Direct Loan Processing Tips and Troubleshooting PASFAA October, 2014 Robert A. Berry U.S. Department of Education Federal Loan School Support Team
Agenda Funding COD Schema Validation Interest Rates Loan Origination Fees Sequestration PLUS Loan Processing Disbursement Processing 2013/2014 Program Year Closeout COD Tools SULA Fundamentals Loan Period & Academic Year Reporting Edits Odds & Ends 2
2014-2015 DL Funding June Advanced Funded schools have ~60% of their award year funding needs set in G5 November Remaining 40% will be made available If you need additional funding Contact COD (800-848-0978) and provided you have substantiated what you ve drawn so far they will increase it to what you need But if it s near the end of the award year they may ask that you send the loan origination records to COD first so they can confirm the anticipated disbursements will substantiate the funding increase 3 7/22/2014 & 7/24/2014
COD Full Schema Validation Enforced: schemas 3.0d, 3.0e and 4.0a Retired: 2.0e, 3.0a, 3.0b and 3.0c A new temporary warning edit will be triggered Edit Warning 211 Trigger If the batch contains bad XML, but would have processed under previous schema validation rules and/or if a batch namespace indicates that the record has been submitted using a retired schema version Contact your software provider before Edit Trigger Reject 210 If the record failed schema validation (Returned on <DocumentID> tag) 4
XML Validator Tool Information http://ifap.ed.gov/ifap/codxml.jsp IFAP web site Optional Help school identify XML errors If using web-based product be sure to only enter test data, not live student data for privacy purposes 5
Interest Rates Loans with an earliest disbursement date between 7/1/2014 and 6/30/2015 Subsidized/Unsubsidized loans for undergraduates 4.66% Unsubsidized loans for graduate/professional 6.21% PLUS loans (both parent and Grad PLUS) 7.21% See electronic announcement posted on IFAP on 5/9/2014 6 7/22/2014 & 7/24/2014
Loan Origination Fees Changes due to Sequestration COD calculation and truncation rules have not changed Dear Colleague Letter GEN-14-10 posted 5/2/2014 Electronic Announcement posted 5/9/2014 Electronic Announcement attachment posted 9/4/2014 Many more years of these most likely Reject 140 for wrong fee % Must inactivate loan, then reactivate 7
Origination Fees New New Reject 213 has been added: Actual Disbursement Submitted with EDD after an Established Date Next established date that we currently know of - 10/1/2015 o when we know loan fees will be changing then but we don t yet know what they will be o schools will be notified as that date approaches CROF system-generated response: Once new fees are known COD to correct loans having only anticipated disbursements CROF15OP = 2014/2015 award year 9/4/2014 Electronic Announcement attachment 8
PLUS Loans - Origination Credit check is initiated: o By the school when sending the loan origination record to COD, or o By the school online via the COD website, or o By the borrower via the PLUS Request in StudentLoans.gov But regardless of how or when the credit check is initiated you should not delay originating the PLUS loan if the borrower is otherwise eligible o Too often schools hold off originating PLUS loans Delays usually over credit decisions Borrowers are pursuing an appeal or endorser However, when credit is finally resolved on some loans the loan period has passed It s then too late to pursue that loan even through late disbursements 9
PLUS Loans Credit Check Timing is important As long as you have approved credit and have not received a subsequent denied credit check (and do not know of disqualifying factors) you can increase the PLUS loan at any time during the award year If it has been 90+ days since the approved credit check you may want to increase the PLUS 001 loan instead of creating a PLUS 002 loan because the new credit check could come back denied o just remember that sending the borrower back out to SLG will result in a new credit check being run But if you now have a declined credit check you cannot increase the PLUS loan beyond the original amount And you can either finish disbursing that PLUS loan -or- disburse additional unsub 10
PLUS Loans - New NPRM (Notice of Proposed Rule Making) posted 8/8/2014 Federal Register (79 FR 4660) Changes proposed Adverse credit criteria to include if one or more debts with a total combined outstanding balance greater than $2,085: o 90 days or more delinquent, or o Charged-off or placed in collections within past two years Credit checks will remain valid for 180 days PLUS borrowers with adverse credit who appeal based on extenuating circumstances must undergo loan counseling o Possibly on those who get an endorser too 11
Actual Disbursement Date The date a school credits a student s account or pays the student or parent directly Disbursement date reported to COD must be the actual date of the disbursement We re seeing some schools simply flipping the DRI to True instead of first changing the anticipated disbursement date if the disbursement finally occurs on a different date Borrowers are being charged interest for funds they had no access to Schools are receiving warning edit 055 for missing the regulatory reporting deadline See electronic announcement posted 1/29/2014 for details 12
