nasfaa u self-study guide: cash management - … · i nasfaa u self-study guide 2017–18 cash...

NASFAA U

SELF-STUDY GUIDES

CASH MANAGEMENT

CREDENTIALEDTRAINING

AWARD YEAR 2017–18 • ISSUE DATE MAY 2017

i

NASFAA U Self-Study Guide

2017–18 Cash Management

Table of Contents Lesson 1: Introduction to Cash Management ....................................................................................................... 1

Lesson 2: Requesting and Managing Title IV Funds .......................................................................................... 17

Lesson 3: Disbursing Title IV Funds ................................................................................................................... 51

Lesson 4: Notifications and Authorizations ......................................................................................................... 85

References for Cash Management ................................................................................................................... 109

Glossary for Cash Management ....................................................................................................................... 114

Feedback Form ................................................................................................................................................. 121

These training materials are designed for individual use, as well as for in-person instruction during NASFAA U Authorized Events, such as workshops and institutes. The effectiveness of the learning experience depends on utilization of the quizzes, learning activities and reflective exercises provided.

© 2010–2017 by National Association of Student Financial Aid Administrators (NASFAA). All rights reserved.

NASFAA has prepared this document for use only by personnel, licensees, and members. The information contained herein is protected by copyright. No part of this document may be reproduced, translated, or transmitted in any form or by any means, electronically or mechanically, without prior written permission from NASFAA.

NASFAA SHALL NOT BE LIABLE FOR TECHNICAL OR EDITORIAL ERRORS OR OMISSIONS CONTAINED HEREIN; NOR FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE FURNISHING, PERFORMANCE, OR USE OF THIS MATERIAL.

This publication contains material related to the federal student aid programs under Title IV of the Higher Education Act and/or Title VII or Title VIII of the Public Health Service Act. While we believe that the information contained herein is accurate and factual, this publication has not been reviewed or approved by the U.S. Department of Education, the Department of Health and Human Services, or the Department of the Interior.

The Free Application for Federal Student Aid (FAFSA®) is a registered trademark of the U.S. Department of Education.

NASFAA reserves the right to revise this document and/or change product features or specifications without advance notice.

May 2017

NASFAA U Self-Study Guide: Cash Management

© 2017 NASFAA Cash Management: Lesson 1 1

Lesson 1: Introduction to Cash Management

Learning Objectives After completing this lesson, you will:

• Understand the meaning of cash management; and

• Know the definitions of key terms related to cash management.

Key Concepts The key concepts you will learn in this lesson:

• Cash management;

• Administrative capability;

• Academic year;

• Payment period;

• Standard terms; and

• Nonstandard terms.

Resources for This Lesson

• Glossary

Icons You will see the following icons in Lesson 1:

• Key concept

• Quick quiz

• Reflection questions

• Learning activity

• Helpful hint

Introduction to Cash Management In this self-study guide, you will learn about a school’s responsibilities for managing Title IV funds, including requesting and receiving funds, maintaining funds, disbursement, notices, and authorizations. This lesson introduces you to cash management and to important terms you need to understand as you complete the remaining lessons in the guide. Cash Management Definition

As we begin our deep dive into cash management, let’s start with a definition. Cash management is the rules and procedures an institution that participates in the Title IV programs must follow to request, maintain, authorize, disburse, deliver, use, and

return Title IV funds. The cash management regulations apply to the following Title IV programs: • Federal Pell Grant Program; • Iraq and Afghanistan Service Grant (IASG); • Federal Supplemental Educational Opportunity Grant (FSEOG)

Program; • Federal Work-Study (FWS) Program; • Federal Perkins Loan Program; • Teacher Education Assistance for College and Higher Education

(TEACH) Grant Program; and • Federal Direct Student Loan (Direct Loan) Program. It’s important to note that the FWS Program is excluded from certain cash management provisions. Effective cash management by the school minimizes the federal government’s costs for making Title IV program funds available to students and schools, as well as the student’s costs for participation in the Title IV loan programs. Additionally, effective cash management ensures that: • Only eligible students receive Title IV funds; • Students receive their financial aid funds as needed and in a timely

manner; • Interest on Title IV loans does not accrue needlessly;


2 Cash Management: Lesson 1 © 2017 NASFAA

• Title IV overawards and overpayments are avoided;

• Institutional cash flow needs are met;

• The school does not hold excess federal cash; and

• The institution has appropriate accounting procedures and maintains a clear audit trail.

Administrative Capability

Administrative capability is the ability a school must demonstrate in providing the education it promises and properly managing the federal student aid programs.

Cash management is an administrative capability requirement that has campus-wide implications. It is an institutional responsibility carried out by multiple campus offices. A school’s ability to participate in any or all of the Title IV programs could be jeopardized if the offices responsible for various aspects of the cash management process are not in compliance with the rules governing Title IV funds. For this reason, campus-wide communication and coordination, as well as appropriate internal controls, are pertinent to ensure effective, compliant cash management procedures throughout the institution. This is especially important for the financial aid, business, admissions, and registrar’s offices. The Department of Education (ED) views a school as a single entity. Thus, if the business office knows that a student has received additional sources of aid, or if the registrar’s office knows that a student has dropped classes, the financial aid office is assumed to be aware of this information as well. Another aspect of administrative capability that clearly affects a number of institutional offices and functions is the requirement that the school institute adequate checks and balances in its system of internal controls. While offices within a school must coordinate their efforts, there also must be a separation of certain duties. The institution should not only be able to detect, but should be able to prevent, fraud and abuse in its administration of the Title IV programs, and the misuse of federal funds.

Separation of Functions. The focus of the checks and balances requirement is the separation of functions—that is, individuals with the authority to award aid and

authorize payments should not also have the ability to make disbursements, and vice versa. The institution must be diligent in safeguarding its systems so that only authorized individuals can change records and affect awards and payments.

“Effective cash management

by the school minimizes the

federal government’s costs

for making Title IV program funds

available to students and schools,

as well as the student’s costs

for participation in the

Title IV loan programs.”

At a minimum, the institution must set up its organizational structure so that the functions of authorizing payments and disbursing or delivering funds are divided, to meet the following specific regulatory requirements:

• No one office may have responsibility for both functions with respect to student aid awarded under the programs;

• The individuals carrying out these functions must be organizationally independent;

• The individuals may not be members of the same family; and

• The individuals may not together exercise substantial control over the institution.

The Title IV regulations detail the administrative capability standards an institution must meet in 668.16 in the Student Assistance General Provisions.

The concepts of academic year and payment periods underlie the requirements related to



disbursing Title IV funds. Payment period definitions are based, in part, on the program’s definition of an academic year. Let’s take a closer look at the concept of an academic year. Academic Year

Every eligible academic program must have a defined academic year (AY). A school may have different academic years for different academic programs, but you

must use the same academic year definition for all Title IV awards to students enrolled in the same program of study. Furthermore, a program’s academic year definition must be used for all Title IV program purposes. An academic year is defined as a period that begins on the first day of classes and ends on the last day of classes or examinations. For credit-hour programs, that period must be a minimum of 30 weeks of instructional time. For clock-hour programs, that period must contain a minimum of 26 weeks of instructional time. The regulations define a week of instructional time as a consecutive seven-day period in which at least one day of regularly scheduled instruction or examinations occurs or, after the last day of regularly scheduled classes for a term or payment period, at least one day of study for final examinations. This definition excludes vacation periods, homework, orientation, counseling activities, or any other activity not related to class preparation or examination periods. Undergraduate Programs In addition to the minimum number of weeks of instructional time mentioned above, for an undergraduate educational program, during that period a full-time student must be expected to complete at least:

• 24 semester or trimester hours;

• 36 quarter hours; or

• 900 clock hours.

Graduate Programs While there is no statutory or regulatory minimum number of hours component to the definition of an academic year for graduate and professional programs, the school must establish and document in its written policies and procedures a minimum number of hours that a full-time graduate or professional student is expected to complete during the number of weeks in the program’s academic year definition. Payment Period

The payment period is the school-determined length of time for which financial aid funds are paid to a student. For standard term academic programs

(semesters, trimesters, or quarters) the payment period is the term. For programs not using standard terms, the institution designates at least two payment periods within an academic year that meet all applicable regulations. All Title IV funds, except compensation paid under the FWS Program, are disbursed to students on a payment period basis. Although the payment period concept applies to all Title IV programs, additional disbursement rules apply to the Direct Loan Program.

You will learn about disbursement rules and requirements in Lesson 3.

The payment period is determined based on the structure of the student’s academic program, which may be a:

• Credit-hour program offered in standard terms or nonstandard terms with substantially equal terms;

• Credit-hour program offered in nonstandard terms that are not substantially equal;

• Nonterm credit-hour program; or

• Clock-hour program.

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



Academic Terms Before we take a closer look at the payment period definitions for the various program structures, let’s quickly review the applicable definitions related to academic terms. For Title IV purposes, academic terms are either standard or nonstandard.

Standard Terms. Standard terms are semesters, trimesters, or quarters. A semester or trimester consists of 14 to 17 weeks of instructional time, and full-time

enrollment for undergraduate students is defined as at least 12 semester or trimester credit hours. A quarter consists of 10 to 12 weeks of instructional time, and full-time enrollment for undergraduate students is defined as at least 12 quarter credit hours. For graduate level programs, the school defines full-time status. Although the standard terms in a program need not be the same length, the length of each term must be within the specified range.

Nonstandard Terms. A nonstandard term is defined as any term other than a semester, trimester, or quarter. In addition, if the school uses a different credit

measure for a semester, trimester, or quarter—such as awarding semester credits for a quarter term—the term is nonstandard.

“Successfully complete means

not only must the student

complete all of the weeks and

hours in the payment period,

but also the school considers the

student to have passed

the coursework associated

with those hours.”

A school may combine a short nonstandard term (for example, a four-week intersession between the fall and spring semesters or between the fall and

winter quarters) with a standard term, and treat the combined term as a standard term if the treatment is applied for all Title IV purposes and to all students enrolled in the program. Payment Periods for Credit-Hour Programs Offered in Standard Terms or Nonstandard Terms with Substantially Equal Terms For these programs, the payment period is the term. Remember, you must disburse all Title IV funds (except FWS) by the term. Payment Periods for Credit-Hour Programs Offered in Nonstandard Terms that are Not Substantially Equal For the Federal Pell Grant, IASG, TEACH Grant, FSEOG, and Federal Perkins Loan programs, the payment period is the nonstandard term. For the Direct Loan Program, different payment period definitions apply depending on the length of the program. For each payment period definition, the student must successfully complete both the credit hours and the weeks of instructional time in the payment period before the next payment period begins.

Successfully complete means not only must the student complete all of the weeks and hours in the payment period, but also the school considers the student to have

passed the coursework associated with those hours. Academic Programs Less Than or Equal to One Year in Length. The first payment period is the period of time in which the student successfully completes half the number of credit hours and half the number of weeks of instructional time in the program. The second payment period is the period of time in which the student completes the program. Academic Programs Longer Than One Year in Length. For each full academic year, the first payment period is the period of time in which the student successfully completes half the number of credit hours and half the number of weeks of instructional time in the program’s academic year



definition, and the second payment period is the period of time in which the student successfully completes the academic year. For a remaining portion of a program that is less than or equal to half of an academic year, the payment period is the period of time in which the student completes the remainder of the program. For a remaining portion of a program that is less than an academic year, but more than half of an academic year, the remaining portion of the program consists of two payment periods:

• The first payment period is the period of time in which the student successfully completes half the number of credit hours and half the number of weeks of instructional time in the remaining portion of the program; and

• The second payment period is the period of time in which the student completes the remainder of the program.

Nonterm Credit-Hour Programs and Clock-Hour Programs For all the Title IV programs (except FWS), different payment period definitions apply depending on the length of the program. For each payment period definition, the student must successfully complete the credit hours or clock hours and the weeks of instructional time in the payment period. Academic Programs Less Than or Equal to One Year in Length. The first payment period is the period of time in which the student successfully completes half the number of credit or clock hours and half the number of weeks of instructional time in the program. The second payment period is the period of time in which the student successfully completes the program. Academic Programs Longer Than One Year in Length. For each full academic year, the first payment period is the period of time in which the student successfully completes half the number of credit or clock hours and half the number of weeks of instructional time in the program’s academic year definition, and the second payment period is the period of time in which the student successfully completes the academic year.

For a remaining portion of a program that is less than or equal to half of an academic year, the payment period is the period of time in which the student completes the remainder of the program. For a remaining portion of a program that is less than an academic year, but more than half of an academic year, the remaining portion of the program consists of two payment periods:

• The first payment period is the period of time in which the student successfully completes half the number of credit or clock hours and half the number of weeks of instructional time in the remaining portion of the program; and

• The second payment period is period of time in which the student completes the remainder of the program.

In addition to the basic payment period definitions for nonterm and clock-hour programs, there are some additional requirements for these types of programs. Excused Absences. Under certain conditions, a school may include clock hours for which the student received an excused absence (in other words, an absence the student does not have to make up) when determining whether the student has successfully completed the clock hours in a payment period. The school must have a written policy that allows excused absences, and the number of excused absences allowed under that policy cannot exceed the lesser of:

• The number of excused absences allowed under the excused absences policy of the school’s accrediting agency that is designated for Title IV purposes;

• The number of excused absences allowed under the excused absences policies of the state agency that licenses or authorizes the school to operate in the state; or

• Ten percent of the clock hours in the payment period.

Programs for Which Successful Completion of Half the Credit or Clock Hours Cannot Be Determined. The second payment period begins on the later of



the date you determine the student successfully has completed, as applicable, half of the:

• Academic coursework in the academic year, program, or remainder of the program; or

• Number of weeks of instructional time in the academic year, program, or remainder of the program.

“If the student’s re-entry falls

during a new award year, the Title

IV funds to be disbursed for the

payment period should be paid

from the award year during which

the payment period originally

began. For an award year that is

closed, you may request an

extension to the established data

submission deadline through the

Common Origination and

Disbursement (COD) System.”

Rules for Students Who Re-enter Within 180 Days. If a student withdraws during the payment period from a nonterm credit-hour program or clock-hour program and resumes studies in the same program at the same school within 180 days of the withdrawal date, he:

• Remains in the same payment period from which he withdrew;

• Is eligible for previously disbursed funds for the payment period that had been returned under the return of Title IV funds requirements; and

• Is eligible for undisbursed funds for which he is otherwise eligible.

If the student’s re-entry falls during a new award year, the Title IV funds to be disbursed for the payment period should be paid from the award year during which the payment period originally began. For an award year that is closed, you may request an extension to the established data submission deadline through the Common Origination and Disbursement (COD) System. Rules for Students Who Re-enter After 180 Days or Transfer. You must calculate a new payment period if a student withdraws from a nonterm credit-hour program or clock-hour program and:

• Re-enters the same program at the school more than 180 days after he withdrew; or

• Transfers to the school from another school or into another program at the school within any time period.

For purposes of calculating the new payment period only, the length of the student’s program is the remaining number of credit or clock hours and weeks of

instructional time in the program the student is re-entering or in the transfer program. However, there is an exception to the requirement to calculate a new payment period. A student who withdraws and transfers into another program at the same school may be considered to be in the same payment period from which she withdrew if:

• The student is continuously enrolled at the school;

• The coursework in the payment period from which the student withdrew is substantially similar to the coursework the student will be taking when she first transfers into the new program;

• The payment periods are substantially equal in length in weeks of instructional time and credit or clock hours;

• There is little or no change in institutional charges associated with the payment period; and

• The hours from the program from which the student is transferring are accepted toward the new program.



Quick Quiz Now it’s time to check what you have learned so far. Answer the following questions and check your responses using the Answer Key on page 13.

1. Define “cash management.” ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

2. Which Title IV program is exempt from certain cash management provisions?

IASG

FWS

Direct Loans

Federal Perkins Loan 3. Effective cash management ensures which of the following? (check all that apply)

Only eligible students receive Title IV funds

The school makes at least $1,000 in interest income from the Title IV programs

The school employs at least five people in the business office

Title IV overawards and overpayments are avoided

The institution has appropriate accounting procedures and maintains a clear audit trail 4. Define “administrative capability.”

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

5. At a minimum, an institution must set up its organizational structure so that the functions of authorizing payments and disbursing or delivering funds are divided to meet what specific regulatory requirements? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________



Quick Quiz (cont’d)

6. An academic year consists of which two components?

Months and hours

Weeks of instructional time and hours

Weeks of instructional time and competencies

Days and credits 7. A credit-hour program must include a minimum of ______ weeks of instructional time. A clock-hour

program must include a minimum of _____ weeks of instructional time. (fill in the blanks)

8. During the time covered by an academic year, a full-time undergraduate student is expected to complete

at least: (check all that apply)

24 semester or trimester hours


30 quarter hours

36 quarter hours

600 clock hours

900 clock hours 9. Who determines the minimum number of hours in the academic year for a graduate program?

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

10. What are “standard” terms?

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

11. Define “payment period.”

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________




12. For which program structure is the payment period always the term (except for FWS)?

Standard term

Nonstandard term with terms that are not substantially equal in length

Nonterm programs

All nonstandard term 13. Define “substantially equal in length.”

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

14. For credit-hour programs with terms that are not substantially equal in length, the payment period is the

term for which Title IV programs? (check all that apply)

Federal Pell Grant

FSEOG

Direct Loans

TEACH Grant

IASG

Federal Perkins Loan

15. Define “successfully complete.” ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

16. For nonterm credit-hour programs and clock-hour programs, the definition of the payment period varies

based on the:

Number of hours in the program

Program level (undergraduate or graduate)

Length of the program

Format of the program




17. For credit-hour programs with terms that are not substantially equal in length, nonterm credit-hour programs, and clock-hour programs, how many payment periods are in a full academic year?

1

2

3

4 18. For nonterm credit-hour programs and clock-hour programs shorter than an academic year, how is the

payment period defined? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

19. What conditions apply if a student withdraws during a payment period from a nonterm credit-hour

program or clock-hour program and resumes studies in the same program at the same school within 180 days of the withdrawal date? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

20. Under what conditions is a student who withdraws and transfers into another nonterm credit-hour

program or clock-hour program at the same school considered to be in the same payment period from which she withdrew? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________



Learning Activity: Research Research the following questions about your institution.

1. How does your institution ensure the separation of functions? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

2. How does the institution define the academic year? Does it use the same definition for all programs? If

not, what other definitions does it use? Why? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

3. What is the structure of the programs offered by the institution?

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

4. If your institution offers credit-hour programs with terms that are not substantially equal in length, nonterm

credit-hour programs, and/or clock-hour programs, how does it ensure a student has successfully completed a payment period? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________



Reflection Questions Take a few moments to reflect on the following questions. There are no right or wrong answers. You can also discuss these questions with a coworker in your office.

1. Do you agree with the purposes of cash management? Why or why not? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

__________________________________________________________________________________

2. Given advances in technology, do you think the separation of functions is still necessary? Why or why

not? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

3. Do you think it is appropriate that the academic year should have a minimum number of weeks of

instructional time? Is this approach still appropriate given the popularity of innovative learning models, such as competency-based education? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

4. Do you think it is necessary to have multiple definitions of a payment period? Why or why not?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________



Lesson 1 Answer Keys Quick Quiz

1. Define “cash management.” Cash management is the rules and procedures an institution that participates in the Title IV programs must follow to request, maintain, authorize, disburse, deliver, use, and return Title IV funds.

2. Which Title IV program is exempt from certain cash management provisions?

IASG

FWS

Direct Loans

Federal Perkins Loan 3. Effective cash management ensures which of the following? (check all that apply)

Only eligible students receive Title IV funds

The school makes at least $1,000 in interest income from the Title IV programs

The school employs at least five people in the business office

Title IV overawards and overpayments are avoided

The institution has appropriate accounting procedures and maintains a clear audit trail 4. Define “administrative capability.”

Administrative capability is the ability a school must demonstrate in providing the education it promises and properly managing the FSA programs.

5. At a minimum, an institution must set up its organizational structure so that the functions of authorizing

payments and disbursing or delivering funds are divided to meet what specific regulatory requirements? To ensure the separation of the functions of awarding and disbursing aid, a school must ensure that no one office may have responsibility for both functions with respect to student aid awarded under the programs; the individuals carrying out these functions must be organizationally independent; the individuals may not be members of the same family; and the individuals may not together exercise substantial control over the institution.

6. An academic year consists of which two components?

Months and hours

Weeks of instructional time and hours

Weeks of instructional time and competencies

Days and credits 7. A credit-hour program must include a minimum of ___30___ weeks of instructional time. A clock-hour

program must include a minimum of __26___ weeks of instructional time. (fill in the blanks)




8. During the time covered by an academic year, a full-time undergraduate student is expected to complete at least: (check all that apply)



30 quarter hours

36 quarter hours

600 clock hours

900 clock hours 9. Who determines the minimum number of hours in the academic year for a graduate program?

Schools must establish and document in their written policies and procedures the minimum number of hours a full-time graduate or professional student is expected to complete during the number of weeks in the academic year definition.

10. What are “standard” terms?

Standard terms are semesters, trimesters, and quarters, and full-time for the term is defined, as applicable, 12 semester hours, 12 trimester hours, or 12 quarter hours.

11. Define “payment period.”

The payment period is the academic period or period of enrollment established by a school for which it disburses financial aid.

12. For which program structure is the payment period always the term (except for FWS)?

Standard term

Nonstandard term with terms that are not substantially equal in length

Nonterm programs

All nonstandard term 13. Define “substantially equal in length.”

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

14. For credit-hour programs with terms that are not substantially equal in length, the payment period is the

term for which Title IV programs? (check all that apply)

Federal Pell Grant

FSEOG

Direct Loans

TEACH Grant

IASG

Federal Perkins Loan




15. Define “successfully complete.” Successfully complete means not only must the student complete all of the weeks and hours in the payment period, but also the school considers the student to have passed the coursework associated with those hours.

16. For nonterm credit-hour programs and clock-hour programs, the definition of the payment period varies

based on the:

Number of hours in the program

Program level (undergraduate or graduate)

Length of the program

Format of the program 17. For credit-hour programs with terms that are not substantially equal in length, nonterm credit-hour

programs, and clock-hour programs, how many payment periods are in a full academic year?

1

2

3

4 18. For nonterm credit-hour programs and clock-hour programs shorter than an academic year, how is the

payment period defined? The first payment period is the period of time in which the student successfully completes half the number of credit hours and half the number of weeks of instructional time in the program. The second payment period is the period of time in which the student completes the program.

19. What conditions apply if a student withdraws during a payment period from a nonterm credit-hour program or clock-hour program and resumes studies in the same program at the same school within 180 days of the withdrawal date? The student remains in the same payment period from which he or she withdrew, is eligible for previously disbursed funds for the payment period that had been returned under the return of Title IV funds requirements, and is eligible for undisbursed funds for which he or she is otherwise eligible.

20. Under what conditions is a student who withdraws and transfers into another nonterm credit-hour program or clock-hour program at the same school considered to be in the same payment period from which she withdrew? A student who withdraws and transfers into another program at the same school is considered to be in the same payment period from which he or she withdrew if the student is continuously enrolled at the school, the coursework in the payment period from which the student withdrew is substantially similar to the coursework the student will be taking when he or she first transfers into the new program, the payment periods are substantially equal in length in weeks of instructional time and credit or clock hours, there is little or no change in institutional charges associated with the payment period, and the hours from the program from which the student is transferring are accepted toward the new program.



NOTES: ______________________________________________________________________

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______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________



Lesson 2: Requesting and Managing Title IV Funds

Learning Objectives After completing this lesson, you will understand: • How a school requests

and receives Title IV funds for making Title IV disbursements to students and for administrative cost allowances used to administer the Title IV programs;

• Crossover payment periods and how to manage Title IV program funds covering those periods;

• How to maintain Title IV funds received and held by the institution;

• How to manage excess cash; and

• When to return funds to the appropriate Title IV programs.

Key Concepts The key concepts you will learn in this lesson are: • Requesting Title IV funds; • G5; • Common Origination and

Disbursement System; • Funding methods; • Advance payment

method; • Current Funding Level; • Reimbursement payment

method;

Requesting Title IV Funds In Lesson 1, you were introduced to the key concepts and definitions of cash management as they relate to the proper administration of the Title IV federal student aid programs. You learned that cash management encompasses the rules and procedures an institution must follow to request, maintain, authorize, disburse, deliver, use, and return Title IV funds. This lesson will focus on how a school requests and receives Title IV funds, how it manages those funds while being held by the institution, and how it promptly returns any funds it is not using to pay students or administer the Title IV programs.

