower, more costly to process than electronic refunds • Treasury has ordered a complete discontinuation • If you haven’t done so yet – arrange to return funds to G5 electronically • Cash management regulations have long required refunds of $100,000 or more to be returned electronically Electronic Announcement posted 4/2/2013

  10. COD Cash Management Screens COD website has a number of screens to help you track your funding and cash management • School Summary Information • Cash>NAPD • School Funding Information • CFL, Available Balance, NAPD • Net Draws, Cash>NAPD • School Summary Financial Information • Same info and format as SAS Cash Summary page • Cash Activity • Printer friendly button in right corner • Lists all drawdowns and refunds COD.ED.GOV

  11. Loan Origination Fees • Changes due to Sequestration • COD calculation/truncation rules are not changed Electronic Announcement posted 9/4/2014

  12. Origination Fees - New New Reject-213 • Actual Disbursement Submitted with EDD after an Established Date • The next “established date” we currently know of is 10/1/2015 • We know the loan fees will be changing then but until we know what they will be we won’t accept the actual disbursements CROF System-Generated Response • Once new fee percentages are known • COD will correct records having only anticipated disbursements • CROF15OP = 2014-15 award year Electronic Announcement posted 9/4/2014

  13. PLUS Loans - New • Adverse credit criteria to include if one/more debts have a total combined outstanding balance greater than $2085 • 90 days or more delinquent, or • Charged-off or placed in collections within past two years • Credit checks valid for 180 days • PLUS borrowers with adverse credit who appeal based on extenuating circumstances or obtain an endorser – must complete PLUS loan (credit) counseling Final Regulations posted 10/23/2014

  14. Disbursement Reporting Requirement 15-day reporting requirement Federal Register posted 2/28/2013 • Disbursements and adjustments made on/after 4/1/2013 • Pell LEU and SULA all need prompt reporting to COD • For now COD edits are still looking at 30 days but the Regulations are tighter, 15 days • School Monitoring Report • 30-Day Warning Report • Warning Edit 055 No. Edit Type Block Message 055 W Disbursement Disbursement Information Received 30 Days after Date of Disbursement

  15. Disbursement Date Reporting • The actual disbursement date is the date a school credits the student’s account or pays the student or parent directly • Actual disbursement date reported to COD must be accurate due to interest calculations and various timeframes, deadlines, and a number of regulatory triggers (i.e. loan fees, interest rates) • We are seeing schools merely flipping the DRI to True but not first updating the disbursement date • Warning edit 055, School Monitoring Report, other implications Electronic Announcement posted 1/29/2014

  16. Upward Disbursement Adjustments • Should only be made to correct an erroneously reported actual disbursement • Interest is calculated from the sequence 01 date • If you give additional funds make a new disbursement for that additional amount

  17. Disbursements – 120-Day Rule • For any loan type (Sub, Unsub, PLUS) if the borrower returns funds asking the disbursement be reduced you may accept those funds up to 120 days from the disbursement date • Reduce disbursement and report to COD • Re-disburse or return the money to G5 • Borrower gets a break on interest and loan fees of returned amount • You are not required to do this beyond the regulatory right to cancel timeframes. However, a lower debt burden is a default less likely Does not apply to returns required for regulatory reasons Those must be made no matter when they’re discovered

  18. Loan Periods & Academic Years • Correct reporting crucial to accurate SULA calculations • 2013-14 & forward – all borrowers, all loan types • Loan periods should include only terms/payment periods in which the borrower received (and retained) funds • Loan Period: period of enrollment for which the loan is intended • Academic Year: period used to track annual loan limits • Updates required in many instances if circumstances change Dear Colleague Letter GEN-13-13 posted 5/10/2013

  19. Loan Period Reporting Why Updating the Loan Period Matters Example: Fall: 9/10/2014 – 12/10/2014 Spring: 1/10/2015 – 5/10/2015 • School originates fall-spring loan, full-time attendance • SAY, summer trailer, summer attendance not required • SUP: #days in LP/#days in AY = 242/242 = 1.0 Years But borrower doesn’t return in the spring • School needs to update LP to fall-only • SUP: #days in LP/#days in AY = 91/242 = 0.4 Years

  20. Academic Year Reporting Your academic year is school-defined • Minimum of 30 weeks of instruction and 24 semester/ 36 quarter credit hours for a credit-hour based program • No hour minimum for a graduate level program • Minimum of 26 weeks and 900 clock hours of instruction for a program measured in clock hours Why is this significant for SULA? • We’re seeing loans with AY’s that are too short, even some less than half that • Since SUP = LP/AY … calculations are too high • Plus, are these schools also awarding new annual loan limits too soon?

