Session FF-10

Disbursing Title IV Funds

Jamie MaloneU.S. Department of Education

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What Is A Disbursement?• A disbursement occurs when a school

credits a student’s account or pays a student or parent directly with: Title IV funds received from the

Departmentor Funds received from an FFEL lenderor School funds labeled as Title IV funds

in advance of receiving actual federal funds

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Checking Eligibility at Time of Disbursement

• Before disbursing Title IV funds, schoolmust confirm that: Recipient is an eligible student Student is enrolled for the period For loans, student is enrolled at least

half-time Student has begun attendance if

disbursement occurs on/after first day of classes

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Methods of Disbursement

• Crediting student’s account at the institution

• Direct Payment Releasing FFEL lender check directly to

student/parent Issuing a check to student/parent EFT to student or parent bank account Dispensing cash with signed receipt

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Crediting the Student’s Account

• May use Title IV funds to credit student’s account to satisfy current charges for Tuition and Fees Room and board (if the student

contracts with the institution)• With prior student/parent authorization,

may use Title IV funds to credit student’s account to satisfy current charges for other educationally related charges

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Memo Entries and Estimated Aid• Memo entries for billing purposes that do

not identify a Title IV credit, e.g. “estimated Federal Pell Grant” are not considered disbursements

• Memo entries are often needed to prepare billing statements and/or allow students to register for classes

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Crediting Account With School Funds • If credit account with school’s funds earlier

than 10 days before first day of classes of the payment period Not considered a Title IV disbursement

until the 10th day before first day of classes

Stafford borrowers subject to 30 day delay – not considered a disbursement until 30th day after beginning of the payment period

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Direct Payment

• Issuing a check ED considers check to be issued on date it

is mailed or date of notification to student that it is available for pickup

Notification to student must provide specific location for pickup

Checks may be held for pickup for up to 21 days after notification to student•After 21 days, mail check or return to

Title IV program

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Notification of Disbursement• School must notify student/parent of

Perkins, FFEL/DL, and TEACH Grant disbursements credited to student’s account Date and amount of disbursement Student’s/parent’s right to cancel all

or portion of disbursement Procedures and time by which

student/parent must notify school of desire to cancel

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Notification Of Of Disbursement

• For schools that obtain affirmative confirmation prior to disbursement Notification must be made no earlier than

30 days before or no later than 30 days after disbursement

Student/parent must be given 14 days to cancel

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Notification Of Of Disbursement

• For schools that do not obtain affirmative confirmation prior to disbursement Notification must be made no earlier than

30 days before or no later than 7 days after disbursement

Student/parent must be given 30 days to cancel

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FFEL/DL Disbursements

• For schools with cohort default rates of 10% or greater May not make first disbursement to first

year first time borrower until 30 days after first day of program of study

Must make multiple disbursements of one-term only loans

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Required Authorizations• School may not require or coerce students

to provide an authorization• Authorization may be modified or

cancelled at any time (procedure must be explained) Cancellation or modification is not

retroactive• Authorization may remain in effect for

entire period of enrollment – unless cancelled or modified

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Electronic Processes for Notifications/Authorizations

• Schools may provide notifications or obtain authorizations electronically

• Reasonable safeguards must be adopted• E-Sign Act governs electronic signatures

Provides that a signature, contract etc. may not be deemed invalid solely because it is electronic

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Disbursements to Students on Leave of Absence

• May not disburse FFEL/DL • May disburse

Pell Grant ACG National SMART Grant FSEOG Perkins Loan Title IV credit balances

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Payment Periods• Academic term is payment period for programs

offered in credit hours and standard terms credit hours and non-standard terms that are

substantially equal* • All Title IV disbursements except FWS are made

by academic term

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

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Payment Periods

• Non-standard terms not substantially equal Academic term is payment period for Title

IV grants and Perkins For FFEL/DL, each academic year is

divided into two payment periods•Payment periods are same as those for

non-term credit hour programs

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Payment PeriodsClock hour and Non-Term Credit hour programs• For clock hour and non-term credit hour programs

less than an academic year First payment period is period of time in which

student successfully completes half of credit/clock hours and half of weeks of instructional time in program

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

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Payment PeriodsClock hour and Non-Term Credit hour programs

• Programs equal to or multiples of one academic year First payment period is period of time in

which student successfully completes half of credit/clock hours and half of weeks in academic year

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

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Payment PeriodsClock hour and Non-Term Credit hour programs

• For any remaining portion of a program that is more than half of an academic year but less than a full year Period of time in which student successfully

completes half of credit/clock hours and half of weeks of instructional time

• For any remaining portion of a program that is not more than half of a year Payment period is the remainder

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Clock Hour ExamplesAcademic year is 900 clock hours and 30 weeks

375 Clock Hours/12 weeks

375 Clock Hours/12 weeks

Program is 750 clock hours and 25 weeksProgram is 750 clock hours and 25 weeks

375 Clock Hours/13 weeks

375 Clock Hours/13 weeks

Program is 1200 clock hours and 40 weeksProgram is 1200 clock hours and 40 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