Requesting, or “drawing down,” Title IV funds is the process by which a school’s accounting or business office electronically requests and receives Title IV program funds from the federal government. All Title IV funds are requested or drawn down by

the school. Once received, the funds are used to pay students and parent PLUS borrowers the Title IV assistance for which they are eligible. The G5 Payment System

To request Title IV funds, schools use the Department of Education’s (ED’s) G5 payment system. G5 is the delivery system that supports Title IV program award and payment administration. It is the system through which schools request

and return Title IV funds to and from the federal government. G5 receives payment data from the Common Origination and Disbursement (COD) System and information regarding the school’s campus-based program award year allocations from the eCampus-Based System. G5 communicates with COD through the Financial Management System (FMS), which is ED’s general ledger for Title IV funds. G5 and FMS are parts of the Education Central Automated Processing System (EDCAPS), which is the ED system that interfaces directly with the U.S. Treasury’s Federal Reserve System to deliver funds from the Treasury to schools. EDCAPS integrates its financial processes, including financial management, contracts and purchasing, grants administration, and payment management. A school requests Title IV program funds on-line using the G5 website at www.g5.gov.

You will find definitions relevant to the content of this lesson in the Glossary.



• Cash monitoring payment method;

• Crossover payment period;

• Crossover payment period drawdowns;

• Maintaining Title IV funds; • Institutional depository

account; • Interest-bearing

depository account; • Administrative cost

allowance; • Excess cash; • Returning Undeliverable

Title IV funds; and • Student ledger account.


• Title IV Funding Methods Comparison chart

• Crossover Payment Period Awards and Draw Downs chart

• Returning Undeliverable Title IV Funds flowchart

• Glossary


• Key concept

• Quick quiz



• Helpful hint

Common Origination and Disbursement System

In general, COD is an integrated system used by schools to request, report, and reconcile funds for Federal Pell Grants, Iraq and Afghanistan Service Grants (IASGs), Teacher Education Assistance for College and Higher Education (TEACH) Grants,

and Federal Direct Student Loans (Direct Loans). We will be learning more about COD as we discuss the various program-specific requirements and payment methods a little later on. For now, let’s turn our attention to the various methods used by schools to request Title IV funds and by ED to pay those funds to schools.

The COD website is at https://cod.ed.gov.

Funding Methods

ED delivers Title IV funds to the school using one of the following funding methods:

• The advance payment method;

• The reimbursement payment method; or

• The heightened cash monitoring payment methods. Under these funding methods, a school requests and receives Title IV funds to cover:

• Federal Pell Grant, IASG, and TEACH Grant disbursements;

• The federal share of Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Federal Perkins Loan disbursements; and

• The net amount of Direct Loan disbursements (in other words, the gross amount borrowed minus applicable loan fees).

Let’s take a closer look at each of these funding methods. Advance Payment Method Definition

Most schools receive Title IV funding under the advance payment method. Under this method, a school requests and receives funds needed for disbursements the school will make or has made to students and parents.

Limitations. A school’s request for cash may not exceed the amount of funds the school needs immediately for disbursements it has made or will make to students and parents.



Timeframes. Upon receiving the requested funds, the school is expected to make disbursements as soon as administratively feasible, but no later than three business days following the date the school received the funds. There are some exceptions to the three-business-day rule; these are discussed a little later under excess cash. Delivery of Funds. Under the advance payment method, the school initiates a drawdown request through G5, and then substantiates the amount drawn down by reporting actual disbursement records. A school’s access to additional funding may be restricted if prior drawdowns are not substantiated in a timely manner. Direct Loan Program Funds The school requests Direct Loan funds electronically by transmitting origination and disbursement data via COD. Origination data establishes a student’s eligibility for a specific annual award amount. The school draws down funds to cover the corresponding disbursements.

Current Funding Level (CFL). Prior to July 1, the school will receive an initial Current Funding Level (CFL), which also is referred to as an authorization or Cash Control

Amount (CCA). The CFL is based on the school’s prior-year disbursement history against which it can draw down funds and make disbursements for the current year. Each drawdown must be substantiated by actual disbursement records submitted to and accepted by COD. Upon acceptance of an actual disbursement, COD calculates whether the school’s CFL needs to be increased. As the award year progresses, the schools CFL is adjusted accordingly. Timeframes. The school can submit actual disbursement records in advance of, on, or after the disbursement date. Actual disbursement records may be submitted to COD as early as 7 calendar days prior to the disbursement date, and no later than 15 days of the actual disbursement or an adjustment to a previous disbursement.

Federal Pell Grant, IASG, and TEACH Grant Program Funds Like Direct Loans, the school requests Federal Pell Grant, IASG, and TEACH Grant funds electronically by transmitting origination and disbursement data via COD. For these programs, the school will receive a CFL after its first disbursement record is submitted and accepted by COD. Each drawdown must be substantiated by actual disbursement records submitted to, and accepted by, COD. Upon acceptance of an actual disbursement, COD calculates whether the school’s CFL needs to be increased.

“Under the advance payment

method the school initiates

a drawdown request through

G5 and then substantiates

the amount drawn down

with actual disbursements.”

For the Federal Pell Grant Program, the school also is sent an initial authorization called an Electronic Statement of Account (ESOA). The school’s initial ESOA for the award year is ED’s estimate of the amount of funds the school will need to make the first disbursements to its students based on the school’s total program expenditures for the prior award year. The initial ESOA is sent by June 1 each year; subsequent ESOAs are sent each time the school’s CFL changes. Timeframes. As with Direct Loans, the school can submit actual Federal Pell Grant, IASG, and TEACH Grant disbursement records in advance of, on, or after the disbursement date. Actual disbursements may be submitted to COD as early as 7 calendar days prior to the disbursement date, and no later than 15 days of the actual disbursement or an adjustment to a previous disbursement.



More detailed information about program-specific COD processing requirements may be found in the Common Origination and Disbursement (COD) Technical

Reference available on ED’s FSA Download website at www.fsadownload.ed.gov, as well as the COD website at https://cod.ed.gov. Campus-Based Program Funds The amount a school may expend in any campus-based program is composed of both federal and nonfederal funds, and the amount of federal funds is referred to as the “federal share.” The federal share of Federal Perkins Loan Program funds is called the “federal capital contribution” (FCC). Unlike the Federal Pell Grant, IASG, TEACH Grant, and Direct Loan programs, schools do not receive CFLs from COD and do not report disbursement information to COD for any of the campus-based programs. Instead, the amount of funds a school may request for any campus-based program is limited to the amount of funds ED has allocated to the school for the award year (i.e., the period from July 1 of one year to June 30 of the following year). The amount of funds allocated for each campus-based program is based on information the school annually reports to ED on its Fiscal Operations Report and Application to Participate (FISAP). Schools use the FISAP to report campus-based program expenditures made during the recently completed award year, and to apply for campus-based funds for the upcoming award year. For the campus-based programs, the amount a school may draw down is the federal share for disbursements the school has already made or will make within three business days following the drawdown date. Cash requests for each of the campus-based programs are drawn down using G5. It is important to note that since the 2005–06 award year, no FCC funds have been appropriated for the Federal Perkins Loan Program. In addition, in the 2017–18 award year, graduate students cannot qualify for Federal Perkins Loans. A school may award Federal Perkins Loans to eligible undergraduate students only through September 30, 2017. These students may receive subsequent disbursements only if the first disbursement occurred prior to October 1, 2017.

You can find more information about campus-based program funding requirements—including the federal and institutional shares and the wind-down of

the Federal Perkins Loan Program—in the NASFAA Self-Study Guide, The Campus-Based Programs.

Schools were notified of tentative 2017–18 campus based allocations in the January 9, 2017, Electronic Announcement, Tentative 2017–18 Funding Levels for the

Campus-Based Programs, available on ED’s Information for Financial Aid Professionals (IFAP) website at www.ifap.ed.gov.

“If ED determines it

must strictly monitor the

school’s use of federal funds,

ED will place a school

on the reimbursement

payment method.”

Reimbursement Payment Method Definition

If ED determines it needs to increase the monitoring of the school’s participation in the Title IV programs, ED will place a school on the reimbursement payment

method. Under this payment method, the school must make disbursements and pay any Title IV credit balance that the student or parent PLUS borrower is eligible to receive before the school can request and receive Title IV funds from ED. For the Federal Pell Grant, IASG, TEACH Grant, and Direct Loan programs, the school receives the funds only after COD has accepted and posted actual disbursement records.



Limitations. Before submitting a Reimbursement Payment Request to ED and receiving Title IV funds, the school must:

• Make Title IV disbursements and pay Title IV credit balances to students and parent PLUS borrowers in the amount(s) for which they are eligible for the payment period by using institutional funds;

• Identify the students and parent PLUS borrowers for whom it seeks reimbursement from ED by completing and submitting a Student Data Spreadsheet to ED;

• Complete and submit Office of Management and Budget (OMB) 1845-0089, Standard Form 270; and

• Submit documentation showing each student’s and parent PLUS borrower’s eligibility was determined properly, the correct amount(s) of funds were disbursed, and any Title IV credit balance was paid directly to the student or parent PLUS borrower.

Timeframes. After the school’s reimbursement request is approved, ED transfers the appropriate amount of funds to the school’s depository account in which it maintains its federal funds. The school may submit only one reimbursement request within any given 30-day period. Delivery of Funds. For Federal Pell Grant, IASG, TEACH Grant, and Direct Loan funds, ED electronically transfers funds to the school’s depository account through G5 after reviewing the required documentation, approving the school’s request for funds, and receiving actual disbursement records in COD. The school does not receive an initial CFL—that is, the school receives a CFL only after actual disbursement records are accepted by COD. For the campus-based programs, which are not processed via COD, ED electronically transfers funds to the school’s depository account after reviewing the required documentation and approving the school’s request for funds.

Heightened Cash Monitoring Payment Method Definition

If ED determines a school is financially weak, or has failed financial responsibility standards, the school will be placed on the heightened cash monitoring payment

method. The heightened cash monitoring payment method is similar to the reimbursement payment method in that a school must make Title IV disbursements, as well as pay any Title IV credit balance to students and parent PLUS borrowers using institutional funds, before requesting and receiving the funds. However, different documentation requirements apply to schools placed on the cash monitoring payment method, and ED may tailor each school’s documentation requirements and its review procedures on a case-by-case basis. Limitations. ED establishes documentation requirements depending on its cash monitoring focus. Documentation requirements are less restrictive than the reimbursement payment method. Timeframes. When funds are delivered to a school depends on the level of cash monitoring it must use.

“If ED determines a school

is financially weak or has failed

financial responsibility standards,

the school will be placed on the

heightened cash monitoring

payment method.”

Delivery of Funds. For the Federal Pell Grant, IASG, TEACH Grant, and Direct Loan programs, schools placed on the heightened cash monitoring payment method do not receive an initial funding authorization; they receive an authorization/CFL only after COD has accepted and posted actual



disbursement records. Funds are provided to schools by one of the following methods:

• Heightened Cash Monitoring 1 (HCM1); and

• Heightened Cash Monitoring 2 (HCM2). HCM1 allows a school to request and receive Title IV funds after the school makes Title IV disbursements and pays any Title IV credit balance to eligible students and parents from institutional funds. The school draws down the funds in the same manner as a school on the advance payment method. For the Federal Pell Grant, IASG, TEACH Grant, and Direct Loan programs, the school must submit the disbursement records to COD before drawing down the funds. HCM2 also requires a school to request and receive Title IV funds only after the school makes disbursements to eligible students and parents from institutional funds. However, the school’s request for the funds must contain a Reimbursement Payment Request, which includes:

• A completed OMB 1845-0089, Standard Form 270; and

• Documentation demonstrating that each student and parent PLUS borrower was eligible for and received the funds.

After the school’s reimbursement request is approved, ED transfers the appropriate amount of funds to the depository account in which the school maintains its federal funds. The school may submit only one Reimbursement Payment Request within any given 30-day period.

The Title IV Funding Methods Comparison chart starting on page 37 provides a side-by-side comparison and summary of these funding methods.

Crossover Payment Period Drawdowns So far, all of the payment methods we have discussed apply to the July 1 through June 30 award year. Let’s now turn our attention to some issues regarding the drawdown of funds when the payment period crosses over two award years. Remember, ED allocates funds for on an award

year basis, from July 1 of one year through June 30 of the following year. The award year from which funds should be drawn down is not always apparent for a payment period that overlaps two award years. Although the award year association is straightforward for the fall/spring semesters or fall/winter/spring quarters, for example, a summer crossover period tends to cause some confusion. Crossover Payment Period

A crossover payment period is a payment period that begins before July 1 and ends on or after July 1, encompassing portions of two award years.

Crossover Payment Period Drawdowns

Because a new award year begins on July 1, a summer crossover payment period actually “crosses over” from one award year to the next, encompassing portions of

two award years. The rules for drawing down funds to cover crossover period payments to students vary among the Title IV programs.

Please see the Crossover Payment Period Awards and Draw Downs chart on page 41.

Federal Pell Grant, IASG, and TEACH Grant Program Funds For the Federal Pell Grant, IASG, and TEACH Grant programs, if a student enrolls in a crossover payment period, the school must consider the entire payment period to occur within one award year. The institution determines the award year in which the crossover payment period will be placed, with one

Jan

10 -

May

15 Spring

Semester

May

20

-Aug

15 Summer

Crossover

Aug

20 -

Dec

20 Fall Semester



exception: if more than six months of the crossover payment period for a TEACH Grant will fall within one award year, the crossover payment period must be assigned to that award year. Otherwise, the institution may determine on a student-by-student basis the award year to which the crossover payment period is assigned. If the institution places the crossover payment period in the prior award year, it must draw down and use funds from the prior award year funding authorization (or allocation). If the institution places the crossover payment period in the upcoming award year, it must draw down and use funds from the upcoming award year funding authorization. Regardless of the award year to which the crossover payment period is assigned, a student may not receive more than one Federal Pell Grant, IASG, or TEACH Grant Scheduled Award in an award year. Additionally, for the chosen award year:

• The student must demonstrate eligibility for the grant; and

• The school must have an official expected family contribution (EFC) on a valid Institutional Student Information Record or Student Aid Report—referred to as the ISIR and SAR, respectively.

FSEOG and Federal Perkins Loan Program Funds

In general, the school may choose which award year’s EFC it uses to determine a student’s eligibility for campus-based funds for a summer crossover period. For

example, a school could pay a student’s FSEOG for a 2017 summer crossover payment period from its 2017–18 award year allocation based on the student’s EFC from the 2016–17 award year. For the FSEOG and Federal Perkins Loan programs, if the school has adequate funds in its allocation to cover drawdowns, the school may choose to pay funds from either award year allocation. The allocation from which funds are drawn need not correspond to the award year used to calculate the student’s EFC. Moreover, the award year EFC used for FSEOG and Federal Perkins Loan funds may differ from the award year EFC

used for Federal Pell Grant funds, but must be the same award year EFC that is used to award Direct Loan funds. FWS Program Funds The FWS Program adds another dimension to a summer crossover payment period. Any hours worked before July 1 are paid from the school’s prior award year allocation. Hours worked on or after July 1 are paid from the school’s allocation for the upcoming award year. If the student is enrolled in classes during the crossover payment period, the school may choose to use the student’s prior award year EFC, cost of attendance (COA), and estimated financial assistance (EFA), or the upcoming award year COA, EFC, and EFA, to determine the student’s FWS eligibility for the crossover payment period. If the student is not enrolled in classes during the crossover payment period, the school must use the upcoming award year EFC, COA, and EFA to determine the student’s FWS award amount and eligibility. The award year from which the EFC is used to determine the student’s FWS eligibility does not have to correspond to the award year allocation from which the FWS funds are drawn; however, the same award year EFC must be used to award FWS, FSEOG, Federal Perkins Loan, and Direct Loan funds.

FSEOG and FWS carry-forward and carry-back provisions add another variable to a summer crossover payment period. These provisions are discussed in the NASFAA

Self-Study Guide, The Campus-Based Programs. Direct Loan Program Funds The rules are a little different for the Direct Loan Program. Because this program does not have a set funding authorization maximum by award year, there are no restrictions on the total amount of Direct Loan funds a school may award and disburse during an award year. Instead, Direct Loans are awarded on an academic year basis—that is, based on the student’s Scheduled Academic Year (SAY) or Borrower-Based Academic Year (BBAY).



A SAY begins and ends at approximately the same time each calendar year according to the school’s published academic year beginning and ending dates. As applicable, a student’s SAY consists of two semesters or trimesters or of three quarters offered during the fall through spring. For enrollment during a summer term, the school has a choice of attaching the summer to the SAY either as the first term of the SAY (i.e., a header) or as the last term of the SAY (i.e., a trailer). A BBAY does not begin at the same time each year. Instead, it floats with the student’s enrollment. Unlike the SAY, a new BBAY always begins with a period of enrollment that the student actually attends. A SAY or a BBAY may be used to award Direct Loans to students enrolled in credit-hour programs that are offered in standard terms (i.e., semesters, trimesters, or quarters) or in nonstandard terms with substantially equal terms and no term is less than nine weeks of instructional time in length. For all other program structures, the school always must use a BBAY to award Direct Loans. The amount of loan awarded for a SAY or BBAY is based on the student’s need, grade level and, with the exception of Direct PLUS, maximum annual and aggregate loan limits applicable to the student’s grade level and dependency status. The allocation from which the Direct Loan funds are drawn down is based on the dates the funds are disbursed. If the school uses a SAY and is originating a Direct Loan for a loan period that includes only a summer crossover period, the school has a choice of award year EFC unless the school also is awarding campus-based funds for the summer crossover period. If the student also will receive campus-based funds for the summer crossover period, the school must use the same award year EFC to award the campus-based aid and Direct Loan funds.

Academic year and loan period determinations, annual and aggregate loan limits, and Direct Loan amount calculations are detailed in the NASFAA Self-Study

Guide, Direct Loan Program.



Quick Quiz 1 Now it’s time to check what you have learned so far. Answer the following questions and check your responses using the Answer Key on page 43.

1. G5 receives funds for the non-campus-based programs from the ______________________________

________________________________ and information regarding the campus-based program award

year allocations from the ____________________________________________. (fill in the blanks) 2. COD is used to report and request funds for which of the following programs? (check all that apply) Federal Pell Grants Teacher Education Assistance for College and Higher Education (TEACH) Grants Federal Perkins Loans Direct Loans

3. Which of the following is not a funding method used by the U.S. Department of Education (ED) to deliver

Title IV funds to schools? Advance payment method Just-in-time payment method Reimbursement payment method Heightened cash monitoring payment method

4. Under the Title IV federal student aid funding methods, schools request and receive Title IV funds to

cover which of the following? (check all that apply) The federal and school shares of FSEOG and FWS awards Federal Pell Grant and TEACH Grant disbursements Gross amounts of Direct Loan disbursements Net amounts of Direct Loan disbursements

5. Upon receiving funds under the advance payment method, the school is expected to make

disbursements as soon as administratively feasible, but no later than ___________________________. 3 business days 7 calendar days 10 business days 30 calendar days



Quick Quiz 1 (cont’d)

6. Define “Current Funding Level” (CFL). ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________ 7. What is the ED’s system for drawing down and delivering Title IV funds? EDFUNDS G5 FISAP NSLDS

8. Fill in each blank in the following statement using one of the options presented:

Under the advance payment method, actual Direct Loan disbursement

records may be submitted to COD no earlier than ______________________________ calendar days

prior to the disbursement date, and no later than ______________________________ calendars days of

the actual disbursement.

9. For the Federal Pell Grant Program, a school using the advance payment method is sent an initial

authorization that is ED’s estimate of the amount of funds the school will need to make first disbursements to its students based on the school’s prior award year Federal Pell Grant expenditures. What is this authorization called? Current Funding Level Electronic Statement of Account G5 Cash Control Amount

• 10 • 15 • 30

• 3 • 7 • 10




10. What are the four steps a school must take in order to receive Title IV funds under the reimbursement payment method? 1) __________________________________________________________________________

2) __________________________________________________________________________

3) __________________________________________________________________________

4) __________________________________________________________________________

11. Most schools receive Title IV funding under the reimbursement payment method. True False

12. Match each of the following Title IV payment methods to the characteristics that apply to that payment

method. Some characteristics apply to multiple payment methods. a – Advance Payment Method b – Reimbursement Payment Method c – Heightened Cash Monitoring 1 Payment Method d – Heightened Cash Monitoring 2 Payment Method

Payment Method Characteristic Payment Method (a, b, c, and/or d)

The school must make disbursements to students out of institutional funds before drawing down the funds.

The school requests and receives funds for disbursements it will make to students within the next 3 business days.

The school submits a Reimbursement Payment Request to ED.

The school completes and submits OMB Standard Form 270 to ED.

The school submits documentation supporting each student’s eligibility for disbursed funds.

The school receives an authorization/CFL only after COD has accepted and posted actual disbursements.

The school does not receive an initial CFL and submits actual disbursements on or after the disbursement date.

The school must substantiate the amount of Federal Pell Grant, IASG, TEACH Grant, or Direct Loan funds drawn down with actual disbursements accepted and posted in COD.

ED transfers Title IV funds to the school’s depository account after reviewing the school’s disbursement documentation.




13. A summer term that starts before July 1 and ends after July 1 is called a

___________________________________. (fill in the blank) 14. Which of the following is true regarding crossover payment period drawdowns of FSEOG and Federal

Perkins Loan funds? The award year allocation from which funds are drawn needs to correspond to the expected family

contribution used to award funds The school may choose to pay funds from either the prior award year allocation or the upcoming

award year allocation The award year used for FSEOG and Federal Perkins Loans may differ from the award year used to

award Direct Loan funds The award year used for FSEOG and Federal Perkins Loans must be the same as the award year

used to award Federal Pell Grant funds 15. Which of the following is true regarding crossover payment period drawdowns of Federal Pell Grant

funds? If the crossover payment period starts before July 1, the school must place the payment period in the

prior award year The award year used for Federal Pell Grants must be the same as the award year used to award

Direct Loan funds If the payment period is seven months and at least six months fall within one award year, the

crossover payment period must be assigned to that award year The award year used for Federal Pell Grants does not need to be the same as the award year used

to award campus-based funds 16. Which of the following is true regarding crossover payment period drawdowns of Federal Work-Study

funds? The award year allocation from which FWS funds are drawn needs to correspond to the expected

family contribution used to award FWS funds The award year used for FWS may differ from the award year used to award Federal Perkins Loan

and Direct Loan funds The award year used for FWS must be the same as the award year used to award Federal Pell Grant

funds Funds for hours worked prior to July 1 are drawn down from the prior award year allocation and

hours worked on or after July 1 are drawn down from the upcoming award year allocation



Learning Activity—Crossover Payment Period Drawdowns

Review the following scenario and indicate whether the funds for each Title IV program must be drawn down from 2016–17 or 2017–18 award year funds, whether the school has a choice of the award year from which it draws down funds, or whether the funds must be drawn down based on payment of the funds to the student before or after July 1. Check your responses using the Answer Key on page 47.

Scenario: Peter is a dependent second-year student in the English Language Program at Neverland University so he can become a secondary school teacher. He enjoyed his freshman year a little too much, so he’s a little behind on completing his program. Because he always feels the ticking of the clock, he decides to accelerate his studies and enrolls in summer modules that cover the entire summer period between the 2016–17 and 2017–18 award years. The 2017 summer term begins on June 1, 2017 and ends on August 10, 2017. For the summer term, he is awarded a Federal Pell Grant, a Direct Loan, and funds from each of the campus-based programs. Neverland is a standard semester-based school that combines all summer modules into a single term crossover payment period for purposes of awarding and disbursing Title IV federal student aid. Neverland also treats the summer as a trailer to the previous academic year—that is, the academic year is fall, spring, and summer when students are enrolled during the summer term. For summer 2017, Neverland requires the 2016–17 Free Application for Federal Student Aid (FAFSA) and uses the 2016–17 expected family contribution (EFC) to award federal student aid from all of the following programs. Peter starts a Federal Work-Study job after the July 4th holiday and works the rest of the summer.

Aid Program Funds must be

drawn down from 2016–17 award

year allocation?

Funds must be drawn down from

2017–18 award year allocation?

School may choose to draw

down funds from either award

year?

Funds are drawn down according to whether they are

paid before July or on/after July 1?