  21. The Loan Period/Acad Year Fraction Subsidized Usage Period (SUP) = # Days in the Loan Period ….. if too high SUP is too high # Days in the Academic Year ….. if too low SUP is too high

  22. Updating LP & the Annual Loan Limit Exception Annual Loan Limit Exception to SUP = LP/AY • Standard-term programs and non-standard-term programs that are substantially equal and each at least nine weeks in length • If borrower receives full annual loan limit for grade level • And loan period < academic year • A SUP of 1.0 Years will be calculated, regardless of the LP/AY calculation

  23. Annual Loan Limit Exception - Continued Example – loan originated with 2 anticipated disbs • Loan amount: $3500 • LP = AY: 9/10/2014 – 5/10/2015 SUP = 1.0 Years Fall disb made, student withdraws before spring disb • School correctly updates LP per GEN-13-13 • LP = Fall, AY = Fall-Spring SUP = 1.0 Years still! • Why? The annual loan limit exception was triggered Solution: zero out the unused second disbursement and reduce the loan amount

  24. Updating Unused Loans Example: Loan was originated and an actual disbursement was made but later backed out COD processing rules: • An actual Subsidized Usage Period (SUP) will be calculated if the incoming record has any actual disbursements • When an award is inactivated the actual Subsidized Usage Period (SUP) is cancelled What does this mean? • Once you’ve reported an actual disbursement on a loan the only way for the SUP to be fully removed is to inactivate the loan • Reduce all disbursements to zero • Reduce the loan amount to zero

  25. 150% – Terms & Concepts • SULA • First-time borrower • Maximum Eligibility Period (MEP) • Subsidized Usage Period (SUP) • Remaining Eligibility Period (REP) • XML Schema • Tags • SULA Calculations • COD – system of record for loan records • NSLDS – system of record for enrollment reporting

  26. SULA Fundamentals • SULA: Subsidized Usage Limit Applies • First-time borrower: Any borrower who had no balance on a DL/FFEL on 7/1/2013 or afterwards at the time they obtain a loan • Maximum Eligibility Period (MEP): Set at 150% the published length of the program the borrower is enrolled in • Subsidized Usage Period (SUP): The loan’s subsidized usage, which is basically length of loan period divided by length of academic year • Remaining Eligibility Period (REP): The borrower’s remaining eligibility for subsidized loans: MEP - ∑SUPs = REP

  27. SULA Information - Responses SULA usage communicated in two response types: System-generated response: CRSU Person, Award, or Disbursement level

  28. SULA Information - Web Pages Two new SULA web pages have been added to the COD website: • Subsidized Eligibility Information page • Link on the Person Direct Loan Information page • Subsidized Usage Limit Applies Request page • Request the most recent SULA information via CRSU • Reachable via Batch tab, left navigation panel NOTE: Privacy information shown in next pages is fake data from our test database

  29. Subsidized Eligibility Information Page COD website Person Tab Subsidized Eligibility Search SULA • MEP • SUP • REP

  30. SULA Request Page COD website/ Batch Tab/ SULA Request COD will generate a CRSU and send to TG Mailbox

  31. SULA Calculator – ComingSoon • Working on it now, implemented in Spring • On the COD website • Allows you to plug in subsidized loan values either for loans already on the system or new loans you are going to send • Won’t create/build/change any loans – it’s just a calculator to help you see if a loan can make it through when remaining eligibility is in question • Won’t need to keep sending the loan, getting it rejected • Optional

  32. SULA Loss Dispute Process - Soon • Working on it now, implemented in Spring • On the COD website • Forward to FSA’s attention when SULA particulars need correcting on a loan and the former school can’t (won’t?) do so • Intended for closed-school loans • By far the most efficient means of getting former loans corrected is by a courtesy call directly from financial aid office to financial aid office

  33. COD Rejects & Warnings • Rejects – record not built and will not be in Person/Award search on COD website • Warnings – record was processed, FYI concerning your processing/timing • Watch your rejects Rejected disbursements = unsubstantiated funds • Use your software’s import edit report • Review batches on the COD website COD Technical Reference, Volume II, Section 4 - Edits

  34. Top Hits – Rejects & Warnings COD Technical Reference, Volume II, Section 4

  35. Resolving Your COD Rejects • Response • Work the Response when you import it • Query your system for rejects • Most systems will keep resending rejected records until they are accepted • COD website Batch Search functionality • Since rejected records were not “built” they will not be found in Person/Award Search • Batch Search will tell you what the rejects were

