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(P-98-04) (P-98-04) This letter is the second in a series that describes the new 1999-2000 Recipient Financial Management System (RFMS) for reporting and requesting funds under the Federal Pell Grant Program.

DCLPublicationDate: 9/1/98
DCLID: P-98-4
AwardYear: 1999-2000
Summary: This letter is the second in a series that describes the new 1999-2000 Recipient Financial Management System (RFMS) for reporting and requesting funds under the Federal Pell Grant Program.

Action Letter #2
September 1998


SUMMARY: This letter is the second in a series that describes the new 1999-2000 Recipient Financial Management System (RFMS) for reporting and requesting funds under the Federal Pell Grant Program.

Dear Colleague:

This letter provides an overview of the new RFMS and includes the following topics: RFMS - A Step into the Future, Summary of the New Process, Advance and Just-In-Time Payment Methods, Benefits to Institutions, Resources Available, and a calendar of upcoming activities.

RFMS - A Step into the Future

RFMS improves and modernizes the Federal Pell Grant Program. It embodies many of the key concepts developed under Project EASI (Easy Access for Students and Institutions). Project EASI is a collaborative initiative of the Department of Education (Department) and the rest of the student aid community to improve the national student aid delivery system including the standardization of its business processes. The Department has incorporated into RFMS the following major Project EASI concepts:

* Common Origination and Payment Process and Common Data Standards

Project EASI recognizes that most student aid programs, whether they are Federal, State, or private, can be delivered through a common business process using student-level data that is standardized and integrated. As a result, we have developed a common origination and payment process. Under this process, an origination record is sent by an institution to a funding source to establish the eligibility of a student for aid. To request funds for a disbursement, and simultaneously report an expenditure, the institution sends a disbursement record to the funding source that references the origination record. RFMS implements the use of origination and disbursement records as a step toward this common process.

The origination and disbursement records used in RFMS are being mapped to common standards that also include the Direct Loan and Federal Family Education Loan (FFEL) programs. These electronic data interchange (EDI) standards are being developed in conjunction with Project EASI and the Postsecondary Education Standards Council, of which the Department, various higher education associations such as the National Association of Student Financial Aid Administrators, and others are members (see

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* Student-centered Delivery and Improved Use of Taxpayer Funds

RFMS also provides a basis for moving the Federal Pell Grant Program toward the student-centered delivery system envisioned by Project EASI by supporting detailed student-level data and the means to implement the Just-In-Time payment method. In addition, distributing aid based on student-level data, provided in a timely manner, implements a major improvement in the use of U.S. taxpayers' funds.

[[This file contains the "RFMS Overview" chart in Portable Document Format (PDF). It can be viewed with version 3.0 or greater of the free Adobe Acrobat Reader software.]]

Summary of the New Process

The major differences between the current processes and RFMS are the data records and the business process. Under RFMS, all institutions submit an origination record and one or more disbursement records for each student who receives a Federal Pell Grant. Origination and disbursement records contain basically the same payment data information that institutions are reporting to the current system. Using these records supports, with some modification, the Advance payment method by which most institutions currently receive program funds and the implementation of the new Just-In-Time payment method for receiving funds.

RFMS records for institutions

As illustrated in the upper left side of the RFMS Overview diagram, there are four categories of records that an institution sends to RFMS: origination records, disbursement records, data request records, and institutional data records. An institution sends these records to RFMS electronically (1999-2000 is the last year that the Department will accept magnetic tapes as well). RFMS sends a detailed acknowledgement record, including the processing results, back to the institution for every record received as shown on the upper right side of the diagram. In addition, RFMS is able to send

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electronic letters to institutions as needed and to create Statements of Account for institutions out of its funding process.

Processing origination and disbursement records

The origination record establishes a student's eligibility for a specific annual award of Federal Pell Grant program funds. Except for the amount of specific disbursements, the origination record contains basically the same information as the current payment data record. This information is used by RFMS to edit the accuracy of a student's annual award amount and includes information such as the student's annual award amount calculated by the institution, expected family contribution, and cost of attendance.

An institution uses the disbursement record to report a disbursement or expected disbursement for each student. The "regular" disbursement record basically includes an origination record unique identifier and the amount and date of the disbursement. RFMS uses totals of the accepted disbursement record data in the funding process as either the basis for adjusting an institution's authorization level or as a request for funds. This process is illustrated by the flow from record editing through funding to the Grant Administration and Payment System (GAPS) in the RFMS Overview.

An institution may send origination records to RFMS early in the processing year to have the records edited and any problems resolved prior to the time funds are needed. Alternatively, an institution may send a student's origination record at the same time as the initial disbursement record. Once RFMS accepts an origination record for a student, it is able to process disbursement records for the student. The institution sends a disbursement record just prior to, or after, the date for each disbursement. However, RFMS rejects any disbursement records that do not reference an accepted origination record or that report amounts in excess of a student's eligibility.