Federal Pell Grant Yes No Yes No Yes No Yes No

TEACH Grant Yes No Yes No Yes No Yes No

FSEOG Yes No Yes No Yes No Yes No

FWS Yes No Yes No Yes No Yes No

Federal Perkins Loan Yes No Yes No Yes No Yes No

Direct Loan Yes No Yes No Yes No Yes No

If Peter had chosen not to work during the summer between the 2016–17 and 2017–18 award years, but still wanted to work in his FWS job during the summer before returning in the fall semester, which award year EFC would be used? _________________

How would his summer FWS earnings be drawn down if he began the summer FWS job on June 1, 2017?

_____________________________________________________________________________________

_____________________________________________________________________________________



Maintaining Title IV Funds Title IV Funds Institutional Depository Account

A school must maintain Title IV funds in a depository account that meets certain regulatory requirements.

A depository account is an interest-bearing account at a depository institution described in 12 U.S.C. 461(b)(1)(A) and into which ED deposits all Title IV funds requested by the school. The account must be insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA). If the school is a foreign institution, the depository account may be insured by the FDIC, NCUA, or an equivalent agency of the country in which the institution is located. Furthermore, the depository account must be an interest-bearing account unless the school is a foreign institution. A school is not required to keep Title IV funds in a separate depository account unless ED specifically requires the school to do so. Nonfederal and federal funds may be kept in the same depository account; however, for all accounts containing Title IV funds, schools must adhere to certain rules regarding identification of funds, the use of funds and revenue earnings, and accounting and fiscal record-keeping.

If ED determines that a school’s fiscal practices are weak, it may decide that the school’s Title IV funds must be maintained in a separate depository account.

Identification of Funds All schools must identify that Title IV funds are maintained in the depository account where they are held. Public institutions must:

• Ensure the name of the account includes the words “federal funds” in the account’s title; or

• Notify the depository institution that the account contains Title IV funds and maintain a copy of the notice.

All other institutions must meet these requirements too. However, if the school is not a foreign institution and the name of a nonpublic school’s depository account containing Title IV funds does not include the words “federal funds,” the school also must file a Uniform Commercial Code Form (UCC-1) with the appropriate state or municipal government entity. The UCC-1 form discloses that the account contains federal funds. A school must maintain a copy of any UCC-1 form that it files.

“All schools must ensure

each depository account identifies

that Title IV funds are

maintained in the account.”

A school may make disbursements from its own funds, and then reimburse itself by drawing down federal funds. While this practice is acceptable, it does not exempt the school from the requirement of maintaining a depository account into which federal funds are deposited. ED will release requested funds only into a depository account specifically designated for the federal funds. Use of Funds The Title IV program funds a school receives for disbursements are held in trust for the students who will ultimately receive the funds. Thus, a school may use Title IV funds only for:

• Making disbursements to students; and

• Other program-specific uses stipulated in regulations (e.g., administrative cost allowance payments or FWS Job Location and Development Program administration).

The school may not use federal funds for any other purpose, such as paying operating expenses, securing loans, or earning interest or generating revenue in a manner that risks the loss of Title IV funds or subjects the Title IV funds to liens or other attachments.



Use of Revenue Earnings ED expects schools to maintain Title IV funds in an interest-bearing depository account. Interest earnings that the may be retained are limited, but include the following:

• Interest or investment revenue earned on Federal Perkins Loan funds must be retained as part of the school’s Federal Perkins Loan fund; and

• Up to $500 of the initial revenue earned on any other Title IV program account may be retained by the school to pay for the administrative expense of maintaining the account.

Any interest earned from holding Title IV funds in excess of these amounts must be remitted to ED at least annually, and no later than 30 days after the end of each award year. The interest may be remitted electronically through G5, or by paper check to the Department of Health and Human Services (HHS). Accounting and Fiscal Records The school must maintain accounting and internal controls that readily identify the cash balances of Title IV funds held in each depository account, as well as any earnings on Title IV funds. In addition, the school must maintain its fiscal records in accordance with Title IV recordkeeping requirements.

Additional information regarding Title IV recordkeeping requirements can be found in 34 CFR 668.24 and Volume 2 of the FSA Handbook.

Administrative Cost Allowance

Schools are allowed an administrative cost allowance (ACA) for the Federal Pell Grant and campus-based programs. The allowance is given to help defray the costs

associated with administering the programs, including salaries, training, supplies, and equipment, as well as expenses related to the carrying out student consumer information requirements. In addition, if the school enrolls a significant number of less-than-full-time or independent students, a

reasonable portion of the Federal Pell Grant ACA must be used to ensure that financial aid services are available to those students during times and at places that will accommodate the needs of those students most effectively. Let’s take a closer look at each program. Federal Pell Grant ACA The Federal Pell Grant ACA is subject to the availability of funds, and is $5.00 per student receiving a Federal Pell Grant award at the school for the award year. A school may use the Federal Pell Grant ACA only to defray the costs of administering the Federal Pell Grant and campus-based programs, and to ensure financial aid services are available to less-than-full-time or independent students. The amount the school receives is calculated using the number of Federal Pell Grant recipients reported by the school via COD with at least one accepted actual disbursement during the award year. Students who receive disbursements and later withdraw are included in the calculation, as well as students who transfer to the school. However, students for whom all actual disbursement records have been rejected by COD are not included in the ACA calculation. A school does not have to calculate or request its ACA. COD calculates the school’s ACA and deposits the ACA funds directly into the school’s depository account. Campus-Based Program ACA A school calculates its own ACA for the campus-based programs based on its program expenditures for the award year. These expenditures include:

• The total of the federal and nonfederal shares of FSEOG disbursements made to students;

• The total of the federal and nonfederal share of the FWS gross wage compensation paid to students; and

• Federal Perkins Loan advances made to students.

The campus-based ACA is calculated as a percentage of the school’s total expenditures for the campus-based programs. However, if a school



chooses to overmatch its share of FSEOG awards (i.e., provide a nonfederal share of more than 25 percent), the school may not include any FSEOG nonfederal share in excess of 25 percent. In addition, total Federal Perkins Loan expenditures may not include the amount of loans made under the Federal Perkins Loan Program it assigns to ED during the award year. A school’s campus-based ACA for an award year equals the sum of:

5% of first $2,750,000 of its total expenditures

+ 4% of its expenditures greater than $2,750,000 but less than $5,500,000

+ 3% of its expenditures that are $5,500,000 or more

= School’s total campus-based ACA Unlike the Federal Pell Grant Program, the campus-based ACA is not an additional amount of money given to the school. It is claimed from the federal portion of the school’s campus-based program allocations. In other words, both funds disbursed to students and the ACA calculated and claimed by the institution may be paid from the federal share of the school’s allocation. A school may use its campus-based programs ACA only to:

• Defray the costs of administering the Federal Pell Grant and campus-based programs; and

• Offset expenses incurred for carrying out Title IV student consumer information services.

A school draws down the ACA funds in the same way as it draws down its other cash requests. A school should maintain accounting records showing which portion of its cash request represents funds to be paid to students and which represents the ACA for expended funds. This information is needed so that the school can report program expenditures accurately on its annual FISAP.

The matching contribution and ACA requirements related to the campus-based programs are discussed in NASFAA’s Self-Study Guide, Campus-Based Programs.

Excess Cash Definition

In general, excess cash is any amount of Title IV funds (other than Federal Perkins Loan funds) a school does not disburse to students or parents by the end of the third

business day following the date the school:

• Drew down the funds; or

• Deposited or transferred to its federal funds account previously disbursed funds, such as funds from award adjustments, recoveries, or cancellations.

The excess cash regulations do not apply to Federal Perkins Loan Program funds in this context. Limitations and Timeframes All excess cash must be used either to make disbursements to students or parent PLUS borrowers, or immediately be returned to ED. To avoid having schools return funds only to request them again, ED built a tolerance into the excess cash regulations. A school may retain, for up to seven days, an amount of excess cash not exceeding one percent of the total amount of funds the school drew down in the prior award year. A school must return:

• Immediately any amount of excess cash above the one percent tolerance; and

• After the seven-day tolerance period, any amount remaining in its account.

In most cases, a financial aid administrator will not be responsible for determining whether the excess cash tolerance can be applied. Business office personnel are

typically responsible for this task. Normally, a school determines whether it has satisfied the three-business-day rule for disbursing funds based on the date that the school credits the



student’s ledger account, issues a check to the student, or initiates an EFT to the student’s bank account. A student’s ledger account is a bookkeeping account the school maintains to record the financial transactions pertaining to enrollment at the school. A check is considered “issued” when the school releases or makes the check available by mailing it to the student or when the student expeditiously is notified of when and where the check is available for immediate pick-up at a specified location at the school. Funds represented by checks that have been issued according to this definition generally are not considered excess cash. Upon finding that a school has maintained excess cash balances, ED considers the school to have issued a check on the date that check cleared the school’s depository account, unless the school demonstrates that it issued the check to the student shortly after it was written. Now that you have an understanding of how schools request and draw down Title IV funds for making disbursements, we will examine how the school returns excess cash or Title IV funds that cannot be delivered to the student. Returning Undeliverable Title IV Funds Undeliverable Funds

If the institution is not successful in its attempts to deliver Title IV funds directly to the student or parent PLUS borrower, the funds must be returned to the appropriate

Title IV program. Funds are considered undeliverable if:

• A check sent by mail is returned or not negotiated (cashed) by the student or parent; or

• An electronic funds transfer (EFT) is rejected by the bank.

Timeframes The regulations require Title IV funds to be returned to the appropriate program within a certain time period. If Title IV funds are delivered by check to the student or parent PLUS borrower and the check is

not cashed, the institution must return the funds to the appropriate Title IV program no later than 240 calendar days after the date it issued the funds. In addition, if a check is returned to the institution, or an attempt to deliver funds by EFT is rejected, the institution has the option to make additional attempts to deliver the funds, but it must do so no later than 45 days after the funds were returned or rejected. In the case where the institution elects to make additional attempts to deliver the funds, it must cease all attempts and return the funds to the appropriate Title IV program account no later than 240 days after the date it issued that check or EFT.

Refer to the Returning Undeliverable Title IV Funds flowchart on page 42 for step-by-step guidance on returning Title IV funds within the applicable timeframes.

Escheat Prohibition Regardless of the circumstances or timeframes, the institution must have a process in place to ensure that Title IV funds never escheat to the school, the state, or any other third party. Escheatment is the reversion of funds to an unintended third-party, such as when a Title IV credit balance check sent to a student is not cashed, and the funds remain in the school’s depository account or are transferred to the state’s escheatment account.

240 Days

Title IV funds check or EFT issued to student or parent

195 Days

Attempt #1to deliver returned check or rejected EFT

150 Days

Attempt #2to deliver returned check or rejected EFT




1. If the school is not a public or foreign institution and name of the institution’s depository account containing Title IV funds does not contain the words, “federal funds,” the institution also must do which of the following? Complete and submit Office of Management and Budget (OMB) Standard Form 270 to ED. Ensure the Title IV funds are not kept in a bank account that contains non-Title IV funds. File a Uniform Commercial Code Form UCC-1 with the appropriate state or municipal government. Submit a Reimbursement Payment Request to ED for all federal funds in the account.

2. All public institutions with Title IV funds in a depository account must either

______________________________________________________________________________, or

__________________________________________________________________. (fill in the blanks) 3. If a Title IV credit balance check is returned to the school and the school does not make any further

attempts to deliver the funds to the student, the school must return the funds to the appropriate Title IV account within how many days? 30 45 180 240

4. The Federal Pell Grant administrative cost allowance (ACA) is what amount? $1 for each student who received a Federal Pell Grant for the award year $5 for each student who received a Federal Pell Grant for the award year 1% of the school’s total Federal Pell Grant expenditures for the award year 5% of the school’s total Federal Pell Grant expenditures for the award year




5. How is the campus-based ACA calculated for an award year? (fill in the blanks)

6. The campus-based administrative cost allowance can be used by the school for which of the following?

(check all that apply) Costs associated with administering the campus-based programs Costs associated with administering the Direct Loan Program Costs associated with administering Title IV consumer information requirements Costs associated with administering the Federal Pell Grant Program

7. When is a school considered to have “excess cash?”

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________ 8. A school may retain no more than one percent of the total amount of funds the school drew down in the

prior award year as excess cash for no more than how many days? 3 7 14 30

9. A Title IV credit balance check is considered issued when which of the following are true? (check all that

apply) The Title IV funds are disbursed to the student’s ledger account The school mails the check to the student or parent The school immediately notifies the student or parent that the check is available for immediate pick-

up at a specified school location The student or parent cashes the check

_____% of the first $2,750,000 of the school’s total campus-based expenditures

= School’s total campus-based ACA

+ _____% of the school’s expenditures greater than $2,750,000 but less than $5,500,000

+ _____% of the school’s expenditures that are $5,500,000 or more



Reflection Questions

Take a few minutes to answer the following questions. There are no right or wrong answers. Interview staff from your office as necessary.

1. Under what funding method does your institution draw down and receive Title IV funds from the U.S. Department of Education? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________ 2. If your institution uses the reimbursement or cash monitoring payment method, explain why it is required

to do so. __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________ 3. Why do you think schools are required to draw down Federal Work-Study (FWS) funds for hours worked

before July 1 from the prior award year allocation and for hours worked on or after July 1 from the upcoming award year allocation? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________ 4. Should FWS drawdowns be different from how funds are drawn down for the other campus-based

programs? Why or why not? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________



Title IV Funding Methods Comparison The following chart details the various funding methods used by the U.S. Department of Education (ED) to deliver Title IV funds to schools. Under these methods, schools request and receive Title IV funds to cover:

• Federal Pell Grant, Iraq and Afghanistan Service Grant (IASG), and Teacher Education Assistance for College and Higher Education (TEACH) Grant disbursements;

• The federal share of Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Federal Perkins Loan disbursements; and

• The net amount of Federal Direct Student Loan (Direct Loan) disbursements (i.e., gross loan amount minus fees).

Definition Limitations Timeframes Delivery of Funds

Ad

van

ce P

aym

ent

Met

hod

• School requests and receives funds for disbursements it has made or will make to students or to parent PLUS borrowers.

• Federal Pell Grant, IASG, TEACH Grant, and Direct Loan funds are requested by submitting origination and disbursement data to the Common Origination and Disbursement (COD) System.

• Federal share of campus-based funds is drawn down via G5.

Request for cash may not exceed the amount of funds for disbursements school has made or will make to students and parents.

• School must make disbursements: As soon as

administratively feasible; but

No later than 3 business days following the date it received the funds.

• Actual Federal Pell Grant, IASG, TEACH Grant, and Direct Loan disbursement records may be submitted to COD no earlier than 7 calendar days prior to the disbursement date. Disbursement

records must be submitted no later than 15 days of actual disbursements or adjustments.

• School must initiate a draw down request through G5.

• For the Federal Pell Grant, IASG, TEACH Grant, and Direct Loan programs, the school must substantiate the amount drawn down with actual disbursements. School’s access

to additional funding may be restricted if prior drawdowns are not substantiated with disbursement records in a timely manner.

• For campus-based programs, school draws down funds for disbursements made or will be made within 3 business days.



Definition Limitations Timeframes Delivery of Funds R

eim

bu

rsem

ent

Pay

men

t M

eth

od

• ED determines it needs to increase the monitoring of the school’s participation in the Title IV programs.

• School must make Title IV disbursements and pay any Title IV credit balance using institutional funds before it can request and receive funds from ED.

• ED requires documentation of disbursements.

• For the Federal Pell Grant, IASG, TEACH Grant, and Direct Loan programs, school only receives funds after COD has accepted and posted actual disbursement records.

Before receiving funds, the school must: • Make Title IV

disbursements and pay any Title IV credit balance to students and parents using institutional funds;

• Identify students and parents for whom it seeks reimbursement by submitting a Student Data Spreadsheet to ED;

• Complete and submit Office of Management and Budget (OMB) 1845-0089, Form 270; and

• Submit documentation supporting each student’s and parent’s eligibility for disbursed funds, the correct amount(s) of funds were disbursed, and any Title IV credit balance was paid directly to the student or parent PLUS borrower.

• After the school’s reimbursement request is approved, ED transfers the appropriate amount of funds to the school’s depository account in which it maintains its federal funds.

• School may submit 1 reimbursement request within any given 30-day period.

• For Federal Pell Grant, IASG, TEACH Grant, and Direct Loan funds, ED transfers the funds to the school’s depository account after: Reviewing the

required documentation;

Approving the request for funds; and

Accepting actual disbursement records in COD.

• For campus-based programs, ED reviews and approves disbursements, and then transfers funds to the school’s depository account.



Definition Limitations Timeframes Delivery of Funds H

eig

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ned

Cas

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Pay

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Hei

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(H

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1)

• ED determines a school is financially weak or has failed financial responsibility standards.

• School must make Title IV disbursements and pay any Title IV credit balance before it can receive Title IV funds from ED.

• ED establishes documentation requirements depending on its cash monitoring focus—HCM1 or HCM2.

• ED tailors each school’s documentation requirements.

• HCM1 school draws down funds after it: Makes

disbursements to eligible students and parents from institutional funds; and

Submits, for the Federal Pell Grant, IASG, TEACH Grant, and Direct Loan programs, disbursement records to COD.

• HCM1 school draws down funds the same way as a school on the advance payment method.

• School must make disbursements: As soon as

administratively feasible; but

No later than three business days following the date it received the funds.

• Actual Federal Pell Grant, IASG, TEACH Grant, and Direct Loan disbursements may be submitted to COD no earlier than 7 calendar days prior to the disbursement date. Disbursement

records must be submitted within 15 days of the actual disbursements or adjustments.

• School must initiate a draw down request through G5.

• For the Federal Pell Grant, IASG, TEACH Grant, and Direct Loan programs, the school must substantiate the amount drawn down with actual disbursements. School’s access

to additional funding may be restricted if prior drawdowns are not substantiated in a timely manner.

• For campus-based programs, school draws down funds after disbursements made.



Definition Limitations Timeframes Delivery of Funds H

eig

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Cas

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Pay

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Hei

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(H

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2)

• ED determines a school is financially weak or has failed financial responsibility standards.

• School must make Title IV disbursements and pay any Title IV credit balance before it can receive Title IV funds from ED.

• ED establishes documentation requirements depending on its cash monitoring focus—HCM1 or HCM2.

• ED tailors each school’s documentation requirements.

Before receiving funds, HCM2 school must: • Make Title IV

disbursements and pay any Title IV credit balance to students and parents from institutional funds;

• Submit a Reimbursement Payment Request, which includes: A completed OMB

1845-0089, Standard Form 270; and

Documentation demonstrating that each student and parent PLUS borrower was eligible for and received the funds.

• After the school’s reimbursement request is approved, ED transfers the appropriate amount of funds to the school’s depository account in which it maintains its federal funds.

• School may submit 1 reimbursement request within any given 30-day period.

• For Federal Pell Grant, IASG, TEACH Grant, and Direct Loan funds, ED transfers the funds to the school’s depository account after: Reviewing the

required documentation;

Approving the request for funds; and

Accepting actual accepted disbursement records in COD.

• For campus-based programs, ED reviews and approves disbursements, and then transfers funds to the school’s depository account.

Crossover Payment Period Awards and Draw Downs

This chart details how to handle Title IV program awards and draw-downs to cover student and parent disbursements for crossover payment periods—that is, periods that start before and end after July 1. It also addresses how to assign the expected family contribution (EFC) and cost of attendance (COA) for those periods.

Title IV Program Applicable Crossover

Period

Does School Have Choice of

Award Year EFC?

Must School Use Same Award Year

EFC for All Students in

Crossover Period?

Must School Use Same Award Year, EFC, COA,

and Need to Award Aid from Other Title IV

Programs?

Draw Down and Use Funds from

Same Award Year as EFC?

Federal Pell Grant and Iraq and Afghanistan Service Grant (IASG)

Payment period Yes No Not applicable Yes

Teacher Education Assistance for College and Higher Education (TEACH) Grant

Payment period Yes No Not applicable Yes

Federal Supplemental Educational Opportunity Grant (FSEOG)

Payment period Yes No

Yes; must use same award year, EFC, COA, and need as used for FWS, Federal Perkins Loans, and Direct Loans

No; school may choose award year from which funds are drawn down

Federal Work-Study (FWS)

Award period

Yes, if student is attending classes; if not attending classes, school must use EFC for next period of enrollment

No

Yes; must use same award year, EFC, COA, and need as used for FSEOG, Federal Perkins Loans, and Direct Loans

No; hours worked before July 1 are paid and drawn down from prior award year allocation; hours worked on or after July 1 are paid from upcoming award year

Federal Perkins Loan Payment period Yes No

Yes; must use same award year, EFC, COA, and need as used for FSEOG, FWS, and Direct Loans

No; school may choose award year from which funds are drawn down

Federal Direct Student Loan (Direct Loan)

Payment period

Yes, if a summer only loan and no campus-based for crossover period

No

Yes, if a summer only loan and no campus-based for crossover period; must use same award year, EFC, COA, and need as used for FSEOG, FWS, and Federal Perkins Loans

Not applicable; drawdowns correspond to disbursement dates

* Reference 2016–17 FSA Handbook, page 3-152.

© 2017 N

ASFAA C

ash Managem

ent: Lesson 2 41

NA

SFAA

U Self-Study G

uide: Cash M

anagement



Returning Undeliverable Title IV Funds

Title IV credit balances are considered undeliverable if a check is sent by mail and it is returned or not negotiated (cashed) by the student or parent, or an electronic funds transfer (EFT) is rejected by the student’s or parent’s bank. Use the following flowchart to determine if Title IV funds are considered to be delivered and, if not, when the funds must be returned to the Title IV program account(s) by the school.

Was a mailed check containing Title IVfunds returned to the school or not cashed by

the student or parent, or was an electronic funds transfer (EFT) rejected by the bank?

Funds are considered delivered; no furtheraction is required.

Did school attemptto redeliver funds within 45

days after check was returned or EFT wasrejected?

No

School must return funds to Title IV program before end of initial 45-day

period after funds were returned/rejected.

Yes

Did school makeadditional attempts to redeliver

funds within 45 days after check was returned or EFTwas rejected again?

NoSchool must return funds before end of most recent 45-day period after funds

were returned/rejected.

Yes

Were the fundssuccessfully delivered

or was the check cashed within 240 days of the date it was first

issued?

NoYes

NoSchool must return funds within 240

days of date the check was issued bythe school.

YesFunds are considered

delivered; no further actionis required.



Lesson 2 Answer Keys

Quick Quiz 1

1. G5 receives funds for the non-campus-based programs from the __Common Origination and__

Disbursement (COD) System___ and information regarding the campus-based program award year

allocations from the __eCampus-Based System___. (fill in the blanks) 2. COD is used to report and request funds for which of the following programs? (check all that apply) Federal Pell Grants Teacher Education Assistance for College and Higher Education (TEACH) Grants Federal Perkins Loans Direct Loans

3. Which of the following is not a funding method used by the U.S. Department of Education (ED) to

deliver Title IV funds to schools? Advance payment method Just-in-time payment method Reimbursement payment method Heightened cash monitoring payment method

4. Under the Title IV federal student aid funding methods, schools request and receive Title IV funds to

cover which of the following? (check all that apply) The federal and school shares of FSEOG and FWS awards Federal Pell Grant and TEACH Grant disbursements Gross amounts of Direct Loan disbursements Net amounts of Direct Loan disbursements

5. Upon receiving funds under the advance payment method, the school is expected to make

disbursements as soon as administratively feasible, but no later than __________________________. 3 business days 7 calendar days 10 business days 30 calendar days

6. Define “Current Funding Level” (CFL).

The CFL is the total amount of cash available for a school to draw down at any point in time. The CFL is based on the school’s prior-year disbursement history against which it can draw down funds and make disbursements for the current year. A school’s CFL may be adjusted as disbursements are accepted by COD. The CFL also is called an authorization.




7. What is the ED’s system for drawing down and delivering Title IV funds? EDFUNDS G5 FISAP NSLDS


Under the advance payment method, actual Direct Loan disbursement

records may be submitted to COD no earlier than _________________7____________ calendar days

prior to the disbursement date, and no later than _____________15_______________ calendars days

of the actual disbursement.