  36. COD Batch Search Enter school ID and date range (up to 60 days) Or, enter SSN and choose specific award year or select all award years for complete history

  37. Some SULA-Related Rejects *Electronic Announcement posted 10/31/2014

  38. Reject Edit 050 Disbursement Date Outside Allowable Window – Update • Disbursement must be no earlier than 10 days before the loan period start • Disbursement must be no later than 180 days after the loan period end But schools were hitting this reject after zeroing out an actual disbursement and updating the loan period to remove term/payment period per DCL GEN-13-13 • COD “off-cycle” change on 9/14/2014 • Now COD will ignore actual disbursements reduced to $0 Electronic Announcement posted 8/22/2014

  39. Reject Edit 205 Payment Period Start Date is Outside the Award Begin and End dates Issue: • Per GEN-13-13 schools are required to shorten the LP to exclude terms/payment periods where no disbursement is made (or one was made but later zeroed out) • But each term/payment period has its own PPSD and when the LP is shortened and “orphans” a PPSD – Edit-205 fires Solution: • COD R14.0 will relax the edit as long as the disbursement = $0 • Until then zero out the disbursement, change the PPSD to fall within the new LP dates, and then update the LP Electronic Announcement posted 8/22/2014

  40. Reject Edit 206 Remaining Subsidized Eligibility is less than zero for this award • You’ve sent a Subsidized loan to COD and it came back rejected with Edit 206 • Of course, everything could be reported optimally and the borrower simply has insufficient SULA eligibility so … award unsubsidized • Check the reporting of this rejected loan and make updates if necessary • Confirm that prior loans already on the COD system were reported and updated correctly

  41. Reject Edit 206 - Continued • Has this loan been reported so the borrower can receive the maximum amount of subsidized funds for which they are eligible? Maximum Eligibility - ∑SUPs = Remaining Eligibility Subsidized Usage Period = LP/AY • Academic Year – at least the 26 or 30 week minimum? • Loan Period – includes only terms/payment periods where the borrower receives loan funds? • Enrollment Status – will the borrower be attending half-time or three-quarters-time? • Loan Amount – is the annual loan limit exception being triggered?

  42. Reject Edit 206 - Continued • Have previous loans been reported and updated correctly? • Although outside your control you can still be instrumental in getting those loans updated by contacting the former school • So, as a professional courtesy, if you are that former school please update the loan promptly • If the previous loan is from a now closed school – we’re working on it

  43. COD Reports – Can Help You Manage: Disbursement Process • Actual Disbursement list • Pending Disbursement list • COD Action Queue • 30-Day Warning report • Inactive Loans report Loan Origination Process • Duplicate Student Borrower report • Completed PLUS Application report* • Counseling report* • Subsidized Loan Usage Change report Master Promissory Notes • Completed MPN report* • Expired MPN report • MPNs Due to Expire report • MPN Discharge report *From activity completed on StudentLoans.gov

  44. COD Reports – COD Technical Reference FSADownload.ed.gov • What the report can be used for • Business Rules • Formats • Message classes • When it’s generated • Record Layouts • What data is included • Mock-up Samples

  45. COD Reports – Format & Delivery

  46. COD Website - Newsbox

  47. COD Website - Newsbox

  48. COD School Monitoring Report • Produced weekly if any of the following conditions occur: • Pell POP • 30-day reporting missed (should be 15 days anyhow!) • Unsubstantiated cash > 30 days • Posted to your COD Newsbox (DL and Pell) • Also sent to your SAIG Mailbox (SCHMONOP) We check for those conditions weekly so schools should check for that report that often too

  49. Direct Subsidized Loan Usage Change Report • Displays Subsidized loans for a borrower when there is a change to SULA calculated values • Generated weekly on borrowers have changes to: • Maximum Subsidized Eligibility Period • Actual (or Anticipated) Subsidized Usage Period • Actual (or Anticipated) Non-Credential Teacher Certification Subsidized Usage Period • COD Newsbox • CSV format COD Technical Reference, Volume 6, Section 8

  50. Report Readers • Simplified way of importing some COD files into Excel • SAS Disbursement Detail on Demand • Pell Grant Reconciliation File • Pell Grant YTD File • Readers & instructions • COD website “COD Resources” • Request “fixed-length” files Electronic Announcement posted 1/28/2014

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