15-Day Reporting Requirement Federal Register 2/28/2013 Disbursements (and adjustments) made on/after 4/1/2013 Pell LEU and SULA all need earlier reporting to COD COD edits still looking at 30 days: o School Monitoring Report o 30-Day Warning Report o Warning edit 055 No. Edit Type Block Message 055 W Disbursement Disbursement Information Received 30 Days after Date of Disbursement Remember: COD is not your regulatory guide, regulations require 15- day reporting regardless of COD s coding 13
1314 DL Program Year Closeout Deadline 7/31/2015 Closeout is completed on the COD web site by submitting the Balance Confirmation form It will be made available to you when a School Account Statement (SAS) reflects $0 ending cash balance Note the refunds to G5 take 7-9 days to process over to COD If you miss the deadline, and haven t requested extended processing, a Final Demand Letter will be sent to you and the school president After that a Receivable is produced, billing the school the remaining balance plus back interest 14
Report Readers Simplified way of importing some COD files in Excel for reconciliation o SAS Disbursement Detail on Demand file o Pell Grant Reconciliation file o Pell Grant YTD file Readers and instructions on COD web site under COD Resources link Need to request fixedlength files See electronic announcement 1/28/2014 15
COD Web Site Communications Page Electronic Announcement dated 6/20/2014 Effective 6/29/2014: Today s Update on bottom bar renamed COD Resources New page File Share & Messages COD/ School/ School Summary Information File Share & Messages new link on left-hand side For FSA e-mail campaigns with student-specific information For sending customized reports to schools Schools notified by e-mail or phone call when document is available 16
SULA Fundamentals SULA: Subsidized Usage Limit Applies First-time borrower: Any borrower who had no balance on a DL/FFEL student loan on 7/1/2013 or afterwards at the time they obtain a loan Maximum Eligibility Period (MEP): Set at 150% of the published length of the program the borrower is enrolled in Subsidized Usage Period (SUP): Measured in years, the amount of subsidized usage of the loan [# days in loan period/# of days in academic year] Remaining Eligibility Period (REP): Borrower s remaining eligibility for subsidized loans: MEP - SUPs = REP 17
Maximum Eligibility Period Maximum Eligibility Period (MEP) is 150% of the published length of borrower s current or upcoming academic program Varies by program Multiply published length of program by 1.5 Two exceptions Measured in academic years or portions COD will calculate using school-reported information 18
Exception 1: Bachelor s Completion Bachelor s degree-completion programs will have a Maximum Eligibility Period of six years o Implemented by reporting program length as four years Definition: o Only admits students who have completed Associate degree or Two years of prior undergraduate coursework See electronic announcement posted 1/17/2014 for details 19
Exception 2: Special Admission Associate Special admission associate degree programs will have a Maximum Eligibility Period of six years o Implemented by reporting program length as four years Definition: o Only admits students who have completed Associate degree or Two years of prior undergraduate coursework o Admits students on a competitive basis (i.e., no open enrollment) o Prepares students for occupation requiring licensure from state Example: Nursing program See electronic announcement posted 1/17/2014 for details 20
Subsidized Usage Period A Subsidized Usage Period (SUP) is the period of time for which a borrower receives a Direct Subsidized Loan Calculated on a loan-by-loan basis Measured in academic years or portions thereof Rounded up or down to the nearest tenth of a year Included ONLY for periods when a Direct Subsidized Loan is received COD will calculate using school-reported data There are two exceptions Enrollment Status Single-term, full annual loan limit 21
Exception 1: Enrollment Status Calculated subsidized usage period is prorated by enrollment status Full-time = 1.00 ½-time = 0.50 ¾-time = 0.75 Prorate Subsidized Usage Period based on enrollment status. 22
Exception 2: Annual Loan Limit Only circumstance where dollars are considered is when a student receives a Direct Subsidized Loan in the amount of the annual loan limit. Borrow full annual loan limit Received for less than 1 AY Subsidized Usage Period = 1 Can only occur for standard-term programs or for non-standard-term programs that are substantially equal and are each at least nine weeks in length. 23
2014 IASFAA Conference When Both Exceptions Apply 24
Remaining Eligibility Period Remaining Eligibility Period (REP): How much eligibility a borrower has left under the 150% limit. Accounts for Direct Subsidized Loans received for all enrollment in all programs (except teacher certification programs) Eligibility lost when remaining eligibility is zero or less 25
ED s responsibility Which interest is the borrower s? Interest accrued before subsidy loss Interest accrued after subsidy loss Borrower s responsibility Subsidy loss is not retroactive to the date of disbursement or from the date of the loss of eligibility. Loss of subsidy is from the date of the enrollment that caused the loss of subsidy. 26