9. For the Federal Pell Grant Program, a school using the advance payment method is sent an initial

authorization that is ED’s estimate of the amount of funds the school will need to make first disbursements to its students based on the school’s total prior award year Federal Pell Grant expenditures. What is this authorization called? Current Funding Level Electronic Statement of Account G5 Cash Control Amount

10. What are the four steps a school must take in order to receive Title IV funds under the reimbursement

payment method? 1) The school must make Title IV disbursements and pay any Title IV credit balance to students and

parents for the payment period out of institutional funds; 2) The school must identify the students and parent PLUS borrowers for whom it seeks reimbursement

from ED by completing and submitting a Student Data Spreadsheet to ED; 3) The school must complete and submit Office of Management and Budget (OMB) 1845-0089,

Standard Form 270; and 4) The school must submit documentation showing each student’s and parent PLUS borrower’s

eligibility was determined properly, the correct amount(s) of funds were disbursed, and any Title IV credit balance was paid directly to the student or parent PLUS borrower.

• 10 • 15 • 30

• 3 • 7 • 10




11. Most schools receive Title IV funding under the reimbursement payment method. True False

12. Match each of the following Title IV payment methods to the characteristics that apply to that payment

method. Some characteristics apply to multiple payment methods. a – Advance Payment Method b – Reimbursement Payment Method c – Heightened Cash Monitoring 1 Payment Method d – Heightened Cash Monitoring 2 Payment Method

Payment Method Characteristic Payment Method (a, b, c, and/or d)

The school must make disbursements to students out of institutional funds before drawing down the funds.

b, c, d

The school requests and receives funds for disbursements it will make to students within the next 3 business days.

a

The school submits a Reimbursement Payment Request to ED. b, d

The school completes and submits OMB Standard Form 270 to ED. b, d

The school submits documentation supporting each student’s eligibility for disbursed funds.

b, d

The school receives an authorization/CFL only after COD has accepted and posted actual disbursements.

b, c, d

The school does not receive an initial CFL and submits actual disbursements on or after the disbursement date.

b, c, d

The school must substantiate the amount of Federal Pell Grant, IASG, TEACH Grant, or Direct Loan funds drawn down with actual disbursements accepted and posted in COD.

a, b, c, d

ED transfers Title IV funds to the school’s depository account after reviewing the school’s disbursement documentation.

b, d

13. A summer term that starts before July 1 and ends after July 1 is called a

________crossover payment period_____ . (fill in the blank)




14. Which of the following is true regarding crossover payment period drawdowns of FSEOG and Federal Perkins Loan funds? The award year allocation from which funds are drawn needs to correspond to the expected family

contribution used to award funds The school may choose to pay funds from either the prior award year allocation or the upcoming

award year allocation The award year used for FSEOG and Federal Perkins Loans may differ from the award year used to

award Direct Loan funds The award year used for FSEOG and Federal Perkins Loans must be the same as the award year

used to award Federal Pell Grant funds 15. Which of the following is true regarding crossover payment period drawdowns of Federal Pell Grant

funds? If the crossover payment period starts before July 1, the school must place the payment period in

the prior award year The award year used for Federal Pell Grants must be the same as the award year used to award

Direct Loan funds If the payment period is seven months and at least six months fall within one award year, the

crossover payment period must be assigned to that award year The award year used for Federal Pell Grants does not need to be the same as the award year used

to award campus-based funds 16. Which of the following is true regarding crossover payment period drawdowns of Federal Work-Study

funds? The award year allocation from which FWS funds are drawn needs to correspond to the expected

family contribution used to award FWS funds The award year used for FWS may differ from the award year used to award Federal Perkins Loan

and Direct Loan funds The award year used for FWS must be the same as the award year used to award Federal Pell

Grant funds Funds for hours worked prior to July 1 are drawn down from the prior award year allocation and

hours worked on or after July 1 are drawn down from the upcoming award year allocation



Learning Activity—Crossover Payment Period Drawdowns

Scenario: Peter is a dependent second-year student in the English Language Program at Neverland University so he can become a secondary school teacher. He enjoyed his freshman year a little too much, so he’s a little behind on completing his program. Because he always feels the ticking of the clock, he decides to accelerate his studies and enrolls in summer modules that cover the entire summer period between the 2016–17 and 2017–18 award years. The 2017 summer term begins on June 1, 2017 and ends on August 10, 2017. For the summer term, he is awarded a Federal Pell Grant, a Direct Loan, and funds from each of the campus-based programs.

Neverland is a standard semester-based school that combines all summer modules into a single term crossover payment period for purposes of awarding and disbursing Title IV federal student aid. Neverland also treats the summer as a trailer to the previous academic year—that is, the academic year is fall, spring, and summer when students are enrolled during the summer term. For summer 2017, Neverland requires the 2016–17 Free Application for Federal Student Aid (FAFSA) and uses the 2016–17 expected family contribution (EFC) to award federal student aid from all of the following programs. Peter starts a Federal Work-Study job after the July 4th holiday and works the rest of the summer.

Aid Program


2016–17 award year allocation or

Direct Loan authorization?


2017–18 award year allocation or

Direct Loan authorization?

School may choose to draw

down funds from either award

year?

Funds are drawn down according to whether they are paid before July or on/after

July 1?

Federal Pell Grant Yes No Yes No Yes No Yes No

TEACH Grant Yes No Yes No Yes No Yes No

FSEOG Yes No Yes No Yes No Yes No

FWS Yes No Yes No Yes No Yes No

Federal Perkins Loan Yes No Yes No Yes No Yes No

Direct Loan Yes No Yes No Yes No Yes No

If Peter had chosen not to enroll during the summer between the 2016–17 and 2017–18 award years, but still wanted to work in his FWS job during the summer before returning in the fall semester, which award year EFC would be used? ___2017–18___ How would his summer FWS earnings be drawn down if he began the summer FWS job on June 1, 2017? Hours worked before July 1 would be paid out of the 2016–17 award year allocation and hours worked on or after July 1 would be paid out of the 2017–18 award year allocation.



Quick Quiz 2

1. If the school is not a public or foreign institution and the name of the institution’s depository account containing Title IV funds does not contain the words, “federal funds,” the institution also must do which of the following? Complete and submit Office of Management and Budget (OMB) Standard Form 270 to ED Ensure the Title IV funds are not kept in a bank account that contains non-Title IV funds File a Uniform Commercial Code Form UCC-1 with the appropriate state or municipal government Submit a Reimbursement Payment Request to ED for all federal funds in the account

2. All public institutions with Title IV funds in a depository account must either ensure the name of the

account includes the words “federal funds” in the account’s title , or notify the depository institution that

the account contains federal Title IV funds and maintain a copy of that notice . (fill in the blanks) 3. If a Title IV credit balance check is returned to the school and the school does not make any further

attempts to deliver the funds to the student, the school must return the funds to the appropriate Title IV account within how many days? 30 45 180 240

4. The Federal Pell Grant administrative cost allowance (ACA) is what amount? $1 for each student who received a Federal Pell Grant for the award year $5 for each student who received a Federal Pell Grant for the award year 1% of the school’s total Federal Pell Grant expenditures for the award year 5% of the school’s total Federal Pell Grant expenditures for the award year




5. How is the campus-based ACA calculated for an award year? (fill in the blanks)

6. The campus-based administrative cost allowance can be used by the school for which of the following?

(check all that apply) Costs associated with administering the campus-based programs Costs associated with administering the Direct Loan Program Costs associated with administering Title IV consumer information requirements Costs associated with administering the Federal Pell Grant Program

7. When is a school considered to have “excess cash?”

In most instances, a school has excess cash when it has not disbursed any amount of Title IV funds (other than Federal Perkins Loan funds) to students or parents by the end of the third business day following the date the school drew down the funds. A school also has excess cash when it has recovered any amount of disbursed Title IV funds and has not disbursed those funds by the end of the third business day following the date it deposited them in its federal funds account.

8. A school may retain no more than one percent of the total amount of funds the school drew down in the

prior award year as excess cash for no more than how many days? 3 7 14 30

9. A Title IV credit balance check is considered issued when which of the following are true? (check all that

apply) The Title IV funds are disbursed to the student’s ledger account The school mails the check to the student or parent The school immediately notifies the student or parent that the check is available for immediate pick-

up at a specified school location The student or parent cashes the check

5 % of the first $2,750,000 of the school’s total campus-based expenditures

= School’s total campus-based ACA

+ 4 % of the school’s expenditures greater than $2,750,000 but less than $5,500,000

+ 3 % of the school’s expenditures that are $5,500,000 or more



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Lesson 3: Disbursing Title IV Funds


• Understand general and program-specific disbursement requirements;

• Know how to handle Title IV credit balances; and

• Understand provisions that must be made for obtaining required books and supplies.


• General disbursement requirements;

• Early disbursements;

• Late disbursements;

• Retroactive payments;

• Disbursement methods;

• Tier one arrangement;

• Tier two arrangement;

• Allowable charges;

• General student eligibility disbursement requirements;

• Program-specific disbursement requirements;

• Title IV credit balance; and

• Provisions for required books and supplies.

Disbursing Title IV Funds Lesson 1 introduced the concept of cash management, while Lesson 2 delved into how schools request, draw down, maintain, and return the Title IV funds needed for making disbursements. In this lesson, we will examine how funds are disbursed and timeframes governing the disbursement process. General Disbursement Requirements One of the most visible aspects of cash management is the disbursement of Title IV funds to financial aid recipients. Disbursement is the aspect of financial aid in which students and parents are most likely interested, and it is probably the aspect of cash management in which business offices and presidents’ offices are most interested. When a student, parent, or a school’s business officer asks the question—“When do I get the money?”—disbursements are on her mind. Disbursement Definition

Under the cash management regulations, “disburse” refers to making a payment of Title IV funds to a student’s ledger account or directly to the student or parent PLUS borrower. The term “disburse” does not apply to the Federal Work-Study

(FWS) Program; instead, FWS funds are paid as earnings for hours worked. A school must disburse the Title IV funds it receives within a certain timeframe to avoid liabilities for maintaining excess cash. In addition, there are rules governing how early a school may make Title IV disbursements. Thus, it is important for schools to know when Title IV funds are considered to have been disbursed. For the purpose of our discussion, we will use the definition of disbursement that is provided in the cash management regulations. Title IV funds are considered disbursed on the date that the school credits the student’s ledger account or directly pays the student or parent PLUS borrower with:

• Funds received from the U.S. Department of Education (ED); or

• Institutional funds labeled as Title IV funds and used in advance of receiving Title IV program funds.

In other words, regardless of whether Title IV funds were actually received by the school, a disbursement of Title IV funds occurs when the school credits a student’s school account or pays the student or parent PLUS borrower directly and indicates that the source of the payment is from federal funds.




• Prior Year Charges Flowchart

• Glossary


• Key concept

• Quick quiz



• Helpful hint

Disbursement Timeframes As a general rule, when the word “day” appears by itself in the cash management regulations, it means “calendar day.” A “business day” is specified only when ED wants the school to count business days and exclude weekends and federal holidays. Early Disbursements

Definition. For the Federal Pell Grant, Iraq and Afghanistan Service Grant (IASG), Teacher Education Assistance for College and Higher Education (TEACH) Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), and

Federal Perkins Loan programs, the structure of the student’s program of study determines the earliest date on which the school may make a disbursement for any payment period. For credit-hour programs offered in terms that are substantially in length, the earliest a school may make a disbursement is 10 calendar days before the first day of classes of the payment period. For all other academic program structures, the earliest a school may make a disbursement is the later of:

• 10 days before the first day of classes of the payment period; or

• The date the student completed the previous payment period for which he received Title IV funds.

As a general rule, the first day of classes is the day classes begin for the payment period, not the day the student registered for classes or began attendance. For example, a student registers on June 10 for classes that will begin on September 5. The date the student enrolls is June 10, and the earliest date the school may credit his ledger account is 10 days before September 5. However, an exception exists to the 10-day early disbursement rule if the term consists of combined modules, and the student does not enroll in each module. The student is still considered enrolled for the combined term; however, the 10 days is measured from the start date of the first module in which the student is actually enrolled. Now let’s review an example involving modules. Suppose a standard semester consists of three 5-week modules. If a student does not begin enrollment until the second module, the earliest the school may disburse Title IV funds to the student for the semester is 10 days before the first day of the second module. The same rule would apply if the term includes classes that span the entire length of the semester as well as a module that begins later within the semester and a student enrolls in just the module, but not the overarching semester. For example, suppose a school offers an 8-week module that starts after the first day of classes of a 16-week semester. If a student only enrolls for the 8-week module, the 10 days is measured from the start of the module.



Another exception to the 10-day early disbursement rule is if the school credits a student’s ledger account with institutional funds labeled as federal funds in advance of receiving the funds. In this situation, ED does not consider a disbursement to have been made until the tenth day prior to the first day of the payment period. For example, if a school posts a credit labeled as a “Federal Pell Grant” to a student’s ledger account on August 8 for a payment period that begins on September 5, the student’s Federal Pell Grant is not considered disbursed until August 26—that is, 10 days before September 5. Now let’s turn our attention to late disbursements of Title IV funds. Late Disbursements

Eligibility. In general, a student or a parent PLUS borrower is not eligible to receive any further Title IV funds if the student:

• Withdraws, or otherwise ceases attendance; or

• Is no longer enrolled at least half time in cases of Federal Direct Student Loans (Direct Loans).

Late disbursement provisions apply when the student completes the payment period before all Title IV funds for the payment period are disbursed. A late disbursement is permitted, if the:

• Student or parent PLUS borrower meets the regulatory conditions for a late disbursement; and

• Law or other regulations do not otherwise prohibit disbursement of the funds.

A student or parent PLUS borrower satisfies the regulatory conditions for a late disbursement of Federal Pell Grant and IASG funds, if, before the date the student became ineligible, the Central Processing System (CPS) processed the student’s Institutional Student Information Record (ISIR) or Student Aid Report (SAR) with an official expected family contribution (EFC) for the relevant award year. The student or parent qualifies for a late disbursement of FSEOG, Federal Perkins Loan, TEACH Grant, or Direct Loan funds if the CPS processed the student’s ISIR or SAR with an official EFC and, as applicable, the school:

• Originated a Direct Loan;

• Awarded a FSEOG or Federal Perkins Loan; or

• Originated a TEACH Grant award. Note that for the Federal Perkins Loan Program, “awarded” means that the award is complete, except for the execution of the loan’s Master Promissory Note (MPN). Similarly, having “origination” of a Direct Loan does not require the student’s or the parent borrower’s completion of the loan MPN. Although the late disbursement rules do not apply to the FWS Program, a school must pay a student after her last day of attendance for all FWS hours worked and earned while she attended the school.

“Late disbursement provisions

apply when the student

completed the payment period

before all Title IV funds

for the payment period

were disbursed.”

The school must make—or offer to make—a late disbursement to the student or parent PLUS borrower who meets the conditions for a late disbursement and for whom the payment of the late disbursement is not otherwise prohibited by the law or regulations. If the student successfully completed the payment period or period of enrollment, the school must give the student or parent the opportunity to receive the Title IV funds as a late disbursement, to cover:

• Current award year charges for tuition, fees, institutionally-contracted room and board and—with the student’s or parent’s authorization—other educationally-related institutional charges; and

• Up to a maximum of $200 for prior award year charges for tuition, fees, institutionally-contracted room and board and—with the student’s or parent’s authorization—other educationally-related institutional charges.



There is one exception to the requirement to make or offer to make a late disbursement. The school has the option of making the late disbursement of undisbursed Direct Loan funds when a student initially enrolls on at least a half-time status, later dropped to less than half time, but completed the payment period. In this case, the amount of the late disbursement is limited to the educational costs the school determines the student incurred for the period for which she was eligible. A school may not make a late disbursement:

• More than 180 days after the date the student became ineligible for the funds;

• Of a second or subsequent Direct Loan disbursement unless the student successfully completed the period of enrollment for which the loan was intended;

• To a first-year, first-time Direct Subsidized Loan or Direct Unsubsidized Loan borrower who withdrew before the 30th day of the student’s program of study, unless the school is exempt from the 30-day delayed disbursement requirement based on the school’s low default rates; or

• If the school did not receive the student’s valid ISIR or SAR prior to the annual deadline published by ED in the Federal Register.

At the time these materials were finalized, this deadline date for the 2017–18 award year had not been published.

Late disbursements must be made in accordance with all other cash management rules, including Title IV authorization and notification requirements, which will be discussed in Lesson 4. If the school is required to make a late disbursement of a Title IV loan, the school must offer the borrower any portion of the late disbursement that is not credited to the student’s school account. Remember, the only time a late disbursement of a Title IV loan is at the option of the school is when the student dropped to less than half time before completing the period. Post-Withdrawal Disbursement. A post-withdrawal disbursement is a type of late disbursement of Title IV funds made after a student has withdrawn (or dropped out) before completing the payment period or loan period. Post-withdrawal disbursements,

including post-withdrawal disbursement counseling requirements, are described in detail in NASFAA Self-Study Guide: Return of Title IV Funds. Retroactive Payments

Sometimes a payment period ends before the school is able to disburse aid to a student, even though the student was

otherwise eligible during the payment period. For example, a student enrolled during the fall semester, but did not submit a Free Application for Federal Student Aid (FAFSA) until the following spring semester. A school may award and disburse aid for completed payment periods within the award year as long as the student maintained eligibility. Retroactive payments are based on completed credits for the Federal Pell Grant, IASG, and TEACH Grant. Completed credits include earned failing grades. Completed credits also include incomplete grades, as long as the grade has not changed to a failing grade due to the student not completing coursework within the allotted time allowed by the school’s policy. Retroactive payments of Direct Loans can be made if the prior payment periods are included in the loan period, and the student completed the payment period at a half-time or greater enrollment status. For instance, if a student did not receive a Direct Loan disbursement in the fall semester, a Direct Loan can be originated with a loan period that includes both fall and spring semesters. A Direct Loan may not be originated for only the fall semester.

Retroactive payments are contingent upon the student meeting eligibility criteria. Additional information on the general and program-specific student eligibility

requirements may be found in NASFAA’s Self-Study Guide, Student Eligibility. Disbursement Methods

Institutions have multiple ways of disbursing funds to students and parent PLUS borrowers.

Let’s now look at how schools disburse Title IV funds.



Crediting a Student’s School Account Title IV funds may be disbursed by crediting them to a student’s ledger account for eligible charges. A student’s ledger is any recordkeeping system that a school uses to record institutional charges, cash payments made by the student, and payments from Title IV program funds. If a school does not use student ledger accounts, or the student’s ledger account has already been satisfied by other sources, the school may prefer to make a disbursement by one of the other allowable disbursement methods. Direct Payments Another method of disbursing Title IV funds is by making direct payment of the funds to the student or to the parent PLUS borrower. A direct payment may be made by:

• Dispensing cash;

• Issuing a check; or

• Initiating an electronic funds transfer (EFT) to the student’s or parent PLUS borrower’s financial account.

Let’s take a closer look at each of these ways for making disbursements as a direct payment. Cash. A school may disburse the funds by providing cash directly to the student or to the parent PLUS borrower. If a school disburses the funds in cash, the school must obtain a signed receipt from the student or parent for the amount of cash disbursed. Check or Similar Measure. Many schools disburse Title IV funds by issuing a check. Disbursements also may be made in the form of other instruments that are made payable to, and require the endorsement or certification of, the student or the parent PLUS borrower. An example of such an instrument is a voucher that the student can redeem for goods and/or cash at the campus bookstore. A check is considered issued on the date the school:

• Mails it to the student or parent PLUS borrower; or

• Notifies the student or parent PLUS borrower that the check is available for immediate pick-up at a specific location at the school.

A school may hold the check for 21 days after the date it notifies the student or parent PLUS borrower. If the check is not picked up within the 21-day period, the school immediately must mail it to the student or parent, initiate an EFT to the student or parent’s bank account, or return the funds to the applicable Title IV programs. Electronic Funds Transfer. A school may make a Title IV disbursement as well as pay a Title IV credit balance by initiating an EFT to the student’s or parent PLUS borrower’s financial account. A financial account is a checking, savings, prepaid card account, or other consumer asset account held directly or indirectly by a financial institution. A financial institution is a bank, savings association, or credit union. It also includes an entity that directly or indirectly holds a financial account for the student, issues the student an access device associated with the account (such as a debit or credit card), and agrees to provide EFT services. Tier One and Tier Two Arrangements Schools may contract with a third-party servicer to perform functions related to the direct disbursement of Title IV funds to financial accounts either offered or marketed, directly or indirectly, to enrolled students. The cash management regulations refer to this type of contract as a Tier One (T1) arrangement. Schools also may contract with a financial institution that does not act as a third party servicer, but offers or promotes one or more financial accounts to enrolled student either directly or through the school. Cash management regulations refer to this type of contract as a Tier Two (T2) arrangement. If a school chooses to enter into either a T1 or a T2 arrangement, there are cash management requirements that apply regulating the school’s participation in the arrangement, as well as disbursing Title IV funds under the arrangement. These requirements serve to provide safeguards to both Title IV recipients and the Title IV programs. Note that regulatory requirements governing T1 and T2 arrangements do not apply to Title IV eligible foreign schools.



Selection Process. A school participating in a T1 or a T2 arrangement must establish a selection process under which the student chooses one of several options for receiving direct payments of Title IV funds. Requirements governing a school’s selection process are the same regardless of whether the school has a T1 or T2 arrangement. If the student has a pre-existing financial account, the school must ensure the initiation of an EFT to that account is as timely and no more onerous to the student as initiating an EFT under a T1 or T2 arrangement. The student’s options for receiving direct payments by EFT, or by a T1 or T2 arrangement, must be described and presented to the student and include the following information:

• The student is not required to open or obtain a financial account or access a device offered by or through any specific financial institution;

• Options for receiving direct payments, presented in a clear, fact-based, and neutral manner, with no default option;

• No specific account is required to be opened by the student;

• The first option in selecting an account must prominently be presented as the student’s own financial account; and

• Before any account is opened, the major features and fees of the account and a web page address containing all terms and conditions associated with the account.

Schools must begin disclosing features and fees to students by July 1, 2017. ED will provide a template for institutions to use before July 1, 2017 to describe

features and fees. As of the publication of this Self-Study Guide, ED had not yet released the template. It will be released in a Federal Register. If the student chooses not to select any of the direct payment options listed and the student has a Title IV credit balance on her ledger account, the school must pay the Title IV credit balance within the regulatory timeframe for paying a Title IV credit balance. A Title IV credit balance occurs whenever the amount of Title IV funds on the student’s ledger account exceeds the amount of the student’s

allowable educationally-related institutional charges. Title IV credit balances and allowable charges are discussed later in this lesson. The school must inform the student, in writing, that he is not required to open or obtain a financial account or access device offered by or through a specific financial institution. If the student makes a selection and later wants to change how he receives direct payments of his Title IV funds, the school must allow the change as long as he notified the school in writing of the change, within a reasonable time. Tier One (T1) Arrangements Under a T1 arrangement, the school contracts with a third-party servicer under which it performs one or more functions associated with processing direct payments of Title IV funds on behalf of the school, and makes direct payments to:

• Financial account(s) offered to students under the contract; or

• A financial account where information about the account is communicated directly to the student by the school, the third-party servicer, or another entity contracting with or affiliated with the servicer.

Contracts. Before entering into a T1 contract, the school must ensure the terms of each T1 account offered are consistent with the best financial interests of students opening the account. After entering the contract, the school must conduct a due diligence review at least every two years and document each review. Each due diligence review should ascertain whether any fees imposed on students having a T1 account are, as a whole, considered to be consistent with, or lower than, prevailing market rates. A T1 contract also must allow the school to terminate the contract based on student complaints or the school’s determination that any fees imposed are not consistent with or higher than prevailing market rates. The regulations do not specify the number or types of complaints that could lead to a school’s termination of a T1 contract. Instead, a school should carefully consider the volume, nature, and severity of complaints when deciding whether to terminate or renegotiate the contract.



Disclosures. Participation in a T1 arrangement also requires schools to make certain disclosures about its T1 contracts. The school must disclose each of its T1 contracts conspicuously on its website, updated on an annual basis no later than 60 days after each completed award year. When posting a T1 contract, the school may exclude any portion of the contract that would compromise personal privacy, proprietary information technology, or the security of information technology or of physical facilities.