300 clock hours/10 weeks

300 clock hours/10 weeks

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Clock Hour Examples

Academic year is 900 clock hours and 30 weeks

Program is 1700 clock hours and 68 weeksProgram is 1700 clock hours and 68 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

Program is 1800 clock hours and 60 weeksProgram is 1800 clock hours and 60 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

400 clock hours/ 19 weeks

400 clock hours/ 19 weeks

400 clock hours/ 19 weeks

400 clock hours/ 19 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

450 clock hours/15 weeks

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Title IV Credit Balance• Occurs when Title IV funds credited to

student’s account exceed allowable charges• Must be paid to student/parent no later than

14 days after•first day of class for the payment period

if credit balance occurred on/before the first day of class

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

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Title IV Credit Balance ExampleAllowable charges are $5,000 The following aid is credited to the student’saccount

Pell $1,491

Stafford $2,000

FSEOG $1,000

Institutional Scholarship

$2,500

Does this studenthave a Title IV credit balance?

No

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Title IV Credit Balance Example

Allowable charges are $5,000 The following aid is credited to the student’s account

Pell $1,491

Stafford $1,500

FSEOG $1,000

Perkins $2,000

Does this studenthave a Title IV credit balance?

Yes

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Title IV Credit Balance

• Excess parent PLUS Loan funds (not Grad PLUS) must be returned to the parent If school determines PLUS Loan funds

created the credit balance – balance goes to parent

School may disburse excess PLUS funds to student only with parent authorization

• School determines which Title IV funds created a credit balance

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Prior Award Year Charges

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

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

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

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Early Disbursements

• Credit hour term-based programs Earliest date to disburse is 10 days

before the first day of classes for the payment period

• Clock-hour and non-term credit hour programs Earliest date to disburse is later of 10

days before first day of class for the payment period or date student completed the previous payment period

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Student Who Never Begins Attendance• Student who never begins attendance is

not Title IV eligible

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

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

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Student Who Never Begins Attendance• Funds must be returned no later than 30

days after school becomes aware of failure to attend

• School must notify lender/Secretary of FFEL/DL funds disbursed directly to student Lender/Secretary will issue final demand

letter

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Retroactive Disbursements• School must pay retroactively for any

completed payment periods within award year if student was eligible for payment in those periods

• Pell/ACG/SMART/TEACH Grant disbursements for a completed term are based on hours completed by the student

• Stafford Loan certifications may include an earlier period of eligibility only if student completed a half-time course load during that period

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Excess Cash

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

• Tolerance of 1% May maintain excess cash not to exceed

1% of funds drawn in prior award year for up to 7 days

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

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Late Disbursements

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

• Student is considered ineligible for FFEL/DL, when no longer enrolled at

least half-time for Pell Grant, ACG, National SMART

Grant, TEACH Grant, FSEOG and Perkins Loan, when no longer enrolled at the school

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Conditions for a Late Disbursement

Prior to student becoming ineligible• CPS must have processed SAR/ISIR with

official EFC (except parent PLUS)• FFEL/DL must have been

certified/originated• TEACH Grant must have been originated• FSEOG and Perkins award must have

been made to student

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Mandatory vs. Optional Late Disbursements• School must offer a late disbursement of

Title IV funds to student who successfully completes the payment period or period of enrollment

• School may offer a late disbursement of FFEL/DL to student who does not withdraw but ceases to be enrolled on a half-time basis

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Limitations on Late Disbursement of FFEL/DL

• Second or subsequent late disbursement is prohibited unless Student has graduated or successfully

completed the loan period• If school is subject to 30 day delay, late

disbursement to a first-year, first-time borrower is prohibited unless student withdrew beyond 30th day

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Recovery of Unclaimed Funds

• When student/parent does not receive or negotiate direct disbursement, credit balance, or FWS payment For checks not cashed, school must return

funds no later than 240 days after date check is issued

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

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Recovery of Unclaimed Funds

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

School only returns federal portion of FWS wages

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Disbursements - Funding

• Schools receive funds from ED through the G5 system Advance payment method Reimbursement or cash monitoring

• Schools receive FFEL funds directly from lenders EFT Master check Individual paper checks

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Reporting Disbursements To COD Schools submit a common record that

reports anticipated and/or actual disbursements COD

Actual disbursements must be reported•Pell - within 30 days of the date of

disbursement (before or after)•ACG, SMART, TEACH – no earlier than

7 days before disbursement date and no later than 30 days after disbursement date

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Resources• 2008-2009 Federal Student Aid

Handbook Volume 4, Chapter 2

• Code of Federal Regulations 34 CFR 668.164

• The Blue Book (October 2005) Chapter 14

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Contact Information

Your feedback and comments are appreciated.

Jamie MaloneTraining Officer312-730-1528jamie.malone@ed.gov