Summary: This letter invites institutions to consider volunteering to participate in a pilot of the Just-In-Time payment method in the Federal Pell Grant Program starting in the 1999-2000 award year.
SUMMARY: This letter invites institutions to consider volunteering to participate in a pilot of the Just-In-Time payment method in the Federal Pell Grant Program starting in the 1999-2000 award year.
As part of the implementation of the new Federal Pell Grant Program Recipient Financial Management System (RFMS) starting in 1999-2000, we are inviting institutions to consider volunteering to participate in a Just-In-Time pilot.
Starting in 1999-2000, all institutions will use a new system for reporting Federal Pell Grant disbursements (see 1999-2000 Action Letter # 2). While the process for reporting disbursements and requesting funds will change, most institutions that are not in the pilot will continue to receive funds using the advance payment method in a manner similar to the current funding process. Institutions selected to participate in the pilot will use the new Just-In-Time payment method.
Under the advance payment method, we produce an initial authorization, and an institution submits disbursement records to justify and increase its authorization level. The institution then draws down funds through the Grant Administration and Payment System (GAPS).
Under the Just-In-Time payment method, an accepted disbursement record becomes both a report of a disbursement for a student and a request for funds. RFMS accepts a disbursement record for a student only if the institution has sent an acceptable origination record or sends an acceptable origination record at the same time it sends the student's initial disbursement record. An institution participating in the Just-In-Time pilot will submit a disbursement record no earlier than five days prior to the actual disbursement date reported in the record. Based on accepted and processed disbursement records, RFMS automatically sends a transaction to GAPS requesting that the funds be directly deposited into the institutions bank account without any further action by the institution. We expect this entire processing cycle, from receipt of a disbursement record to deposit of funds in the institution's bank account, to take between 24 and 36 hours. Institutions in the pilot do not receive an initial authorization as one is not needed. We simply establish an account for you in RFMS and GAPS to which we post authorization and payment transactions.
The Project EASI/Cash Management final regulations, published November 29, 1996, provide relief from the following four regulatory requirements with respect to Federal Pell Grant funds for institutions that participate in the pilot using the Just-In-Time payment method:
(1) the "three-day-use" rule required for the advance payment method under section 668.162(b)(3).
(2) the reverification of student eligibility at the time of disbursement required under section 668.162(c)(3) - an institution may rely on its determination at the time it submits the disbursement record for Federal Pell Grant funds.
(3) the requirement that an institution maintain Federal Pell Grant funds in an interest-bearing bank account under section 668.163(c)(3)(iii).
(4) the excess-cash rules under section 668.166.
This regulatory relief does not extend to other Title IV programs in which you participate.
We plan to select a representative cross-section of different types of institutions that participate in the Federal Pell Grant Program for the Just-In-Time pilot. If your institution is interested in further information on the Just-In-Time pilot, please forward your request for further information to the following e-mail address: #email@example.com. We will forward information on the Just-In-Time pilot to those institutions that express an interest and will also provide information on where to address any questions institutions may have. Institutions that express an interest in volunteering for the Just-In-Time pilot are not making a commitment to participate at this time.
The Just-In-Time pilot is part of our continuing effort to modernize and improve our Student Financial Aid (SFA) delivery system. Our long-term goal is for all institutions, except those institutions using reimbursement or cash-monitoring, to participate in the Federal Pell Grant Program using the Just-In-Time payment method.
Thank you for your continued support.
Diane E. Rogers
Acting Deputy Assistant Secretary
Student Financial Assistance Programs