The school also must provide ED with the URL for each T1 contract currently posted on the school’s website. The website for providing ED with this information is

https://studentaid.ed.gov/sa/about/data-center/school/cash-management. ED will publish the URLs of all T1 contracts from all schools in a centralized database and make that database accessible to the general public. In addition, a school must disclose, no later than September 1, 2017 the:

• Total amount—monetary and non-monetary—paid or received for the most recently completed award year by all parties under the terms of each T1 contract; and

• Number of students who had T1 accounts at any time during the most recently completed award year as well as the mean and median of actual costs incurred by those T1 account holders.

These disclosures must be posted on the same website as the T1 contract. The disclosure regarding the number of T1 account holders and the costs they incurred does not apply for any year in which the school’s enrolled students opened fewer than 30 T1 accounts.

After September 1, 2017, the school must make the disclosure annually and no later than 60 days following the most recently completed award year.

A school participating in a T1 arrangement:

• May not share any personally identifiable information with the third-party servicer about a student before the student makes a selection of a T1 account for receiving direct payments of Title IV funds;

• Must inform the student, before opening any T1 financial account, of the account’s terms and conditions; and

• Must obtain the student’s consent to open a T1 account before sending the student any device (or any representation of an access device).

“The school must disclose

each of its T1 contracts

conspicuously on its website,

updated on an annual basis no

later than 60 days after each

completed award year.”

Access to Funds. An access device may be a card the school provides the student for institutional purposes, such as a student ID card that can be activated for use also as a debit card. However, if the school chooses to use student ID cards as an access device to a T1 account, the school or the financial institution must obtain the student’s consent before activating or validating the card to enable the student’s access to the T1 account. Students who open a T1 account must have convenient access to the funds in their account through a surcharge-free national or regional automated teller machine (ATM) network that has a sufficient number of ATMs that are reasonably available. This includes reasonable access when Title IV funds are deposited into the T1 account and throughout the student’s entire period of enrollment. What is considered a sufficient number of ATMs will vary among schools depending on where the school is located and whether the school’s students live on campus or commute.



Associated Costs. The school must ensure students do not incur any costs for opening T1 accounts or initially receiving an access device, nor any:

• Fees for conducting a T1 account balance inquiry or withdrawal of funds at an ATM in a state that belongs to the surcharge-free regional or national network;

• Costs assessed by the school, third-party servicer, or a financial institution associated with the third-party servicer when a student conducts point-of-sale transactions in a state; or

• Fee for any transaction or withdrawal that exceeds the balance in the T1 account or on the T1 access device.

The school must ensure that the T1 account or access device is not marketed or portrayed as, or converted into, a credit card. Regulations prohibit the association or extension of any credit with any T1 account. Tier Two (T2) Arrangements In a T2 arrangement, the school contracts with a financial institution or another entity that offers financial accounts through a financial institution. In this arrangement, the financial institution does not act as a third-party servicer. Financial accounts are offered and marketed directly to the school’s students for the purpose of depositing direct payments of Title IV funds into a T2 account. Direct Marketing. A T2 account is considered directly marketed to students if: • The school communicates information about the

T2 account and how it may be opened directly to students;

• The T2 account or access device is cobranded with the school’s name, logo, mascot, or other affiliation and is marketed principally to the school’s students; or

• A card or other device provided students for institutional purposes, such as a student ID card, is validated to enable the student to use the card or device to access to a T2 account.

Many of the requirements governing T2 arrangements are similar to those governing T1 arrangements. However, unlike T1 arrangements, a school with a T2 arrangement is exempt from some of the T1 requirements if the school satisfies a de minimis threshold—that is, the school has at least

one student with a Title IV credit balance in each of the three recently completed award years but, for the three most recently completed award years, has: • An average of fewer than 500 students with a

Title IV credit balance; or • An average of less than five percent of its

students with a Title IV credit balance. The percentage of students having a Title IV credit balance is calculated by dividing the average number of students with credit balances for the three most recently completed award years by the average number of students enrolled at the school at any time during the three most recently completed award years. Contracts. Before entering into a T2 contract, a school with more than the de minimis number of credit balances must ensure that the terms of any T2 account are consistent with the best financial interests of students opening the account. After entering the contract, the school must conduct a due diligence review at least every two years and document each review. Each due diligence review should ascertain whether any fees imposed on students having a T2 account are considered, as a whole, consistent with or below prevailing market rates. In addition, the T2 contract must allow the school to terminate the contract based on student complaints or the school’s determination that any fees imposed are not consistent with, or are higher than prevailing market rates. A school should carefully consider the volume, nature, and severity of complaints when deciding whether to terminate or to renegotiate a T2 contract.

Disclosures. All schools with a T2 arrangement were required to disclose each of its T2 contracts conspicuously on its website beginning September 1, 2016.

A school must post its T2 contracts annually, but no later than 60 days after each completed award year. The school may exclude any portion of a contract that would compromise personal privacy, proprietary information technology, or the security of information technology or of physical facilities. All T2 schools also must provide ED with the URL for each of their T2 contracts currently posted on their institutional website. ED will publish the URLs of all T2 contracts from all schools in a centralized



database and make that database accessible to the general public. The website for providing ED with this information is https://studentaid.ed.gov/sa/about/data-center/school/cash-management. A school with more than the de minimis number of Title IV credit balances must disclose, no later than September 1, 2017, the:

• Total amount, monetary and non-monetary, paid or received for the most recently completed award year by all parties under the terms of each T2 contract; and

• Number of students who had T2 accounts at any time during the most recently completed award year as well as the mean and median of actual costs incurred by those T2 account holders.

These disclosures must be posted on the same website as the T2 contract itself. The disclosures must be made in a format published by ED. Note that, as of the date these materials were finalized, ED had not yet published the disclosure format. After September 1, 2017, the school must make the disclosure annually and no later than 60 days following the most recently completed award year. However, the disclosure regarding the number of T2 account holders and the costs they incurred does not apply for any year in which the school’s enrolled students opened fewer than 30 T2 accounts. All schools participating in a T2 arrangement must:

• Not share, or permit a third-party servicer to share, any personally identifiable information about a student with the T2 financial institution or its agent before the student makes a selection of a T2 account for receiving direct payments of Title IV funds;

• Ensure T2 financial accounts are not marketed, portrayed as, or converted into credit cards;

• Inform the student, before opening any T2 financial account, of the account’s terms and conditions;

• Obtain the student’s consent to open a T2 account before sending the student any T2 account access device; and

• Ensure students do not incur any cost in opening a T2 account or initially receiving an access device.

Access to Funds. A T2 access device may be a card the school provides the student for institutional purposes, such as a student ID card that also can be activated for use as a debit card. However, if the school chooses to use student ID cards as an access device to a T2 account, the school or the financial institution must obtain the student’s consent before activating or validating the card to enable the student’s access to the T2 account. Associated Costs. A school with more than the de minimis number of Title IV credit balances must ensure students with T2 accounts can execute balance inquiries and access funds deposited in their T2 account through a surcharge-free in-network ATMs. This includes ensuring reasonable access to their Title IV funds when they are deposited into the T2 account and throughout the entire period of enrollment. What is considered a sufficient number of ATMs will vary among schools depending on where the school is located and whether the school’s students live on campus or commute. Disbursements for Institutional Charges Allowable Charges

Allowable charges are educationally-related institutional charges to which Title IV aid may be applied. However, in certain circumstances, the student’s or parent

PLUS borrower’s authorization is required before crediting the student’s ledger account. Allowable charges include charges incurred during the current award year and, with limitations, a prior award year. There is no limit on the amount of Title IV aid that may be used to pay current award year allowable charges. Unlike the other Title IV programs, Direct Loans are awarded on an academic year basis instead of an award year basis. Because of this difference, cash management regulations define the current award year for the purpose of disbursing Title IV funds as:



• The current award year, if the only Title IV funds disbursed do not include a Direct Loan;

• The current loan period, if the only Title IV funds disbursed are Direct Loan funds; or

• At the school’s discretion, either the current award year or the current loan period, if the Title IV funds disbursed include Direct Loan proceeds, as well as funds from any other Title IV program.

The regulations define a prior award year as any loan period or award year prior to the current award year or loan period. Current Award Year Charges. Without the student’s or parent PLUS borrower’s authorization, a school may credit current award year Title IV funds (other than FWS) to the student’s account to pay current award year institutional charges for tuition, fees, and institutionally-contracted room and board. A school may include the costs of books and supplies as part of a student’s tuition and fees under any of the following three conditions:

• The school has an arrangement with a book publisher (or other entity) to make those books and supplies available to students below competitive market rates by the seventh day of the payment period, and the school has a policy that permits students to opt out of this provision for books and supplies;

• The school documents that the books and supplies are electronic materials that can be accessed by the school’s students or from other sources authorized by the school; or

• There is a compelling health or safety reason for including those costs as tuition and fees.

An example of a compelling health or safety reason would be diving equipment for a scuba diving class. The school purchases and maintains the equipment to guarantee the safety of students taking the course. The student’s or parent PLUS borrower’s written authorization is required for all other educationally-related current award year institutional charges.

The student’s written authorization always is required to pay FWS wages by crediting the student’s ledger account for any allowable current year institutional charges. Instead of charging students each payment period, some schools charge students upfront for the entire year or academic program. For example, a semester-based school may charge tuition for the fall and spring semesters at the beginning of the fall semester. Another example is a school that assesses all tuition costs at the at the start of an 1,800 clock-hour program. If a school charges students upfront for an entire year or program, it must prorate the upfront charges to determine the amount of charges associated with the current payment period using one of the two following formulas.

• If the student’s program has substantially equal payment periods, divide the total upfront charges by the number of payment periods in the program; and

• For all other types of programs, first divide the number of credit or clock hours in the current payment period by the total number of credit or clock hours in the program, and then multiply that result by the total upfront charges.

Prior Award Year Charges. Current award year Title IV funds also may be disbursed by crediting them to a student’s ledger account to pay for prior award year allowable institutional charges. However, the maximum amount of current year funds from all Title IV programs that may be used to pay prior award year charges is $200. The student’s written authorization always is required to pay FWS wages by crediting the student’s ledger account for any allowable prior year institutional charges. For the other Title IV programs, a school may credit up to $200 of current award year funds to pay prior award year:

• Institutional charges for tuition, fees, and institutionally-contracted room and board without the student’s or parent PLUS borrower’s authorization; and

• Other educationally-related institutional charges with the student’s or parent PLUS borrower’s written authorization.



Take a few moments to review the Prior Year Charges Flowchart on page 76; it illustrates the various steps for determining whether prior year charges can be paid

with current year Title IV funds. Authorizations will be discussed in more detail in Lesson 4. Nonallowable Charges or Costs There are certain institutional charges that are completely outside the realm of educational purpose, such as the purchase of a television from the campus bookstore. Other examples of nonallowable charges or costs include:

• Vacations;

• Automobiles; and

• Entertainment equipment, such as televisions and Xbox or PlayStation.

If the school is aware of nonallowable charges on the student’s account, but still posts Title IV funds toward them, the school is assisting the student in breaching the requirement to use the funds for educational purposes. Unless there is information suggesting otherwise, ED permits a school to assume that a student is not violating the educational purpose requirement. Therefore, if the business office has no reason to question a charge on the student’s account, Title IV funds may be applied toward the charge. ED has attempted, through the cash management regulations, to recognize that, once disbursed, Title IV funds become the student’s money. For example, if Title IV funds were disbursed as cash directly to the student, the student could use that money to buy a television and not be questioned about it. However, there remains a fiduciary responsibility incumbent upon schools. A school may not assist a student in the misuse of Title IV funds, and it may not disburse funds directly toward nonallowable charges.

General Student Eligibility Disbursement Requirements

Prior to making a Title IV disbursement, the school must confirm that the student still meets the Title IV general student eligibility requirements. These include:

• Enrollment or acceptance for enrollment in an eligible program at an eligible institution;

• Receipt of a high school diploma or its equivalent, completion of a high school curriculum in a home school setting that meets state requirements, or demonstration of ability-to-benefit (ATB) under one of the allowable ATB alternatives;

• No simultaneous enrollment in elementary or secondary school;

• U.S. citizenship, U.S. national, or eligible noncitizen;

• Correct Social Security Number (SSN); • Registration with the Selective Service (if

required); • Signing a Statement of Educational Purpose to

certify Title IV aid will only be used to pay educational expenses;

• No previous default on Title IV loans or owing a Title IV grant or loan overpayment;

• No borrowing in excess of annual or aggregate Title IV loan limits;

• No property subject to a judgment lien for a debt owed to the U.S.;

• Repayment of fraudulently obtained Title IV funds;

• No disqualifying drug convictions; • Maintenance of satisfactory academic progress

(SAP); and • Financial need (if applicable).

Additional information on the general and program-specific student eligibility requirements may be found in NASFAA’s Self-Study Guide, Student Eligibility.

The school may not disburse Title IV funds to a student or parent PLUS borrower for a payment period until the student has enrolled in classes for that payment period. Depending upon the school, enrollment may be called such things as pre-registration, advance enrollment, early enrollment, or registration.




1. When are Title IV funds considered disbursed? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

2. For credit-hour programs offered in terms that are substantially equal, the earliest a school may make a

disbursement is:

30 days before the first day of classes.

10 days after the start of classes.

after the drop/add period or census date.

10 calendar days before the first day of classes. 3. Late disbursement provisions apply when the student _____________________ the payment period

before all Title IV funds for the payment period were disbursed. (fill in the blank)

4. When is a late disbursement permitted?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

5. A check is considered issued on the date the school: (check all that apply)

orders the check.

mails it to the student or parent PLUS borrower.

notifies the student or parent PLUS borrower that the check is available for immediate pick-up at a specific location at the school.

prints the check.

• withdrew from • completed




6. A school may hold a check for______________________ after the student or parent PLUS borrower is notified that it is available to be picked up.

14 days

10 days

21 days

30 days 7. What is the school required to collect for a direct cash disbursement?

_____________________________________________________________________________________

_________________________________________________________________________________

8. If a school disburses Title IV funds under a Tier One (T1) or Tier Two (T2) arrangement, the school must

obtain:

the student’s credit rating.

the student’s consent.

power of attorney.

a FERPA release. 9. A student’s ledger account can be any ______________________ system that a school uses to record

institutional charges, cash payments made by the student, and payments from Title IV program funds.

bank

recordkeeping

troubleshooting

electronic funds transfer 10. Current award year Title IV funds may be used to pay up to ___________ in prior award year institutional

charges.

$400

$300

$200

$150




11. The purchase of a______________________ would be an example of a nonallowable charge or cost.

bookbag

SmartTV

laptop computer

novel for English 212


Regardless of whether Title IV funds were actually received by the school, a __________________ of

Title IV funds occurs when the school ________________ a student’s ledger account or pays the

student or parent PLUS borrower directly and indicates the source of the payment is from

_________________ funds.

• institutional • federal

• removes • credits

• return • disbursement



Learning Activity: Prior Award Year Charges Using the Prior Year Charges Flowchart on page 76, determine if prior year charges may be paid with current Title IV funds for each student below. Answer the following questions and check your responses using the Answer Key on page 80.

\

1. Angie attends National College of the Americas (NCA). NCA allows students to either have FWS paid directly to them or have it applied to charges on their student ledger account. Students may provide or withdraw authorization at any time during the academic year. Angie has provided authorization for her FWS earnings to be applied directly to any outstanding charges on her ledger account and for payment of any Title IV aid for other institutional charges. Angie received a late dorm utility charge from last year for $150. She has no other outstanding charges on her account. Can her current FWS earnings be used to pay her utility charge?

Yes

No Why or Why not? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

2. Bernard has library fines of $250 on his ledger account from the past two years. He is able to register for

courses, but this is Bernard’s last semester and per NCA’s policy, he will not be able to receive his degree or his final transcripts until his ledger account is paid in full. This year, Bernard only has a Direct Unsubsidized Loan and a parent PLUS Loan. Bernard expects to receive a Title IV credit balance of $500.There is no written authorization on file from Bernard or his parents. Can any of his Title IV aid for this year be used to pay the prior year charges?

Yes

No Why or Why not? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________



Program-Specific Disbursement Requirements

Along with the general student eligibility disbursement requirements, there are additional disbursement rules that apply to each of the Title IV programs. Let’s begin

with the Federal Pell Grant, IASG and TEACH Grant Programs. Federal Pell Grant, IASG, and TEACH Grant Programs A portion of the student’s Federal Pell Grant, IASG, or TEACH Grant award is disbursed in each payment period during the award year, according to the various payment period definitions we discussed in Lesson 1. Within each payment period, the student may be paid in whatever installments and at whatever intervals the school determines will best meet the student’s needs. A school may disburse Federal Pell Grant, IASG, or TEACH Grant funds in one lump sum for the current and previously completed payment periods for which the student was eligible within the award year; if the disbursement is made for a prior payment period, the student’s enrollment status must be determined based on the coursework the student completed. Federal Pell Grant A student may decline all or part of a disbursement of Federal Pell Grant funds he would otherwise be eligible to receive in order to preserve future eligibility for larger Federal Pell Grant awards under the 600 percent Lifetime Eligibility Used (LEU) limit. To decline or return a Federal Pell Grant, the student must:

• Provide a signed, written statement clearly indicating the student is declining, or returning, Federal Pell Grant funds for which she is otherwise eligible, and acknowledging that the funds may not be available once the award year is over; and

• Return funds directly to the school, if already disbursed.

TEACH Grant Before disbursing a TEACH Grant for the award year, the student must sign an Agreement to Serve and, as applicable, complete initial or subsequent counseling. FSEOG Program A portion of the student’s FSEOG award is paid each payment period. Generally, the award must be divided equally among the payment periods the student will attend during the academic year. If a student incurs uneven costs or resources during the academic year, the school may disburse funds to the student in unequal portions. The reason(s) for making such unequal disbursements should be noted in the student’s file. Like the Federal Pell Grant, IASG, and TEACH Grant programs, the FSEOG program gives the school flexibility when making a disbursement to pay the funds in whatever installments and at whatever intervals the school determines will best meet the student’s needs within payment periods. However, the intent is that the student’s needs be considered when making disbursements. If schools abuse this flexibility—for example, by systematically drawing down only enough funding to meet institutional charges without making disbursements for noninstitutional living expenses and other costs when the student needs them—the school is acting outside the spirit of the regulations. This not only causes hardship for students who are entitled to the funds, but it may result in sanctions imposed by ED on the school. Federal Perkins Loan Program Like the FSEOG Program, the Federal Perkins Loan Program has similar disbursement requirements. A portion of the student’s Federal Perkins Loan award is paid each payment period. Generally, the award must be disbursed equally among the payment periods the student will attend during the academic year. If a student incurs uneven costs or resources during the academic year, the school may disburse funds to the student in unequal portions. The reason(s) for making such unequal disbursements should be noted in the student’s file.



In addition, the school has the option of paying a loan disbursement for a payment period in whatever installments and at whatever intervals that will best meet the student’s needs. Before making the first disbursement of a Federal Perkins Loan each award year, a school must have a signed Perkins master promissory note (MPN) from the borrower and provide specific disclosures to the borrower about her rights and responsibilities regarding the loan.

Please see NASFAA’s Self-Study Guide, Campus-Based Programs, for more information on the status of the Federal Perkins Loan Program including the wind-

down of the program during the 2017–18 award year. FWS Program Unlike other Title IV funds, FWS compensation is earned when the student performs the work. FWS funds are not paid in a lump sum disbursement each payment period like the other Title IV programs; instead, the funds are paid to the student at least once a month, based on the hours worked during the payroll period. Before paying a FWS student for an award period, the school must inform the student of:

• The amount the student is authorized to earn; and

• How and when the student will be paid. Direct Loan Program Entrance Counseling Requirements Before releasing the first disbursement of a Direct Loan to a first-time student borrower, the school must ensure the borrower receives entrance counseling. Definition. A first-time student borrower is a student who:

• Previously has not borrowed a subsidized or unsubsidized loan under the Direct Loan or Federal Family Education Loan (FFEL) programs; or

• Is a graduate PLUS borrower who has not previously borrowed a graduate PLUS under the FFEL or Direct Loan programs.

“FWS funds are not paid

in a lump sum disbursement

each payment period like the

other Title IV programs...”

Mandatory Counseling of PLUS Borrowers with an Adverse Credit History If a parent or graduate PLUS borrower has an adverse credit history and qualifies for a PLUS after obtaining a creditworthy endorser or documenting extenuating circumstances, the borrower must complete mandatory PLUS counseling before receiving the first disbursement of the loan. This mandatory PLUS counseling is separate from the entrance counseling required of first-time graduate PLUS borrowers. If the borrower obtained a creditworthy endorser, the endorser is not required to complete the counseling. Master Promissory Notes (MPNs) Before making the first disbursement of a Direct Loan for an award year, the school must have, as applicable, a signed MPN from the student or parent PLUS borrower.

Refer to NASFAA Self-Study Guide: Direct Loan Program, for more information about Direct PLUS Loan eligibility and Direct Loan MPNs.

Verifying The Student’s Continuous Eligibility Before releasing Direct Loan proceeds, the school must verify the student has continuously maintained eligibility for the loan, particularly as it



relates to half-time enrollment. If the student delayed attending school for a period of time, the school may consider the student to have maintained eligibility from the first day of the payment period. If, prior to making a disbursement, the student temporarily ceases at least half-time enrollment, the school may disburse the loan proceeds if the:

• Student resumes at least half-time enrollment;

• School recalculates the student’s cost of attendance (COA), taking into account any cost reduction due to the less-than-half-time enrollment;

• Student continues to qualify for the entire loan amount; and

• School documents its determination of the student’s eligibility.

“A Direct Loan disbursement

may not be released to a

first-time, first-year borrower

until the student has

completed the first 30 days

of her program of study.”

Multiple Disbursement Rules Unless the school is exempt from the multiple disbursement rules, a school must disburse a loan in substantially equal installments and no installment may exceed half the loan. If one or more payment periods have elapsed before the school makes a disbursement of a loan, the school may include in the disbursement loan proceeds for completed payment periods during which the student met Direct Loan eligibility requirements. Within each payment period, the student may be paid in whatever installments and at whatever intervals the school determines will best meet the student’s needs.

A school is exempt from the multiple disbursement requirements for a non-study abroad program if the:

• Loan period for a standard term credit-hour program is not, as applicable, more than one semester, trimester, or quarter, or for all other program structures, the loan period is not more than four months; and

• School’s official cohort default rate is less than 15 percent for each of the three most recent fiscal years for which data are available.

A school is exempt from the multiple disbursement requirements for a study abroad program if the school’s cohort default rate is less than 5 percent for the most recent fiscal year for which data are available. 30-Day Delayed Disbursements Delayed disbursement requirements apply to first-time, first-year Direct Loan borrowers. Definition. A first-time, first-year Direct Loan borrower is a student who:

• Is enrolled in her first year of an undergraduate program; and

• Has not previously borrowed a Direct Subsidized Loan, Direct Unsubsidized Loan, Federal Stafford Loan, Federal Unsubsidized Stafford Loan, or Federal Supplemental Loan for Students.

A Direct Loan disbursement may not be released to a first-time, first-year borrower until the student has completed the first 30 days of her program of study. No delayed disbursement requirement applies to second or subsequent disbursements. A school is exempt from the 30-day delayed disbursement requirement if its official cohort default rate is below 15 percent for each of the three most recent fiscal years for which data are available




1. For the Federal Pell Grant, IASG, or TEACH Grant programs, if a disbursement is made for a prior payment period, the student’s enrollment status (and thus the payment amount) must specifically be based on:

the student’s initial enrollment.

the coursework the student completed.

enrollment after the add/drop date.

institutional purview. 2. A student may _______________________ of a disbursement of Federal Pell Grant funds she would

otherwise be eligible to receive in order to preserve future eligibility for Federal Pell Grant awards under the 600 percent Lifetime Eligibility Used (LEU) limit.

give away part

not decline any part

decline all or part

substitute part 3. Before disbursing a TEACH Grant for the award year, the student must sign an Agreement to Serve and

complete:

initial or subsequent counseling.

exit counseling.

a written authorization to receive funds.

one year of teaching. 4. Schools have flexibility in determining the timeframe and amount of FSEOG disbursements.

True

False 5. Of what must a school inform a student before paying FWS for an award period?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________




6. Before a school releases the first disbursement of a Direct Loan to a first-time borrower, the school must ensure the borrower receives:

exit counseling.

financial awareness counseling.

entrance counseling.

subsequent counseling. 7. Mandatory PLUS counseling for borrowers with an adverse credit history is: (check all that apply)

separate from entrance counseling.

included within entrance counseling.

required of creditworthy endorsers as well. 8. A school must verify a student has continuously maintained eligibility for the Direct Loan.