+ Electronic Announcement #7 Posted 12/20/2013 Establishment of IFAP Information Page and First Set of FAQs o Federal Register Notices including Regulations o Dear Colleague Letters and Electronic Announcements o Frequently Asked Questions o Training o Resources 27
SULA - IFAP Information Page Frequently Asked Questions First-Time Borrowers Maximum Eligibility Period Subsidized Usage Period Remaining Eligibility Period Loss of Eligibility Interest Subsidy Entrance & Exit Counseling Preparatory Coursework Teacher Certification Notifications Other Academic Year and Loan Period Reporting 28
Electronic Announcement #8 Posted 1/17/2014 Final Regulations Published Based on public comments 1. Rounding Subsidized Usage Periods 2. Interaction Between the Annual Loan Limit Exception and Proration of Subsidized Usage Periods Based on Part-Time Enrollment Status 3. Maximum Eligibility Period for Bachelor s Degree Completion Programs 4. Maximum Eligibility Period for Special Admission Associate Degree Programs 29
Loan Periods & Academic Years Dear Colleague Letter GEN-13-13, posted 5/10/2013 6/4 and 6/6/2013 webinars available for download Correctly reporting loan periods and academic years is crucial to correct SULA calculations 2013/2014 and forward all borrowers, all loan types If borrower s actual attendance differed from anticipated must be updated Loan periods should only include terms/payment periods in which the borrower received (and kept) funds Loan period: period of enrollment for which the loan is intended Academic year: period used to track annual loan limits 30
Why Updating Matters Example Fall: 9/10/2014 12/10/2014 Spring: 1/10/2015 5/10/2015 School originates a fall-spring loan Scheduled Academic Year, summer is trailer but attendance is not required and no loan for summer Subsidized Usage Period = # Days in LP/# Days in AY = 242/242 = 1.0 Years But borrower doesn t end up receiving the spring disbursement School needs to update the LP to fall-only so # Days in LP/# Days in AY = 91/242 = 0.4 Years 31
Reporting Academic Year Your Academic Year is school-defined Minimum of 30-weeks of instruction and 24 semester (36 quarter) credit hours for a credit-hour based program o No hour minimum for a graduate level program Minimum of 26 weeks and 900 clock-hours of instruction for a program measured in clock-hours So why am I mentioning this? We re seeing loans at COD with AY s of less than 26 weeks, some even less than half that 1. SUP = LP/AY so calculations are too high 2. Are these schools also awarding a new annual loan limit too soon? 32
SULA Reporting Example Loan originated and one actual disb reported Loan Amount: $3500 LP=AY: 9/10/14 5/10/15 Fall: 9/10/2014 12/10/2014 Disb-1 $1750 DRI=T Spring: 1/10/2015 5/10/2015 Disb-2 $1750 DRI=F Student withdraws after the fall term You update the loan period per GEN-13-13 LP: 9/10/14-12/10/14 AY: 9/10/14-5/10/15 So, we re good right? not so fast Remember the annual loan limit exception? Loan amount = annual loan limit -and- loan period < academic year As it stands the SUP on this loan is still = 1.0 Years! Solution: zero out the unused antic disb and reduce loan amount 33
SULA Reporting Example Loan originated and not disbursed on or disbs backed out An anticipated Remaining Eligibility Period (REP) will be calculated if the incoming record has only anticipated disbursements. An actual REP will be calculated if the incoming record has any actual disbursements. When an award is inactivated the anticipated or actual Subsidized Usage Period is cancelled. 34
Award/Loan Level Edits 150% Subsidy limitation: new award record edits introduced with the updated COD Common Record schema. Edit Program Trigger Reject 202 DL Cannot submit more than one tag for Published Program Length (Years, Months or Weeks) Reject 203 DL Incorrect Special Program submitted Reject 206 DL Sub Remaining Subsidized Eligibility Period is less than zero for this award Warning 207 DL Sub Maintenance to this tag may have caused the Remaining Subsidized Eligibility Period to drop below zero for this award Reject 208 DL Incorrect Student Level Code submitted Reject 209 DL Invalid value submitted for Weeks Programs Academic Year Note: Maintenance record and Change record are synonymous 35
Disbursement Level Edits 150% Subsidy limitation: new disbursement record edits introduced with the updated COD Common Record schema. Edit Program Trigger Reject 204 DL & TEACH Incorrect Program CIP Code submitted Reject 205 DL Payment Period Start Date is outside the Award Begin and End dates Reject 207 DL Sub For HCM/Reimbursement schools, sequence issues 36
Reject Edit 050 - New Disbursement Date Outside Allowable Window Disbursement must be no earlier than 10 days before the loan period start -AND- Disbursement must be no later than 180 days after the loan period end But schools were hitting this reject after zeroing out an actual disbursement and updating the loan period to remove a term/ payment period per GEN-13-13 COD off-cycle change on 9/14/2014 Now COD will ignore actual disbursements that were reduced to $0 37