RFMS also uses special disbursement records that include not only the same information as in the "regular" disbursement record but also the information necessary to calculate the payment for the specific payment period to which the disbursement applies. The special disbursement record is required for institutions that the Department places on either the Reimbursement or Cash Monitoring payment method. Other institutions may choose to use the special disbursement record to send payment period-specific data in order to be assured that it calculated the payment for the payment period correctly. An institution can also use a special disbursement record to modify, in some instances, the annual award amount established in the student's origination record in lieu of sending an updated origination record.

Origination, disbursement, or special disbursement records are transmitted in batches. Batches of records are processed by RFMS continuously with records accepted, accepted with corrections, or rejected. The Department expects RFMS to achieve a 24 to 36 hour turn-around time. As illustrated in the RFMS Overview diagram, RFMS sends a detailed acknowledgment for the batch and each record in it to an institution after it processes the incoming records. Each acknowledgment contains the acceptance status, accepted field values, and comment codes explaining the processing results. To assist an institution's reconciliation of each student's funding, the origination record acknowledgment contains the scheduled award amount for the year, and the disbursement acknowledgment contains the year-to-date disbursement amount.

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Data request record and institution data record

The data request record is used to request acknowledgement batch replacements, the Statement of Account, and year-to-date (YTD) information. An institution may also use the data request record to receive multiple reporting information concerning students for whom it originates awards and who also have awards originated at other institutions. An institution uses the institution data record to provide new demographic data about itself.

Electronic letters

RFMS sends electronic letters in a Portable Document Format (PDF) to communicate information from the Department and the program to participating institutions. For institutions not participating in Electronic Data Exchange (EDE), the letters are available via the new Internet Web Institution Access site that is replacing the current Institution Access System (IAS). To improve access to RFMS, institutions may verify batch status, submit data requests, or enter institution data records via the Internet. This Internet access to RFMS will be available 24 hours a day, 7 days a week.

Advance and Just-In-Time Payment Methods

Under the Advance payment method, an institution receives an initial authorization amount from which it may draw down funds from GAPS. RFMS will continue to adjust the initial authorization amount during the award year based on the disbursement records transmitted by the institution. While the Advance payment method is the one currently used by most institutions, an institution may need to adjust its business process since the institution's authorization level is adjusted based on the receipt, and acceptance, of disbursement records by RFMS.

The Just-In-Time payment method is a new payment method available for the first time in the 1999-2000 award year under a pilot project Under this payment method, an institution does not receive an initial authorization, and the accepted disbursement records not only report disbursement amounts but also function as the institution's request for funds that are provided immediately to the institution. As a result of this systemic improvement, institutions using the Just-In-Time payment method are relieved of several cash management regulatory requirements. We plan to send a letter to all eligible institutions in the near future asking for volunteers to pilot this new payment method.

Benefits to Institutions and the Department

The following is a list of RFMS benefits to institutions and the Department:

Improves turnaround time with a goal that RFMS processes batches and makes funds available within 24 to 36 hours after an institution's submission of accepted disbursement records.
Moves towards common standard data transactions using EDI and common business processes across the Title IV programs.
Provides for a phase-in of the Just-In-Time payment method in future award years.
Provides a continuous processing cycle, processing records several times a day.
Minimizes Potential Overaward Project (POP) situations with prescreening of student eligibility, disbursement closer to the actual payment, and the new multiple reporting record.

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Simplifies year-end closeout.
Offers enhanced query capability for institutions by using the latest Internet web technology.
Reduces an institution's decrease student award reporting because disbursement records are reported closer to the actual payment.
Provides the Department better internal controls and management information capabilities to ensure program integrity.
Improves funds reconciliation process, fund control, and cash management.

Resources Available

* 1999-2000 Federal Pell Grant Program Fact Sheet.
* Series of Action letters that provide RFMS information.
* Video conference on October 15, 1998.
* RFMS brochure available in November 1998.
* The Department's Electronic Access Conferences (EAC):
November 17-19, 1998: Kansas City, MO,
December 1-3, 1998: Washington DC, and
December 15-17, 1998: San Diego, CA.
For more EAC information see the website at
* 1999-2000 RFMS information and presentations at regional, State, and vendor conferences.
* Training: Financial Aid Administrator and Fiscal Officer Training - spring 1999.
* Websites - and
* 1-800-4PGRANT (1-800-474-7268) or e-mail

Thank you for your continued support of the Federal Pell Grant Program. Please check the IFAP website for future letters, Year 2000 contingency plans and updates, and other information regarding the 1999-2000 RFMS.


Diane E. Rogers
Acting Deputy Assistant Secretary
Student Financial Assistance Programs

Attachment A
Attachment B
Attachment C

Last Modified: 08/31/1998