True

False 9. A school must disburse a Direct Loan in _______________________________ and no installment may

______________________________ the loan amount.

uneven disbursements; exceed one-third of

exactly equal disbursements; exceed one-half of

substantially equal disbursements; exceed one-fourth of

substantially equal disbursements; exceed one-half of

10. What would exempt a school from the multiple disbursement requirements for a study aboard program? __________________________________________________________________________________

11. A school is exempt from the 30-day delayed disbursement requirement if its official cohort default rate

for each of the three most recent fiscal years is ____________________

30 percent.

above 20 percent.

below 15 percent.

above 30 percent.




1. Each Title IV program allows schools to pay a disbursement in whatever installments best meet the students’ needs. Do you think students would be better off without this option? Why or why not? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

2. Would you be in favor of one loan and one grant program to simplify the disbursement process? Why or

why not? Do you think it would be more beneficial to students or schools? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

3. Do you know of any students who have declined or returned the Federal Pell Grant at your school? Does

your school have a process in place to assist students who may want to do so? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

4. What does your school have in place to verify a student’s continuous eligibility for Direct Loans?

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________



Title IV Credit Balances and Provisions for Books and Supplies Title IV Credit Balances You may be wondering, “What is a Title IV credit balance?” Let’s define it and discuss when it occurs. Definition

A Title IV credit balance occurs any time the total amount of Title IV funds credited to a student’s ledger account exceeds the total amount of allowable charges for a

payment period, and thus, a portion of the funds remain on the student’s account. Many schools also may refer to a credit balance as a “refund.” These remaining Title IV funds are considered a Title IV credit balance. A school may determine which Title IV program funds created the Title IV credit balance. When It Occurs Notice that we are talking about a Title IV credit balance. Non-Title IV funds—such as state, institutional, and other private sources—are not included. A Title IV credit balance does not exist if:

• The total of credited Title IV funds does not exceed allowable institutional charges, even if other non-Title IV sources combine to exceed allowable charges;

• The Title IV credit balance has been paid, as applicable, to the student or parent PLUS borrower, but a non-Title IV credit balance remains on the account; or

• The student is not receiving Title IV funds. Example. Lena’s total cost of attendance is $18,460. Lena receives an outside scholarship of $15,550, which covers the direct costs reflected on her bill. Lena has a Federal Pell Grant of $1,832, FSEOG of $500, and Federal Perkins Loan of $575. Lena’s Title IV aid disbursed to her account first, so her credit balance of $2,907 is the result of her

outside scholarship. Lena does not have a Title IV credit balance. Timeframe for Paying a Title IV Credit Balance With the student’s or parent PLUS borrower’s authorization, a school may hold the credit balance funds or apply them to other allowable current or prior award year charges. If no authorization is provided, a school must pay the excess funds to the student or parent PLUS borrower as soon as possible, but no later than 14 calendar days after the:

• Date the balance occurred, if the credit balance occurred after the first day of the payment period; or

• First day of classes for the payment period, if the credit balance occurred on or before the first day of classes of the payment period.

“A Title IV credit balance

occurs any time the

total amount of Title IV funds

credited to a student’s

ledger account exceeds

the total amount of

allowable charges for

a payment period.”

If authorization to hold a credit balance was given, but later was rescinded, a school must pay the credit balance no later than 14 days after receiving the rescission. Parent PLUS loan funds that create a credit balance must be returned to the parent borrower unless the parent provided authorization in writing or via the StudentLoans.gov website to transfer the proceeds to the student, including to a financial account in the student’s name.



Provisions for Books and Supplies

A school must provide a way for a student who is a Title IV recipient to obtain or purchase, by the seventh day of a payment period, the books

and supplies required for the payment period. This must be done if, 10 days before the beginning of the payment period:

• The school could disburse the Title IV funds for which the student is eligible; and

• Presuming the funds were disbursed, the student would have a Title IV credit balance.

In addition, the school must have a policy under which the student may opt out of the method the school provides for the student to obtain or purchase required books and supplies. If the student uses the school’s method to obtain or purchase books and supplies, no written authorization is needed. The amount that must be provided is the lesser of the presumed amount of the credit balance or the amount the school determines the student needs.




1. When does a Title IV credit balance occur? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

2. Non-Title IV funds such as ______________________, _____________________, and other

________________________ sources do not generate a Title IV credit balance. (fill in the blanks)

3. If no authorization is given, when must a school pay any excess Title IV funds to a student or parent

PLUS borrower? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

4. Parent PLUS funds that create a credit balance must be: (check all that apply)

given to the student.

returned to the parent.

given to the student if the parent provides written authorization.

returned to the Direct PLUS Loan Program. 5. A school must provide a way for a student, who is a Title IV recipient, to purchase books and supplies

required for the payment period by the ____________ day of that payment period, if ___________ days

before the beginning of the payment period, the school __________________ and the student would

have a ________________________. (fill in the blanks)



Learning Activity: Title IV Credit Balances Using the information provided, determine if each student has a Title IV credit balance, explain why or why not, and by what date it must be paid, if applicable. Check your answers using the answer key on page 84.

1. Hannah’s allowable charges for the fall term total $10,000 for tuition and fees. She is living off-campus, so there are no institutionally-contracted room and board costs. Her first day of class is September 11. She has not authorized the school to hold any Title IV funds on her behalf. Payments toward Hannah’s $10,000 tuition and fee charges are applied as follows:

August 17 $2,500 Paid by student August 19 $2,000 State Grant August 19 $1,981 Institutional Grant August 31 $2,732 Federal Pell Grant August 31 $ 500 Federal Perkins Loan September 1 $1,000 Private Scholarship

Does Hannah have a Title IV credit balance?

Yes

No Why or Why not? When must the Title IV credit balance be paid, if applicable? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

2. Hun’s total charges for the payment period are $6,000 for tuition and fees. He has not authorized the school to hold Title IV funds on his behalf. The first day of classes for the payment period is August 28. Payments toward his bill are applied as follows: August 9 $2,000 Private Scholarship August 19 $1,000 Federal Perkins Loan August 19 $ 500 FSEOG September 2 $ 913 Federal Pell Grant September 9 $3,750 Direct Loan

Does Hun have a Title IV credit balance?

Yes

No Why or Why not? When must the Title IV credit balance be paid, if applicable? ____________________________________________________________________________________

____________________________________________________________________________________



Prior Year Charges Flowchart The following chart illustrates the various steps for determining whether prior year charges can be paid with current year Title IV funds. Note, the school has the choice of using either the award year or loan period when the funds to be disbursed include Direct Loan and other Title IV funds. In all cases, the appropriate student or parent PLUS borrower authorization always must be obtained to pay any prior year educationally-related institutional charge that is other than for tuition, fees, room, or board.

Financial aid package include

a Direct Loan (DL)?

Student owes educationally-related institutional charges incurred during a prior award year or loan period

Use DL loan period to determine current and

prior year charges

May pay prior year charges, but only up a total of $200 using current year

funds

Use award year to determine current and

prior year charges

Will Federal Work-Study be used to pay the

charges?

Are the charges only for tuition, fees,

room, or board?

Have authorization(s)

to pay the charges?

Has $200 maximum been used

for prior year charges?

May not use current year funds to pay prior year

charges

No

No

Yes

No

Yes

Financial aid package include

only a DL?Yes

May use award year or DL loan period to

determine current and prior year charges

No

YesNo

Yes

No

Yes



Lesson 3 Answer Keys Quick Quiz 1

1. When are Title IV funds considered disbursed? Funds are considered disbursed on the date the school credits the student’s ledger account or directly pays the student or parent PLUS borrower with funds received from ED or institutional funds labeled as Title IV/federal funds.

2. For credit-hour programs offered in terms that are substantially equal, the earliest a school may make a

disbursement is:

30 days before the first day of classes.

10 days after the start of classes.

after the drop/add period or census date.

10 calendar days before the first day of classes. 3. Late disbursement provisions apply when the student ____completed___ the payment period before all

Title IV funds for the payment period were disbursed. (fill in the blank) 4. When is a late disbursement permitted?

It is permitted if the student or parent PLUS borrower meets the regulatory conditions for a late disbursement and law or other regulations do not otherwise prohibit disbursement of the funds.

5. A check is considered issued on the date the school: (check all that apply)

orders the check.

mails it to the student or parent PLUS borrower.

notifies the student or parent PLUS borrower that the check is available for immediate pick-up at a specific location at the school.

prints the check. 6. A school may hold a check for______________________ after the student or parent PLUS borrower is

notified that it is available to be picked up.

14 days

10 days

21 days

30 days 7. What is the school required to collect for a direct cash disbursement?

A signed receipt from the student or parent for the amount of cash disbursed.

• withdrew from • completed




8. If a school disburses Title IV funds under a Tier One (T1) or Tier Two (T2) arrangement, the school must obtain:

the student’s credit rating.

the student’s consent.

power of attorney.

a FERPA release. 9. A student’s ledger account can be any ______________________ system that a school uses to record

institutional charges, cash payments made by the student, and payments from Title IV program funds.

bank

recordkeeping

troubleshooting

electronic funds transfer 10. Current award year Title IV funds may be used to pay up to __________ in prior award year institutional

charges.

$400

$300

$200

$150 11. The purchase of a____ ______ ___________ would be an example of a nonallowable charge or cost.

bookbag

SmartTV

laptop computer

novel for English 212





Regardless of whether Title IV funds were actually received by the school, a ___ disbursement__ of

Title IV funds occurs when the school ____ credits_____ a student’s ledger account or pays the

student or parent PLUS borrower directly and indicates the source of the payment is from

____ federal____ funds.

• institutional • federal

• removes • credits

• return • disbursement



Learning Activity: Prior Award Year Charges

1. Angie attends National College of the Americas (NCA). NCA allows students to either have FWS paid directly to them or have it applied to charges on their student account. Students may provide or withdraw authorization at any time during the academic year. Angie has provided authorizations for her FWS earnings to be applied directly to any outstanding charges on her account and for payment of any Title IV aid for other institutional charges. Angie received a late dorm utility charge from last year for $150. She has no other outstanding charges on her account. Can her current FWS earnings be used to pay her utility charge?

Yes

No Why or Why not? Angie provided authorization for current award year aid to be used to pay prior year educationally-related charges and the amount is less than the $200 maximum allowed.

2. Bernard has library fines of $250 on his ledger account from the past two years. He is able to register for

courses, but this is Bernard’s last semester and per NCA’s policy, he will not be able to receive his degree or his final transcripts until his ledger account is paid in full. This year, Bernard only has a Direct Unsubsidized Loan and a parent PLUS Loan. Bernard expects to receive a Title IV credit balance of $500.There is no written authorization on file from Bernard or his parents. Can any of his Title IV aid for this year be used to pay the prior year charges?

Yes

No Why or Why not? There is no written authorization on file.



Quick Quiz 2

1. For the Federal Pell Grant, IASG, or TEACH Grant programs, if a disbursement is made for a prior payment period, the student’s enrollment status (and thus the payment amount) must specifically be based on:

the student’s initial enrollment.

the coursework the student completed.

enrollment after the add/drop date.

institutional purview. 2. A student may _______________________ of a disbursement of Federal Pell Grant funds she would

otherwise be eligible to receive in order to preserve future eligibility for Federal Pell Grant awards under the 600 percent Lifetime Eligibility Used (LEU) limit.

give away part

not decline any part

decline all or part

substitute part 3. Before disbursing a TEACH Grant for the award year, the student must sign an Agreement to Serve and

complete:

initial or subsequent counseling.

exit counseling.

a written authorization to receive funds.

one year of teaching. 4. Schools have flexibility in determining the timeframe and amount of FSEOG disbursements.

True

False 5. Of what must a school inform a student before paying FWS for an award period?

The school must inform the student of the amount the student is authorized to earn and how and when the student will be paid.




6. Before a school releases the first disbursement of a Direct Loan to a first-time borrower, the school must ensure the borrower receives:

exit counseling.

financial awareness counseling.

entrance counseling.

subsequent counseling. 7. Mandatory PLUS counseling for borrowers with an adverse credit history is: (check all that apply)

separate from entrance counseling.

included within entrance counseling.

required of creditworthy endorsers as well. 8. A school must verify a student has continuously maintained eligibility for the Direct Loan.

True

False

9. A school must disburse a Direct Loan in ___ ____________________________ ___ and no installment may ____ ___________________ the loan amount.

uneven disbursements; exceed one-third of

exactly equal disbursements; exceed one-half of

substantially equal disbursements; exceed one-fourth of

substantially equal disbursements; exceed one-half of 10. What would exempt a school from the multiple disbursement requirements for a study aboard program?

A cohort default rate of less than 5 percent for the most recent fiscal year for which data are available. 11. A school is exempt from the 30-day delayed disbursement requirement if its official cohort default rate

for each of the three most recent fiscal years is __ __________________ ___.

30 percent.

above 20 percent.

below 15 percent.

above 30 percent.



Quick Quiz 3

1. When does a Title IV credit balance occur? Any time the total amount of Title IV funds credited to a student’s ledger account exceeds the total amount of allowable charges for a payment period.

2. Fill in the blank. Non-Title IV funds such as ___state___, ___institutional___, and other ___private___

sources do not generate a Title IV credit balance. (fill in the blanks) 3. If no authorization is given, when must a school pay any excess Title IV funds to a student or parent

PLUS borrower? No later than 14 calendar days after: 1) the date the Title IV credit balance occurred, if it occurred after the first day of the payment period; or 2) the first day of classes for the payment period if the credit balance occurred on or before the first day of classes of the payment period.

4. Parent PLUS funds that create a credit balance must be: (check all that apply)

given to the student.

returned to the parent.

given to the student if the parent provides written authorization.

returned to the Direct PLUS Loan Program. 5. Fill in the blanks. A school must provide a way for a student, who is a Title IV recipient, to purchase

books and supplies required for the payment period by the ___seventh___ day of that payment period, if

___10___ days before the beginning of the payment period, the school could ___disburse the Title IV

funds for which the student was eligible_ and the student would have a ___Title IV credit balance___.



Learning Activity: Title IV Credit Balances

1. Hannah’s allowable charges for the fall term total $10,000 for tuition and fees. She is living off-campus, so there are no institutionally-contracted room and board costs. Her first day of class is September 11. She has not authorized the school to hold any Title IV funds on her behalf. Payments toward Hannah’s $10,000 tuition and fee charges are applied as follows: August 17 $2,500 Paid by student August 19 $2,000 State Grant August 19 $1,981 Institutional Grant August 31 $2,732 Federal Pell Grant August 31 $ 500 Federal Perkins Loan September 1 $1,000 Private Scholarship

Does Hannah have a Title IV credit balance?

Yes

No Why or Why not? When must the Title IV credit balance be paid, if applicable? Although there is a $713 credit balance on Hannah’s account after crediting the private scholarship, she does not have a Title IV credit balance. Of the total $10,713 on her account, only $3,232 are Title IV funds. The 14-day rule does not apply.

2. Hun’s total charges for the payment period are $6,000 for tuition and fees. He has not authorized the school to hold Title IV funds on his behalf. The first day of classes for the payment period is August 28. Payments toward his bill are applied as follows: August 9 $2,000 Private Scholarship August 19 $1,000 Federal Perkins Loan August 19 $ 500 FSEOG September 2 $ 913 Federal Pell Grant September 9 $3,750 Direct Loan

Does Hun have a Title IV credit balance?

Yes

No Why or Why not? When must the Title IV credit balance be paid, if applicable? After crediting the Direct Loan, Hun’s Title IV aid exceeds his tuition and fees. Of the $2,163 in excess funds, $163 were from his Direct Loans. The $163 must be paid to Hun by September 23, which is 14 calendar days after it was applied to his account.



Lesson 4: Notifications and Authorizations


• Know the various Title IV notifications; and

• Recognize the Title IV authorizations.


• Notification;

• Active confirmation;

• Passive confirmation;

• Authorization;

• Current award year charges;

• Prior award year charges; and

• Holding Title IV funds.


• School Requirements After Notifying Recipient of Title IV Loan or TEACH Grant Cancellation Right flowchart

• Cash Management Notifications chart

• Cash Management Authorizations chart

• Cash Management Authorization Checklist

• References for Cash Management

Notifications and Authorizations In the previous lessons of this self-study guide, you learned about key terms, how a school requests and manages Title IV funds, and the requirements for disbursing Title IV funds. The focus of this final lesson is the notifications schools must provide to Title IV aid recipients (including parent PLUS borrowers), as well as the authorizations you may collect from students and parents. Let’s look at notifications first. Notifications

Simply put, a notification is the act of informing a person of certain information. For cash management purposes, schools use notifications to make Title IV recipients aware of upcoming disbursements as well as their rights and responsibilities under

the programs, such as the right to cancel or reduce a loan disbursement. Under the cash management regulations, you are required to make several different notifications. Let’s look at the notification of Title IV eligibility and payment information first. Title IV Eligibility and Payment Information Before disbursing Title IV funds for an award year, a school must notify a student in writing of his Title IV eligibility and payment information, including:

• The amount expected to be received under each Title IV program;

• The expected disbursement date; and

• The method by which funds will be disbursed. If Federal Direct Student Loan (Direct Loan) funds are to be disbursed, the notice also must indicate the amount of the loan that is subsidized and the amount that is unsubsidized. If Federal Work-Study (FWS) funds are present, the notification must include the amount the student is authorized to earn during the award year.

Actual loan disbursements received by a student may differ slightly from the amount expected by the school due to the deduction of the loan fees and rounding differences. You may use an estimate of the net disbursement amount or the actual

gross amount of the loan disbursement in your notifications.



• Glossary


• Key concept

• Quick quiz



• Helpful hint

Credit Title IV Loan Proceeds to Student’s Ledger Account In addition to the Title IV eligibility and payment notification, another notification must be sent to the student or the parent PLUS borrower when Title IV loan funds are credited to a student’s ledger account. This includes regularly scheduled disbursements and late disbursements, but does not include post-withdrawal disbursements.

Post-withdrawal disbursements are part of the return of Title IV funds; different notification requirements apply when the student or parent PLUS borrower is eligible to receive a post-withdrawal disbursement of a Title IV loan. If you are interested in learning

more about this process, review NASFAA’s Self-Study Guide, Return of Title IV Funds. You must convey the following information in this notice:

• Anticipated disbursement date and amount of disbursement;

• Borrower’s right to cancel all or portion of loan; and

• Procedures and deadline by which borrower must inform the school of decision to cancel all or portion of loan.

The timeframe for providing this notification depends on whether the school obtains the borrower’s active or passive confirmation of the types and amounts of Title IV loans the borrower wants for an award year.

Active Confirmation. Active confirmation is any process by which the institution obtains written confirmation of the types and amounts of Title IV program loans that a borrower wants for an award year. Common examples of active confirmation

include an award letter signed by the student or parent PLUS borrower accepting the loan amount, or a secure access website used by the student or parent to accept the loan amount. The school must receive confirmation before it credits the student’s account with the loan funds.

If you have obtained active confirmation, you may provide the notification 30 days before or within 30 days after crediting the student’s account with the loan funds.

Passive Confirmation. Passive confirmation is when the school does not obtain written confirmation from a borrower of the amount and type of loan funds he would like to receive during the award year. Instead, the school assumes the student or

parent wants to borrow all the funds offered unless told otherwise. If the institution does not obtain active confirmation from the student, it must send the notification no earlier 30 days before or within 7 days after crediting the student’s school account.



Loan Cancellation Requests. If a borrower wants to cancel all or a portion of a loan, she must inform the school:

• By the later of the first day of the payment period or 14 days after the date of the school’s notification, if the school uses an active confirmation process; or

• Within 30 days after the date the school sent the notification, if the school does not use an active confirmation process.

Under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, the deadline for responding is extended from 14 to 60 days for borrowers

identified as “affected individuals.” For purposes of this modification, “affected individuals” are borrowers who are:

• Serving on active duty during a war or other military operation or national emergency;

• Performing qualifying National Guard duty during a war or other military operation, or national emergency;

• Residing or employed in an area declared a disaster area by a federal, state, or local official in connection with a national emergency; or

• Affected by direct economic hardship as a direct result of a war or other military operation or national emergency, as determined by ED.

For more information, see the Notice published in the Federal Register on September 27, 2012. Also, refer to the list of References Related to Cash Management on page 109.

Cancellation Requests After School Deadline. If the borrower notifies the school to cancel all or a portion of the loan after the school’s deadline, the school may, but is not obligated to, honor the borrower’s request. If the school chooses to honor the request, the school must return the loan proceeds, as requested, to the Federal Perkins Loan or Direct Loan program. Regardless of when the school receives the borrower’s request, the school must inform the borrower, in writing or electronically, of the outcome of the request.

Credit Teacher Education Assistance for College and Higher Education (TEACH) Grant Proceeds to Student’s Account The final cash management notification schools must make is very similar to the one just discussed for crediting Title IV loan proceeds. You may be wondering why a school needs to send such a notification to a grant recipient. The reason has to do with the nature of the TEACH Grant. If a recipient fails to complete the teaching service requirement, or upon the student’s request, the TEACH grant will convert to a Direct Unsubsidized Loan. Since the grant could potentially be converted to a loan, you must give the recipient the opportunity to cancel the disbursement.

“If a recipient fails to complete the

teaching service requirement, or

upon the student’s request,

the TEACH grant converts to a

Direct Unsubsidized Loan. Since

the grant could potentially be

converted to a loan, you must

give the recipient the opportunity

to cancel the disbursement.”

The notice must provide the following information:

• Anticipated disbursement date and amount of disbursement;

• Student’s right to cancel all or a portion of the TEACH Grant; and

• Procedures and deadline by which student must inform the school of his decision to cancel all or a portion of the TEACH Grant.

Because the process under which the TEACH Grant Program is administered is considered to be an active confirmation process, the school must provide



the notice to TEACH Grant recipients no earlier than 30 days before and no later than 30 days after crediting the student’s ledger account with the funds. Cancellation Requests. You must return, cancel, or both, a TEACH Grant upon the student’s request by the later of:

• First day of the payment period; or

• 14 days after the date of the school’s notification.

“The regulations do not

specify the method schools

must use to provide cash

management notifications.

Schools may provide

notifications either in writing

or electronically.”

Cancellation Requests After School Deadline. As is the case with Title IV loans, TEACH Grant recipients may request cancellation of their award after your deadline for requests. As with late loan cancellation requests, the school, may but is not obligated to, honor the request. The school may return or cancel a TEACH Grant (or both) if a student requests cancellation of the award after 14 days of the school’s notification, but within 120 days of the grant’s disbursement date. If the school does not return or cancel a TEACH Grant, it must notify the student that he may contact the Department of Education (ED) to request the grant be converted to a Direct Unsubsidized Loan. Regardless of when the school receives the borrower’s request, the school must inform the borrower, in writing or electronically, of the outcome.

To learn more about the TEACH Grant Program, review NASFAA’s Self-Study Guide regarding the TEACH Grant Program.

To help you understand a school’s options regarding a recipient’s right to cancel Title IV loans and TEACH Grants, this guide includes a flowchart, School Requirements

After Notifying Recipient of Title IV Loan or TEACH Grant Cancellation Right, on page 102. Notification Formats The regulations do not specify the method schools must use to provide cash management notifications. Schools may provide notifications either in writing or electronically. If using electronic transactions to meet Title IV (including cash management) notification requirements, the school must obtain affirmative consent, as applicable, from the student or the parent PLUS borrower that reasonably demonstrates that she is able to access the information provided in electronic form. ED considers a school to be in compliance with the notification requirements if a written or electronic notification directs students and parents to a secure website containing the required information, rather than providing the required information directly to its student and/or parents.

Additional information regarding the use of electronic communications may be found in GEN-01-06.

Regardless of the method you use for notifications, you must send them directly to the student or parent PLUS borrower. The Cash Management Notifications chart on beginning on page 103 summarizes the requirements for all of the notifications discussed in this lesson. It is a great desk reference.

For additional resources, refer to the list of References Related to Cash Management on page 109.