Resolving a Reject Edit 205 Payment Period Start Date is Outside the Award Begin and End Dates See also Electronic Announcement dated 8/22/2014, with attachment. The Issue: Per Gen-13-13 schools are required to shorten the loan period to exclude terms/payment periods where no disbursement is made (or one that was made was later zeroed out. But each term/payment period has its own PPSD and when the loan period is shortened so a PPSD falls outside the updated loan period R-205 The Solution: COD Release 14.0 (Spring 2015) will relax the edit as long as the disbursement is $0. 38
Resolving a 205 - Continued Payment Period Start Date is Outside the Award Begin and End Dates See also Electronic Announcement dated 8/22/2014, with attachment. The Interim Work-Around: 1. Reduce the unused upcoming anticipated disbursement to $0 2. Change the unused PPSD to fall within the new loan period 3. Update the loan period Notes: Confirm that your software will permit the above steps See the examples in the EA attachment EDExpress guidance is specifically provided in the EA too 39
Troubleshooting a Reject Edit 206 Remaining Subsidized eligibility is less than zero for this award 1. What is the program length, in years, on this loan? 2. What is the Maximum Eligibility Period (MEP) for the program? Multiply the program length in years X 1.5. 3. How much subsidized usage does this borrower already have? Log into COD and note the total Subsidized Usage Period (SUP) calculations. 4. What is the Remaining Eligibility Period (REP) for this borrower? REP = MEP - SUPs 5. What is the SUP for this rejected loan? # of days in the loan period/# of days in the academic year. 6. Are the loan period and academic year reported correctly? Does the LP have terms/payment periods in which the borrower did not receive funds? Is the AY at least the statutory minimum? 40
Reject 206 - Continued Remaining Subsidized eligibility is less than zero for this award 7. Was the enrollment status reported correctly on this loan? If three quarters time or half time the SUP will be prorated by 0.75 or 0.50. 8. Was the full annual loan limit exception invoked? If the loan was for a period less than an AY but the loan amount was for the annual loan limit the exception will set the SUP at 1.0 years. 9. Are the previous loans for this borrower correct in LP and AY dates and the enrollment status? Did a full annual loan limit exception get invoked on any of them? 10. Is this rejecting loan for less than a full AY? If it is, is it for a full annual loan limit so that exception is being invoked? If so, reduce the loan amount by $1 and calculate the SUP without that exception to see if the REP will now cover it. Otherwise, sorry, the borrower has insufficient remaining subsidized eligibility and you ll need to go just to unsubsidized loans. 41
2014/2015 EDExpress Release 3.0 Miscellaneous Announcements School Monitoring Report CBT s Resources 42
EDExpress Release 3.0 If you use this release you should download the new dll 2014/2015 EDExpress Release 3.0 contains SULA information Issue identified that prevents changes to anticipated disbursement information: CIP Code, PPSD, Enrollment Status from exporting to COD Download dynamic link library (dll) file: CODImportExport15.dll from FSADownload.ed.gov Note that an earlier CODImportExport15.dll was posted that resolved an issue with CRSP15OP files in creating PLUS loans so even if you downloaded that dll in July you should download the new one which has cumulative fixes See electronic announcement dated 8/18/2014 for details 43
Miscellaneous Announcements Interest Rates for EDD s 7/1/14 6/30/15 See Electronic Announcement dated 5/15/2014 New Consolidation Process See Electronic Announcement dated 5/20/2014 Two Factor Authentication Support Center See Electronic Announcement dated 7/7/2014 44
Announcements Continued 2014 FSA Training Conference See Electronic Announcement dated 7/31/2014 CDR Adjustments due to Split-Servicing See Electronic Announcement dated 9/23/2014 New FSA ID replacing Student PIN See Electronic Announcement dated 10/1/2014 Navient Loan Servicing (Sallie Mae Spin-off) See Electronic Announcement dated 10/2/2014 45
COD School Monitoring Report Remember to check for this periodically In your COD Newsbox DL or Pell Pell POP 30-day reporting (should be 15-days) Unsubstantiated cash >30 days We check for these conditions weekly so schools should check their Newsbox for the School Monitoring Report at least weekly. 46
COD Computer-Based Training Some CBT s have been updated with SULA Electronic Announcement dated 10/3/2014 IFAP / Tools for Schools / COD Computer-Based Training The updated CBT s (posted October 2014) have SULA (We re working on the rest!) 47
SULA- Resources Reporting of Loan Periods & Academic Years Federal Loan School Support Team Dear Colleague Letter GEN-13-13 (5/10/2013) Webinar recording: http://www2.ed.gov/offices/osfap/training/specific.html E-mail: DLOps@ed.gov 150% Calculations & Processing IFAP information page Electronic Announcements Federal Registers Webinar recordings COD Technical Reference NSLDS Newsletters E-mail: 150Percent-Questions@ed.gov 48
Questions? Robert.Berry@ed.gov U.S. Dept. of Education Federal Loan School Support Team (202) 384-4869 49