1. Define notification. ___________________________________________________________________________________

___________________________________________________________________________________

________________________________________________________________________________

2. Which of the following items must be included in the Title IV eligibility and payment information

notification? (check all that apply)

The amount expected to be received under each Title IV program

The date the student accepted his or her financial aid awards

The student’s total educational loan debt

The expected disbursement date

The disbursement method

The amount of subsidized and unsubsidized Direct Loan funds to be disbursed

The amount of FWS funds the student is authorized to earn

The student’s current account balance

3. When must a school provide notification of crediting Title IV loan proceeds to a student’s ledger account? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

4. Which of the following items must be included in the notification of crediting Title IV loan proceeds to a

student’s ledger account? (check all that apply)

The borrower’s total educational loan debt

Anticipated disbursement date

Disbursement amount


The borrower’s right to cancel all or a portion of a loan

Procedures and deadlines by which the borrower must inform the school of his or her decision to cancel all or a portion of a loan

How to access information regarding non-Title IV aid programs




5. What is active confirmation? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

6. What is passive confirmation?

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

7. What actions must a school take if it decides not to honor a borrower’s request to cancel a loan received

after the school’s deadline? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

8. Why must a school notify a recipient before it disburses a TEACH Grant?

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________



Learning Activity: Cash Management Notifications Review your school’s Title IV eligibility and payment information notification then answer the following questions. You also will need to talk with the staff member responsible for coordinating notifications.

1. Does the notification include all requirement elements? If no, what elements are missing? _____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

2. Does the school use an active or passive confirmation process? Why does it use this process?

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

3. When does the school send out the Title IV eligibility and payment information notice?

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________




1. Do you believe all of the cash management notifications are necessary? Why or why not? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

2. Why do you think schools are given the option to honor loan cancellation requests received after the

deadline? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

3. Do you think the information provided in the notice to credit TEACH Grant proceeds to a student’s ledger

account is adequate? Why or why not? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________



Authorizations

There are several services a school may provide when handling Title IV funds that require authorization by the student or by the parent PLUS borrower. Schools are

not required to offer any of these services. However, if the service is offered, you must give the student and/or the parent the option of taking advantage of the service by authorizing (or giving permission for) it in writing.

A student may not authorize the disposition of parent PLUS funds.

A school may accept a verbal authorization, instead of a written one, for a student or parent borrower if he is an “affected individual” under the HEROES Act of 2003, as defined on page 87. You must document the verbal authorization. Let’s take a look at the types of services that require the student’s or the parent PLUS borrower’s authorization. Use of Title IV Funds (Other Than FWS) to Pay Certain Institutional Charges As you learned in Lesson 3, a school may disburse Title IV funds by crediting a student’s ledger account. For all Title IV funds except FWS, a school may credit a student’s ledger account without authorization for current award year tuition, fees, and institutionally contracted room and board charges, or up to $200 in prior-year charges for those same items. Only with authorization from the student or the parent PLUS borrower may a school apply Title IV funds to pay other current award year or prior award year educationally-related institutional charges. Authorization may not be provided to pay more than $200 in total prior-year charges. To provide context for the following discussion about authorizing the payment of certain institutional charges, let’s look first at the meaning of current award year and prior award year charges.

An award year begins on July 1 and ends on the following June 30.

Direct Loans are awarded on an academic year basis, rather than an award year basis. The cash management regulations define the current award year for the purpose of disbursing Title IV funds as:

• The current award year, if the only Title IV funds disbursed do not include a Direct Loan;

• The current loan period, if the only Title IV funds disbursed are Direct Loan funds; or

• At the school’s discretion, either the current award year or the current loan period, if the Title IV funds disbursed include Direct Loan proceeds and any other Title IV aid.

“A school may accept a verbal

authorization, instead of a

written one, for a student or

parent borrower if he is an

“affected individual” under

HEROES Act of 2003…

You must document the

verbal authorization.”

Current award year charges are those charges a school posts to a student’s ledger account for the current award year or loan period, including charges from a payment period earlier in that award year or loan period. For example, suppose a credit-hour semester-based program always treats the summer term as a trailer to the award year and, for Direct Loan purposes, the academic year. A summer term that is a trailer is the last term in the award year or Direct Loan academic year. A student’s remaining balance due for tuition and fees from the fall semester would be current award year charges at the beginning of the summer term since it is treated



as part of the same year as both the fall and spring terms.

Prior award year charges are charges a school applied to a student’s ledger account for any award period or loan period prior to the current award year or

loan period. If the student in our previous example had a remaining balance due for tuition and fees from the summer at the beginning of the following fall semester, the outstanding summer charges would be prior award year charges because the summer term and the fall semester belong to two different award years.

The $200 cap on the payment of prior award year charges applies to all current award year Title IV funds used to pay prior award charges and helps ensure that

Title IV aid awarded for the current year is used primarily to pay current charges.

“To help a student or

parent manage his funds,

a school also may offer to

hold any funds from a Title IV

credit balance remaining on the

student’s school account

after allowable charges

have been paid.”

Use of FWS Funds to Pay Allowable Current Year Charges The provisions regarding the authorization to pay institutional charges using FWS funds are different from the provisions governing the other Title IV programs. If the nonfederal share of an FWS award is in the form of a noncash contribution for tuition, fees, services, or equipment, no authorization is needed to credit the student’s ledger account for

the nonfederal share. Otherwise, a school must obtain the student’s authorization to credit the student’s ledger account with earned FWS funds to pay tuition, fees, institutionally contracted room and board, and other educationally-related goods and services. Use of FWS Funds to Pay Prior Year Charges Unlike other Title IV funds, the student’s authorization is required to apply earned FWS funds toward prior year charges. With authorization, the school can credit FWS funds to the student’s ledger account to pay no more than $200 in prior award year charges for tuition, fees, room, board, or other educationally-related charges.

FWS funds, combined with other Title IV funds, used to pay prior award year charges cannot exceed $200.

Holding Title IV Funds To help a student or parent manage his funds, a school may offer to hold any funds from a Title IV credit balance remaining on the student’s school account after allowable charges have been paid. To do so, the school must obtain an authorization from the student or the parent PLUS borrower. As is the case for all other authorizations, the student or parent must be given a choice in this regard. Authorization is not permitted if prohibited by ED under the reimbursement or heightened cash monitoring payment methods.

Title IV credit balances are discussed in detail in Lesson 3.

Time Limitations for Holding Funds. Regardless of the authorization given by a student or a parent PLUS borrower, the cash management regulations limit how long a school may hold a Title IV credit balance. A school must pay, as applicable, the student or the parent PLUS borrower:

• Any funds the school is holding from a Direct Loan by the end of the loan period;



• Any FWS funds the school is holding by the end of the student’s final payroll period for the award period; and

• Any funds the school is holding from all other Title IV programs by the end of the last payment period in the award year.

The FWS award period is the specific period of time for which the student is authorized to be employed under FWS.

If the school has lost contact with the student or parent, it must use all reasonable means to contact the individual. If these efforts still fail to locate the student or parent, the school must return all Title IV funds held for that individual to the appropriate Title IV program. Unclaimed Title IV funds do not “escheat” to the state—that is, the state has no legal claim to the funds, nor do the funds revert to the school or any other party. Accounting for Held Funds. If the school chooses to offer this service, funds held on behalf of the student or parent PLUS borrower, the school must:

• Identify the amount of funds the school is holding for each student and parent in a subsidiary ledger account specifically designated for that purpose; and

• Maintain in its depository account, at all times, an amount that is at least equal to the amount of funds the school is holding for the student or parent.

The Cash Management Authorizations chart beginning on page 106 summarizes the various authorizations. It is a good desk reference.

A school is not required to offer these service options to all Title IV recipients. Provided the decision is made based on cash management concerns and is not a discriminatory practice, a school may determine whether it is in the school’s or the student’s best interest to offer any of these service options. For example, it is acceptable for a school to choose to hold funds for students but not for parents, or to hold funds for parents but not for students. Or, a school may decide to refuse to hold funds for students with credit balances of less than $100 due to administrative burden.

In any case, a school’s policies and procedures manual should explain the conditions under which it will, or will not, offer a particular service to a student or parent. Authorization Contents Regardless of the service provided, an authorization must be obtained before the school may carry out any activity covered by the authorization. Furthermore, the authorization must convey certain information to the student or to the parent PLUS borrower. The characteristics of an authorization are as follows:

• It must be obtained in writing before the school may perform any action covered by the authorization.

• Separate written authorizations must be obtained from the student and from the parent PLUS borrower.

• It must clearly indicate the student’s or parent PLUS borrower’s option of freely giving her authorization; the school cannot coerce the student or parent PLUS borrower into granting authorization.

• Although the authorization need not detail every aspect of the service provided, it must explain each provision for activities the school seeks to perform on behalf of the student or parent PLUS borrower (that is, a blanket authorization is not acceptable), as well as how the school will carry out each activity.

• It should be written clearly and in plain language so that the student or parent PLUS borrower is able to understand what the school specifically is authorized to do and his rights under the authorization without reading “fine print” or being referred to other materials, such as the school catalog.

• A school may use a single form to collect multiple authorizations. However, the form must be designed so that the student or parent PLUS borrower clearly indicates the service being authorized. In addition, the form should state that the student or parent PLUS borrower may refuse to authorize any service listed on the form.



• The authorization may not be incorporated into any other document that must be signed unless some sort of “yes/no” check-off clearly is provided for each service.

• It must inform the student or parent PLUS borrower of his right to cancel or modify the authorization at any time, and clearly explain the procedures for doing so.

• It must inform the student or parent PLUS borrower that any cancellation or modification request takes effect on the date the school receives the request.

• It should indicate the period covered by each authorization.

• Unless it is canceled by the student or parent PLUS borrower, any authorization given may be for a specific period of time or for the entire period during which the student is enrolled at the school. In other words, schools are not required to notify students or parent PLUS borrowers each year of the provisions contained in the authorization as long as the initial authorization clearly explains the right of the student or parent to modify or cancel the authorization at any time.

• If the purpose of the authorization is to hold Title IV funds, it must state the maximum time the school will hold the student’s or parent PLUS borrower’s Title IV funds.

The Cash Management Authorizations Checklist beginning on page 108 can help you confirm your school’s authorizations include all required elements.

Cancellation of Authorization. If a student or parent PLUS borrower chooses to cancel or modify any authorization he has given the school regarding the handling of his or her Title IV funds, the cancellation or modification is effective on the date the school receives it. It is not retroactive; Title IV funds may be applied to charges that were incurred prior to the school’s receipt of the cancellation or modification notice. For example, suppose a student authorizes the school to apply any Title IV credit balance, other than one created by parent PLUS, toward bookstore charges for books and supplies, and later cancels that authorization. The school does

not have to reverse any transaction involving Title IV funds that were applied to books and supplies charges before the student cancelled the authorization. However, the school may not apply any Title IV funds to books and supplies charges the student incurs after the date the cancellation notice was received by the school. If a student or parent PLUS borrower cancels an authorization to hold Title IV credit balances on the student’s ledger account, any Title IV funds the school is holding under the authorization must be paid to the student or parent PLUS borrower within 14 days of the date the school receives the cancellation notice. Authorization Formats Like the notifications discussed earlier, the cash management regulations don’t specify the method or format of authorizations. They may be written or electronic. As with the use of electronic processes to make notifications, schools should obtain the student or parent PLUS borrower’s affirmative consent that reasonably demonstrates that she is able to access the information provided in electronic form. For additional information, see the discussion of notification formats on page 88.




1. Want is the purpose of authorizations? ___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

2. A school may credit Title IV funds other than FWS to a student’s ledger account to pay which of the

following charges without authorization? (check all that apply)

Current award year tuition and fees

Prior award year tuition and fees

Current award year institutionally contracted room and board

Prior award year institutionally contracted room and board

Other educationally-related expenses 3. What is the difference between current award year charges and prior award year charges?

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

___________________________________________________________________________________

4. A school may use Title IV funds, other than FWS, to pay which of the following charges only if the student

or parent PLUS borrower provides authorization? (check all that apply)


Prior award year tuition and fees in excess of $200


Prior award year institutionally contracted room and board in excess of $200

Other educationally-related expenses 5. What is the maximum amount of Title IV funds (from all programs) that may be used to pay prior award

year charges?

$100

$200

$500

$1,000

$2,000




6. With the student’s authorization, a school may credit FWS funds to his or her account to pay which of the following charges? (check all that apply)



Current year institutionally contracted room and board


Other educationally-related expenses 7. What is the rationale for allowing a school to hold Title IV funds?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

8. If a school holds Title IV funds for a student or parent PLUS borrower, when must it pay the funds to the

student or parent? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

9. Title IV funds cannot _______________________________ to the state. 10. If a school holds funds on behalf of a student or parent, how must it account for the funds?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

11. Which of the following items are characteristics of an authorization? (check all that apply)

It must be in writing

The inclusion of “fine print”

Specifies the period covered by the authorization

Explains any cancellation or modification is retroactive

Explains the procedures for modification and cancellation




12. If a student or parent cancels an authorization, the cancellation is effective

retroactively to the beginning of the payment period.

when the school receives the cancellation.

14 days following the school’s receipt of the cancellation.

the first date of the next payment period.



Learning Activity: Authorizations Using the Cash Management Authorizations Checklist on page 108 as a guide, review your school’s authorizations and answer the following questions.

1. Do the authorizations include all the required elements? If not, what elements are missing? __________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

2. Are the authorizations clear and easy to understand? If not, how would you improve the language?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

3. What format does your school use to collect authorizations? Why?

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________




1. Why do you think students and parents need to authorize the use of Title IV funds to pay certain charges? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

2. Do you agree with the $200 limitation on using Title IV funds to pay prior award year charges? Why or

why not? ____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

3. Do you think all the elements of authorizations are necessary? If not, what would you eliminate?

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________



School Requirements After Notifying Recipient of Title IV Loan or TEACH Grant Cancellation Right

*To cancel all or a portion of a Title IV loan disbursement made to the student’s ledger account, the borrower must respond by: ♦ The later of the first day of the payment period or 14 days of the date of school’s notification if an active

confirmation processed used; or ♦ Within 30 days after school’s notification if active confirmation process not used. To cancel all or a portion of a TEACH Grant disbursement made to the student’s ledger account, the student must respond by the later of the first day of the payment period or 14 days of the date of school’s notification. The school may, but is not required to, honor the borrower’s cancellation request received after the deadline.

Yes No

Yes No

No

No

No

Yes

Yes

Yes

Did recipient respond to

notification of cancellation

right?

No action required

Did recipient request

cancellation of all or portion of award?

No action required

Was the request

made prior to response deadline*?

Will school honor the recipients’ request?

Did recipient request

cancellation of the entire

award?

Notify recipient that award will not be

reduced or cancelled because response received after the deadline.

Reduce award amount and return excess

proceeds according to program requirements.

Notify recipient of action taken.

Cancel award and return proceeds

according to program

requirements. Notify borrower of

action taken.



Cash Management Notifications The chart below details the various cash management notification requirements. Note all parent references below apply only to the parent who borrowed a parent PLUS on behalf of a dependent student.

Notification Information That Must Be Conveyed

Who Must Be Notified When How Comments

Title IV Eligibility and Payment Information 668.165(a)(1); 675.16(a)(3)

• For each Title IV program: Amount to be

received under each program, including PLUS;

Expected disbursement date;

Method of disbursement; and

If Direct Loans awarded, indicate which funds are subsidized, unsubsidized, and PLUS

• For FWS, amount authorized to be earned during the award period

Student • General notification for each Title IV program, before Title IV funds are disbursed

• For FWS, each award period before initial disbursement of FWS wages

• Notice sent directly to student

• Method and format not specified; may be electronic or written

• For each Direct Loan, amount may be full amount of loan originated or estimated net disbursement

• For FWS, the award period is period covered by student’s FWS award (e.g., academic year if awarded for fall and spring semesters)

• FWS award period may consist of parts of two award years (i.e., summer FWS award crosses over July 1)





Credit Title IV Loan Proceeds to Student’s Ledger Account1 668.165(a)(2)-(6)

• Anticipated disbursement date and amount of disbursement

• Borrower’s right to cancel all or portion of loan

• Procedures and deadline by which borrower must inform school of decision to cancel all or portion of loan

Borrower • If school obtains borrower’s affirmative confirmation: no earlier than 30 days before and no later than 30 days after crediting student’s ledger account

• If school does not obtain affirmative confirmation: no earlier than 30 days before and no later than 7 days after crediting the student’s ledger account

• Notice sent directly to borrower in writing


• To request cancellation of all or a portion of a loan, borrower must respond: By the later of

the 1st day of payment period or 14 days after date of school’s notification, if active confirmation process used; or

Within 30 days after date of school’s notification, if no active confirmation process used

• Borrower must be notified of the outcome of any cancellation request

1 Not required for post-withdrawal disbursements of loan proceeds; see 668.22(a)(6).

1 Not required for post-withdrawal disbursements of loan proceeds; see 668.22(a)(6).





Credit TEACH Grant Proceeds to Student’s School Account 668.165(a)(2)-(6); 686.31(e)

• Anticipated disbursement date and amount of disbursement

• Student’s right to cancel all or a portion of TEACH Grant

• Procedures and deadline by which student must inform school of decision to cancel all, or portion of, TEACH Grant

Student No earlier than 30 days before and no later than 30 days after crediting student’s ledger account

• Notice sent directly to student in writing


• School must return or cancel TEACH Grant, or both. by later of: 1st day of

payment period; or

14 days after date of the school’s notification

• School may return or cancel TEACH Grant, or both, if student requests cancellation after 14 days of school’s notification but within 120 days of disbursement date If school does

not return or cancel TEACH Grant, it must notify student

Student may contact ED to request grant conversion

• Student must be notified of the outcome of any cancellation request



Cash Management Authorizations The chart below details the various cash management authorization requirements. Note all parent references below apply only to the parent who borrowed a parent PLUS on behalf of a dependent student.

Authorization School Activities Authorized

Who Provides Authorization When Comments

Use Title IV Funds (other than FWS) to Pay Certain Institutional Charges 668.164(c); 668.164(d)(1); 668.165(b)(1)(i),(2)-(4)

Disbursement of Title IV funds (other than FWS) by crediting student’s ledger account to pay: • Current payment period

institutional charges for educationally-related costs other than tuition, fees, and institutionally contracted room and board;

• Any previous payment period in the current award year or current loan period for which the student was eligible for Title IV aid; and

• Any prior loan period, or prior award year, institutional charges for educationally-related costs other than tuition, fees, and institutionally contracted room and board, not to exceed $2001

Note: Total amount of current year Title IV funds (including FWS) that can be applied to any prior award year charges cannot exceed $200

Student or parent, as applicable • Parent

authorization required for school to make direct payment to student of any parent PLUS Loan funds

Provided at discretion of student or parent prior to authorized activity

Authorization not required for Title IV programs other than FWS when crediting student’s ledger account for payment of: • Current payment

period allowable charges (tuition, fees, or institutionally contracted room and board); or

• Any prior loan period, or prior award year, charges of tuition, fees, and institutionally contracted room and board, not to exceed $2001

Use FWS Funds to Pay Allowable Current Award Year Charges 675.16(b)(1)(i); 675.16(d)(1)(i),(2)-(4)

Disbursement of FWS funds by crediting student’s ledger account to pay current award year institutional charges for tuition, fees, institutionally contracted room and board, and other educationally-related costs

Student Provided at discretion of student prior to authorized activity

No authorization required to pay nonfederal share of FWS, if payment is in the form of a noncash contribution for tuition, fees, services, or equipment

1 School may disburse for one or more payment periods for the current year, defined for these purposes as: • The current loan period for a student or parent who receives only a Direct Loan; • The current award year for a student who does not receive a Direct Loan but receives any other Title IV aid; or • At the discretion of the institution, either the current loan period or the current award year if a student receives a

Direct Loan and any other Title IV aid.



Authorization School Activities Authorized

Who Provides Authorization When Comments

Use FWS Funds to Pay Prior Award Year Charges 675.16(b)(1)(ii),(2); 675.16(d)(1)(i),(2)-(4)

Disbursement of FWS funds by crediting student’s ledger account to pay no more than $200 in prior award year charges for tuition, fees, room, board, or other educationally-related charges Note: FWS funds, combined with other Title IV funds, used to pay prior award year charges cannot exceed $200

Student Provided at discretion of student prior to authorized activity

No authorization required to pay nonfederal share of FWS, if payment is in the form of a noncash contribution for tuition, fees, services, or equipment

Hold Title IV Funds 668.165(b)(1)(ii),(2)-(5); 675.16(d)(1)(ii),(2)-(5)

• Hold Title IV credit balance on student’s account until: End of loan period for

Direct Loan funds; End of final payroll

period of the student’s FWS award period for FWS funds; and

Last payment period of the award year for which funds were awarded for Title IV funds other than Direct Loan or FWS

Note: FWS award period is the specific period of time for which the student is authorized to be employed under FWS

• Authorization not permitted if prohibited by ED under reimbursement or heightened cash monitoring payment method

Student or parent, as applicable

Provided at discretion of student or parent prior to authorized activity

• Title IV credit balance occurs whenever amount of Title IV funds credited to student’s ledger account exceeds allowable institutional charges

• If Title IV funds held, school must: Identify

amount held for each student and parent in a subsidiary ledger account designated for that purpose; and

Maintain cash in its depository account equal to at least amount of funds being held

• Unclaimed Title IV funds do not revert (escheat) to state, school, or any other party



Cash Management Authorization Checklist

Use this checklist to ensure the authorization contains all required elements. Note all parent references below apply only to the parent who borrowed a parent PLUS on behalf of a dependent student.

Authorization must be obtained in writing* before the school may perform any action covered by the authorization.

Separate written authorizations must be obtained from the student and from the parent.

Authorization form clearly must indicate the student’s or parent’s option of giving that authorization (i.e., the student or parent must be allowed to give his authorization freely).

Authorization form must explain each provision for the activities the school seeks to perform on behalf of the student or parent and how the school will carry out the authorized activity.

Authorization form should be written clearly and in plain language so the student or parent is able to understand what the school specifically is authorized to do and his or her rights under the authorization without reading “fine print” or being referred to other materials.

A single form (e.g., institutional financial aid application, award letter) may be used to collect multiple authorizations; however, it clearly should indicate the services authorized and that the student or parent may refuse to authorize any service listed (i.e., cannot be subsumed into some other form).

Authorization form may not be incorporated into any other document that must be signed unless the student or parent can indicate approval plainly for each item to be authorized.

Authorization form must inform the student or parent of his right to cancel or modify the authorization at any time.

Authorization form must describe the procedures for canceling or modifying the authorization.

Authorization form must inform the student or parent that any cancellation or modification request takes effect on date the school receives the request.

Authorization form should indicate the period covered by the authorization, which (unless canceled or modified) may be a specific period of time or the entire period the student is enrolled.

For an authorization to hold Title IV funds, the authorization form must state the maximum time the school will hold the student’s or parent’s Title IV funds.

* Authorization must be given in writing unless the student or parent is unable to provide written authorization due to his or her status as an “affected individual” under the Higher Education Relief Opportunities for Students (HEROES) Act of 2003. An “affected individual” for this purpose is: 1) serving on active duty during a war or other military operation or national emergency; 2) performing qualifying National Guard duty during a war or other military operation, or national emergency; 3) residing or employed in an area declared a disaster area by a federal, state, or local official in connection with a national emergency; or 4) suffering direct economic hardship as a direct result of a war or other military operation or national emergency, as determined by the Department of Education. Although there is no expiration of the HEROES Act and the Secretary of Education’s waiver and modification authority extends indefinitely, the current ED HEROES waivers and modifications are set to expire on September 30, 2017.



References for Cash Management The following is a list of resources used to develop the materials that you may find helpful if you need additional information or clarification on a topic covered in this self-study guide. Federal Register Federal Register, 9/27/12, Notice: Federal Student Aid Programs (Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and the Federal Direct Loan Program) Federal Register, 10/30/15, Final Rule: Program Integrity and Improvement Federal Register, 4/07/16, Program Integrity and Improvement Regulations; Corrections Dear Colleague Letters GEN-12-18 – Declination or Return of Federal Pell Grant Funds by a Student GEN-16-16 – Institutional Reporting of Fee Information Under the New Cash Management Regulations 2016–17 FSA Handbook • Volume 3 – Calculating Awards and Packaging, Chapter 1: Academic Calendar, Payment Periods &

Disbursements; Chapter 3: Calculating Pell & Iraq & Afghanistan Service Grant Awards; Chapter 4: Calculating TEACH Grants; Chapter 7: Packaging Aid

• Volume 4 – Processing Aid and Managing FSA Funds, Chapter 1: Requesting and Managing FSA Funds;

Chapter 2: Disbursing FSA Funds; Appendix A: Accounting Systems; Appendix B: A School’s Financial Management Systems

• Volume 5 – Withdrawals and Return of Title IV Funds, Chapter 1, Treatment of Students Who Withdraw

from Clock-hour Programs, Non-term Credit Hour Programs, and Nonstandard Term Credit-hour Programs with Terms that are Not Substantially Equal (and in which no term is less than 9 weeks in length), and then Transfer to a New School or Re-Enter the Same Program in a Similar Program

• Volume 6 – Managing Campus-Based Funds, Chapter 1: Campus-Based Programs Common Elements



Lesson 4 Answer Keys Quick Quiz 1

1. Define notification. Notification is the act of notifying an individual or entity of certain information.

2. Which of the following items must be included in the Title IV eligibility and payment information

notification? (check all that apply)

The amount expected to be received under each Title IV program

The date the student accepted his or her financial aid awards

The student’s total educational loan debt

The expected disbursement date

The disbursement method

The amount of subsidized and unsubsidized Direct Loan funds to be disbursed

The amount of FWS funds the student is authorized to earn


3. When must a school provide notification of crediting Title IV loan proceeds to a student’s ledger account? A school must provide notification of crediting Title IV loan proceeds to a student’s ledger account for regularly scheduled disbursements and late disbursements.

4. Which of the following items must be included in the notification of crediting Title IV loan proceeds to a

student’s ledger account? (check all that apply)

The borrower’s total educational loan debt

Anticipated disbursement date

Disbursement amount


The borrower’s right to cancel all or a portion of a loan

Procedures and deadlines by which the borrower must inform the school of his or her decision to cancel all or a portion of a loan

How to access information regarding non-Title IV aid programs 5. What is active confirmation?

Active confirmation is the process whereby the Direct Loan borrower requests a specific loan type and amount or, in response to the school’s offer of a loan, accepts or requests changes to the proposed loan type and/or amount.




6. What is passive confirmation? Passive confirmation is the loan process whereby the borrower is notified of each loan type and amount, but need not respond unless he or she wishes to decline or reduce the proposed loan amount.

7. What actions must a school take if it decides not to honor a borrower’s request to cancel a loan received

after the school’s deadline? The school must inform the borrower, in writing, of its decision not to honor the cancellation request.

8. Why must a school notify a recipient before it disburses a TEACH Grant?

Because a TEACH Grant can be converted to a Direct Unsubsidized Loan, the student must be given the option to cancel the award.



Quick Quiz 2

1. Want is the purpose of authorizations? The purpose of authorizations is to give students and parent PLUS borrowers the opportunity to take advantage of cash management services offered by a school.

2. A school may credit Title IV funds other than FWS to a student’s ledger account to pay which of the

following charges without authorization? (check all that apply)





Other educationally-related expenses 3. What is the difference between current award year charges and prior award year charges?

Current award year charges are charges posted to a student’s ledger account only for the current award year or current loan period.

4. A school may use Title IV funds, other than FWS, to pay which of the following charges only if the student

or parent PLUS borrower provides authorization? (check all that apply)


Prior award year tuition and fees in excess of $200


Prior award year institutionally contracted room and board in excess of $200

Other educationally-related expenses 5. What is the maximum amount of Title IV funds (from all programs) which may be used to pay prior award

year charges?

$100

$200

$500

$1,000

$2,000




6. With the student’s authorization, a school may credit FWS funds to his or her account to pay which of the following charges? (check all that apply)



Current year institutionally contracted room and board


Other educationally-related expenses 7. What is the rationale for allowing a school to hold Title IV funds?

A school can hold Title IV funds to help a student or parent manage his or her funds. 8. If a school holds Title IV funds for a student or parent PLUS borrower, when must it pay the funds to the

student or parent? If a school is holding Direct Loan funds, it must pay the funds by the end of the loan period. If it is holding FWS funds, it must pay them by the end of the student’s final payroll period for the award period. If the school is holding funds from other Title IV programs, it must pay them by the end of the last payment period in the award year.

9. Title IV funds cannot _________escheat__________ to the state. 10. If a school holds funds on behalf of a student or parent, how must it account for the funds?

A school accounts for held funds by identifying the amount of funds it is holding for the student or parent in a subsidiary ledger account specifically designated for that purpose and maintaining in its depository account, at all times, an amount that is at least equal to the amount of funds it is holding for the student or parent.

11. Which of the following items are characteristics of an authorization? (check all that apply)

It must be in writing

The inclusion of “fine print”

Specifies the period covered by the authorization

Explains any cancellation or modification is retroactive

Explains the procedures for modification and cancellation 12. If a student or parent cancels an authorization, the cancellation is effective:

retroactively to the beginning of the payment period.

when the school receives the cancellation.

14 days following the school’s receipt of the cancellation.

the first date of the next payment period.


114 Cash Management © 2017 NASFAA

Glossary for Cash Management Academic year (AY): The program’s AY, which must be defined according to statute as: • For undergraduate credit-hour programs, a minimum of 30 weeks of instructional time during which a full-

time student is expected to complete at least 24 semester or trimester hours or 36 quarter hours; • For undergraduate clock-hour programs, a minimum of 26 weeks of instructional time during which a full-

time student is expected to complete at least 900 clock hours; • For graduate and professional credit-hour programs, a minimum of 30 weeks of instructional time during

which a full-time student is expected to complete the minimum number of credit hours defined by the school; and

• For graduate and professional clock-hour programs, a minimum of 26 weeks of instructional time during which a full-time student is expected to complete the minimum number of clock hours defined by the school.

Active confirmation: Process whereby the Direct Loan borrower requests a specific loan type and amount or, in response to the school’s offer of a loan, accepts or requests changes to the proposed loan type and/or amount. Administrative capability: The ability a school must demonstrate in providing the education it promises and properly managing the Title IV programs. Administrative cost allowance (ACA): The allowance paid to schools by ED for participating in the Federal Pell Grant Program and the campus-based programs. This is money paid to schools to offset some of the costs of delivering financial aid to students from these programs, as well as carrying out the Title IV consumer information requirements. Authorization: Amount of Title IV program funds a school is currently eligible for in the year and program in question. The authorization is also called the Current Funding Level (CFL). In Federal Direct Student Loan (Direct Loan) and Teacher Education Assistance for College and Higher Education (TEACH) Grant programs, this is sometimes referred to as the Cash Control Amount (CCA). Available balance: Amount of cash available for a school to draw down through G5. The available balance is the difference between the authorized amount and the school’s net drawdowns to date. Award year: The period from July 1 of one year to June 30 of the following year. Campus-based programs: The term commonly applied to federal student aid programs administered directly by eligible participating institutions. The programs include Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Federal Perkins Loan programs. Carry-back: Funds from the FWS and FSEOG campus-based programs to reserve and spend in the previous award year. Carry-forward: Funds from the FWS and FSEOG campus-based programs to reserve and spend in the next award year. Cash management: The rules and procedures an institution that participates in the Title IV programs must follow to request, maintain, authorize, disburse, deliver, use, and return Title IV funds.


© 2017 NASFAA Cash Management 115

Cash on hand: The amount available in the federal funds account at the payee’s financial institution. Cash on hand is calculated as the total funds received less the federal share of disbursements made, plus refunds received. The balance does not include accruals, accounts payable, or funds belonging to ED (e.g., interest earned). See also excess cash. Common Origination and Disbursement (COD) System: The system used to process records for the Federal Pell Grant, TEACH Grant, and Direct Loan programs. Cost of attendance (COA): Costs the student is expected to incur during the period of enrollment, including tuition, fees, room, board, books, supplies, transportation, miscellaneous personal expenses, and other items allowed under Section 472 of the HEA. The COA usually is calculated for a full academic year. Crossover payment period: A payment period that begins before July 1 and ends on or after July 1. Schools must assign the entire crossover payment period to one of the two award years. Current Funding Level (CFL): Total amount of cash available for a school to draw down at any point in time. The CFL is based on the school’s prior-year disbursement history against which it can draw down funds and make disbursements for the current year. A school’s CFL may be adjusted as disbursements are accepted by COD. The CFL is also called the authorization or Cash Control Amount. Depository Account: An interest-bearing account at a depository institution described in 12 U.S.C. 461(b)(1)(A) and into which ED deposits all Title IV funds requested by the school. Disbursed aid: A student’s Title IV aid that was disbursed directly to the student or credited to his or her institutional account. Disbursement: When Title IV funds are credited to a student’s school account or directly paid to a student or parent PLUS borrower with: • Funds received from ED; or • Institutional funds labeled as Title IV funds and used in advance of receiving Title IV funds. Drawdown: A school’s request for and subsequent transmission of funds to the school via G5. A drawdown occurs when a school (or COD) initiates a request for funds through G5, and the funds are transmitted from the U.S. Department of the Treasury to the school’s bank account. Also known as cash receipt. Early disbursement: For standard term credit-hour programs, the disbursement of Title IV funds up to 10 calendar days before the first day of classes of the payment period. For credit-hour programs that are nonstandard term or nonterm and all clock-hour programs, the disbursement of Title IV funds is the later of: • 10 days before the first day of classes of the payment period, or • The date the student completed the previous payment period for which he or she received Title IV funds. Education Central Automated Processing System (EDCAPS): ED system that integrates its financial processes, including financial management, contracts and purchasing, grants administration, and payment management. Electronic Statement of Account (ESOA): An official statement from ED that sets a school’s authorization level for the upcoming award year and projects adjustments to the school’s Title IV program funding needs. It summarizes the status of a school’s CFL as it compares to the net drawdowns for the award year. An ESOA also details the amount expended to date. ESOAs are produced for the Federal Pell Grant Program whenever there is an adjustment to a school’s current Title IV program authorization.



Escheat: The reversion of funds to an unintended third-party, such as when a Title IV credit balance check to a student is not cashed, and the funds remain in the school’s account or are transferred to the state’s escheatment account. Schools must have a process to ensure that FSA program funds never escheat to the state or any other third party. Estimated financial assistance (EFA): The estimated amount of assistance for a period of enrollment that a student (or a parent on behalf of a student) will receive from federal, state, institutional, or other sources, such as scholarships, grants, net earnings from need-based employment, or loans, including—but not limited to— • The estimated amount of other federal student financial aid, including but not limited to a Federal Pell

Grant, TEACH Grant, and campus-based aid, and the gross amount (including fees) of subsidized and unsubsidized Direct Loans and Direct PLUS; and

• Except for Direct Subsidized Loans, national service education awards or post-service benefits under Title I of the National and Community Service Act of 1990 (AmeriCorps);

• Any educational benefits paid because of enrollment in a postsecondary education institution, or to cover postsecondary education expenses;

• Fellowships or assistantships, except non-need-based employment portions of such awards; and • Insurance programs for the student’s education. EFA does not include— • Those amounts used to replace the expected family contribution (EFC), including the amounts of any

TEACH Grant, Direct Unsubsidized Loans, Direct PLUS, and nonfederal non-need-based loans, including private, state-sponsored, and institutional loans. However, if the sum of the amounts received that are being used to replace the student’s EFC exceed the EFC, the excess amount must be treated as EFA;

• Federal Perkins Loan and Federal Work-Study funds that the student has declined; • Non-need-based employment earnings; • Assistance not received under this part if that assistance is designated to offset all or a portion of a specific

amount of the COA and that component is excluded from the COA as well. If that assistance is excluded from either EFA or COA, it must be excluded from both;

• Federal veterans’ education benefits paid under: Chapter 103 of Title 10, United States Code (U.S.C.) (Senior Reserve Officers’ Training Corps), Chapter 106A of Title 10, U.S.C. (Educational Assistance for Persons Enlisting for Active Duty), Chapter 1606 of Title 10, U.S.C. (Selected Reserve Educational Assistance Program), Chapter 1607 of Title 10, U.S.C. (Educational Assistance Program for Reserve Component Members

Supporting Contingency Operations and Certain Other Operations), Chapter 30 of Title 38, U.S.C. (All-Volunteer Force Educational Assistance Program, also known as the

“Montgomery GI Bill—active duty”), Chapter 31 of Title 38, U.S.C. (Training and Rehabilitation for Veterans with Service-Connected

Disabilities), Chapter 32 of Title 38, U.S.C. (Post-Vietnam Era Veterans’ Educational Assistance Program), Chapter 33 of Title 38, U.S.C. (Post 9/11 Educational Assistance), Chapter 35 of Title 38, U.S.C. (Survivors’ and Dependents’ Educational Assistance Program), Section 903 of the Department of Defense Authorization Act, 1981 (U.S.C. 2141 note) (Educational

Assistance Pilot Program), Section 156(b) of the “Joint Resolution making further continuing appropriations and providing for

productive employment for the fiscal year 1983, and for other purposes” (42 U.S.C. 402 note) (Restored Entitlement Program for Survivors, also known as “Quayle benefits”),

The provisions of chapter 3 of Title 37, U.S.C., related to subsistence allowances for members of the Reserve Officers Training Corps (ROTC), and

Any program determined by ED to be covered by section 480(c)(2) of the HEA; • Iraq and Afghanistan Service Grants; and • For Direct Subsidized Loans, national service education awards or post service benefits paid under

AmeriCorps.



Excess cash: Any amount of federal student aid funds, other than Federal Perkins Loan Program funds, that an institution does not disburse to students or parents by the end of the third business day following the date the institution: • Received those funds from ED; or • Deposited or transferred to its federal account previously disbursed federal student aid program funds

received from ED, such as those resulting from award adjustments, recoveries, or cancellations. Excess liquid capital (Federal Perkins Loan Program only): The amount by which the funds a school has available (cash on hand plus anticipated collections) to make Federal Perkins Loans in an award year significantly exceeds the loans a school anticipates making for that award year. Expected family contribution (EFC): Estimate of a family’s ability to contribute toward postsecondary educational costs, derived by a formula known as “Federal Methodology.” Federal capital contribution (FCC): Federal funds allocated or reallocated to an institution for deposit into the institution’s Federal Perkins Loan fund account. Federal Direct Student Loan (Direct Loan) Program: The collective name for the Direct Subsidized Loan, Direct Unsubsidized Loan, Direct PLUS, and Direct Consolidation Loan programs. These federal funds are administered by ED and participating schools. Federal Pell Grant Program: A Title IV program for needy postsecondary students who have not yet received a baccalaureate, or for postbaccalaureate students who are enrolled in a teaching certificate or licensing program at an eligible institution. Federal Perkins Loan Program: A Title IV campus-based program that provides low-interest loans to students with financial need. Federal share: Federal funds allocated or reallocated to an institution for deposit into the institution's FWS and FSEOG funds to be used for making FWS and FSEOG awards to students. Federal Student Aid (FSA): The office within the U.S. Department of Education with administrative oversight for Title IV aid. Federal Supplemental Educational Opportunity Grant (FSEOG) Program: One of the Title IV campus-based programs, providing grants to undergraduate students with exceptional financial need and who have not completed their first baccalaureate or professional degree. Federal Work-Study (FWS) Program: One of the campus-based programs, providing part-time employment for undergraduate and graduate students who are in need of such earnings to meet a portion of their educational expenses. Financial account: A checking, savings, prepaid card account, or other consumer asset account held directly or indirectly by a financial institution. Financial institution: A bank, savings association, credit union, or an entity that directly or indirectly holds a financial account for the student, issues the student an access device associated with the account (such as a debit or credit card), and agrees to provide EFT services. Financial Management System (FMS): System which is the general ledger for Title IV funds. FMS works with G5 to communicate financial information and to deliver federal cash to schools.



Fiscal Operations Report and Application to Participate (FISAP): Electronic application through which schools provide information on expenditures for each campus-based program made during the just completed award year, and apply for campus-based funds in the coming award year. Free Application for Federal Student Aid (FAFSA®): The application used to apply for all Title IV aid. The FAFSA collects financial and other information used to calculate the EFC and to confirm a student’s eligibility via various database matches with other federal agencies. G5: System through which schools request and return Title IV funds through EDCAPS, which interfaces directly with the U.S. Treasury’s Federal Reserve System. G5 communicates with COD through the Financial Management System (FMS). Header/Leader: Term that precedes the scheduled academic year—generally the summer term before the standard academic year. Institutional match: Funds an institution contributes to match a portion of federally allocated funds when making FWS and FSEOG awards to students. Institutional Student Information Record (ISIR): The electronic record the school receives as the result of the student listing that school on the FAFSA. If sufficient data is provided to the CPS, when the school receives the ISIR, it should contain information about the student’s EFC, verification selection, database matches, and financial aid history. Iraq and Afghanistan Service Grant (IASG) Program: A non-need-based Title IV grant program from which awards are made to qualifying students with a parent or guardian who died as a result of U.S. military service in Iraq or Afghanistan after September 11, 2001. At the time of the parent’s or guardian’s death, the student must have been either less than 24 years of age or enrolled at an institution of higher education. If a student is eligible for a Federal Pell Grant, he or she cannot receive an IASG. Late disbursement: A disbursement of Title IV aid made to an otherwise eligible student after the date that: • For a loan under the Federal Direct Student Loan (Direct Loan) Program, the student is no longer enrolled

at the institution as at least a half-time student for the period of enrollment for which the loan was intended; or

• For an award under the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Perkins Loan, and Teacher Education Assistance for College and Higher Education (TEACH) Grant programs, the student is no longer enrolled at the institution for the award year.

Loan period: Portion of an academic year during which a student will be enrolled and has applied to receive a loan. For standard term credit-hour programs and nonstandard term credit-hour programs with substantially equal terms of at least nine weeks in length, the minimum length of a loan period is the length of a term. For all other academic program structures, the minimum loan period is the shortest of the program length, the length of the academic year, or the remaining portion of a program. For all programs, the maximum loan period is generally an academic year. A school may use a longer period if the loan is for a length of the student’s program that is longer than an academic year. Nonfederal share: The portion of campus-based program funds that a school must contribute from a nonfederal source (usually the portion comes from the school itself). Generally, a nonfederal source must constitute at least one-third (33-1/3 percent) of a school’s Federal Perkins Loan fund; one-quarter (25 percent) of FWS awards; and one-quarter (25 percent) of FSEOG awards. Nonstandard term: Any term other than a semester, trimester, or quarter, in which full time for an undergraduate student is defined as less than 12 credits, and terms using a different credit measure for a semester, trimester, or quarter (e.g., awarding semester credits in a quarter-based program).



Notification: The act of notifying a person of certain information. Passive confirmation: Process whereby the Direct Loan borrower is notified of each loan type and amount, but need not respond unless he or she wishes to decline or reduce the proposed loan amount. Payment period: A school-determined length of time for which financial aid funds are paid to a student. For programs using academic terms (semesters, trimesters, or quarters), a payment period is equal to the term. For programs not using academic terms, schools must designate at least two payment periods within an academic year that meets all applicable regulations. Period of enrollment: The period coinciding with one or more academic terms established by the school for which institutional charges are generally assessed, such as a semester, trimester, or quarter in weeks of instructional time; an academic year; or the length of the program of study in weeks of instructional time. Also referred to as the loan period. Post-withdrawal disbursement. The amount of Title IV funds earned by a student that exceeds the amount disbursed at the time he or she withdrew. The school must disburse, or offer to disburse, a post-withdrawal disbursement. Retroactive payment: Disbursement to a currently enrolled student for a prior payment period the student completed. A school may pay the student for all prior payment periods in the current award year or loan period for which the student was eligible. Standard term: A semester, trimester, or quarter. Student Aid Report (SAR): A paper or electronic output document sent to students as a result of the CPS receiving a FAFSA for the student. The CPS computes the official EFC and performs various checks and federal agency matches to confirm certain aspects of the student’s eligibility for Title IV funds. The results of the matches and the EFC computation are conveyed on the output document. Student Ledger Account: A bookkeeping account that the school maintains to record the financial transactions pertaining to the enrollment at the school. Student or parent PLUS borrower authorization: Granting permission for a specified action to occur. Teacher Education Assistance for College and Higher Education (TEACH) Grant Program: Non-need-based grants for undergraduate and graduate students, awarded in exchange for specific future teaching service in designated high-need fields and low-income elementary and secondary schools. If a student does not complete the required teaching service, the grant becomes a Direct Unsubsidized Loan that must be repaid. Tier One (T1) arrangement: A contractual arrangement between a school and a third-party servicer under which the third-party servicer performs functions related to the direct disbursements of Title IV funds. Tier Two (T2) arrangement: A contractual arrangement between a school and a financial institution to offer and market financial accounts through the school into which enrolled students’ Title IV funds are directly deposited. Title IV: The section of the HEA pertaining to administration of the federal student financial assistance programs.



Title IV credit balance: Funds resulting from when a school credits a student’s account with Title IV funds and the total amount of Title IV funds credited exceeds the amount of tuition and fees, room and board, and other authorized educationally-related charges assessed the student. Trailer: A term which follows a scheduled academic year—generally a summer term following the standard academic year. U.S. Department of Education (ED): The Cabinet-level department of the United States government with oversight of the programs and funds authorized under the HEA that provide financial assistance to eligible students enrolled in postsecondary educational programs. Also referred to as “the Department.”



NASFAA U Self-Study Guide: 2017–18 Cash Management Feedback Form

We appreciate your interest in our training materials and would like your feedback about their effectiveness. Please complete the following evaluation form and email to [email protected]. You may also mail or FAX it to NASFAA, 1801 Pennsylvania Ave., NW, Suite 850, Washington, DC 20006, attention: Dana Kelly, Chief Training Officer. FAX: (202) 785-1487. Your Name: (Optional) I. Please check the type of institution you represent: (check all that apply)

Public Private Proprietary

Two year Four year Graduate/Professional II. How many years of experience do you have as a financial aid administrator? (check one)

Less than 1 1 to 2 2 to 3 3 to 5 More than 5 III. Using the following scale, please rate the content and effectiveness of the following aspects of the

self-study guide: (circle your response)

5 = Excellent 4 = Very Good 3 = Good 2 = Fair 1 = Poor N = Not Applicable

Aspect Feedback Organization/structure of self-study guide 5 4 3 2 1 N Self-study guide content 5 4 3 2 1 N Quick Quizzes 5 4 3 2 1 N Reflection Questions 5 4 3 2 1 N Learning Activities 5 4 3 2 1 N Resources 5 4 3 2 1 N Visual Appeal 5 4 3 2 1 N

IV. Please indicate any training or conferences you have attended in the last two years: (check all that apply)

NASFAA Conference NASFAA Webinar

Regional Conference State/Regional Webinar

State Conference ED Webinar

FSA Conference ED Workshop/In-person training

State/Regional Neophyte training State Workshop

Other Conference (please specify): ____________________________

Other Training (please specify): ____________________________

mailto:[email protected]



V. What features of the self-study guide did you find the most helpful?

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VI. What additional features would have made the self-study guide more useful to you?

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VII. Please use the space below for any other comments or suggestions you would like to make (feel free to attach additional comments):

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Congratulations on completing this Self-Study Guide! What’s next?Continue Your Learning. Earn Credentials. Differentiate Yourself.Benefits to Learners: • Expand your financial aid knowledge.• Improve your job performance and service to students.• Provide tangible evidence of your knowledge to

employers.• Differentiate yourself from less qualified personnel.• Give you and your organization a competitive edge.

Benefits to Employers: • Feel confident that your staff is trained to the highest

industry standards. • Provide your staff with the opportunity to grow

professionally, and ensure that employee training is consistent and measureable.

DIFFICULTY LEVEL TOPICS BEGINNER INTERMEDIATE ADVANCED

Overview of Financial Aid Programs

PART 1Application Process

Student Eligibility

Cost of Attendance

Need Analysis: Federal and Institutional Methodology

Verification

PART 2Federal Pell Grants and Iraq and Afghanistan Service Grants

Campus-Based Programs

TEACH Grant Program

Direct Loan Program

Packaging and Notification of Awards

PART 3Return of Title IV Funds

Satisfactory Academic Progress

Consumer Information

Gainful Employment

Cash Management

Administrative Capability

Professional Judgment

For more information, visit nasfaa.org/NASFAA_U

http://nasfaa.org/NASFAA_U

1801 PENNSYLVANIA AVENUE NW, SUITE 850WASHINGTON, DC 20006

202.785.0453 FAX. 202.785.1487 WWW.NASFAA.ORG

© 2017 National Association of Student Financial Aid Administrators

The National Association of Student Financial Aid Administrators (NASFAA)

provides professionaldevelopment for financial

aid administrators; advocates for public policies that increase

student access and success;serves as a forum on student financial aid issues; and is

committed to diversitythroughout all activities.

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