DCLPublicationDate: 2/1/98 DCLID: GEN-98-5 AwardYear: Summary: Temporary procedures for drawing down Federal Direct Loan, Federal Pell Grant, and Campus-Based Program funds during the period in which the Department converts its payment system from the Payment Management System (PMS) to the new EDCAPS Grant Administration and Payment System (GAPS). ******************************************************************** CORRECTION: Contrary to the guidance originally provided in this notice, as required under 34 CFR 668.163(c)(4), institutions that currently maintain Federal Direct Loan, Federal Pell Grant, Federal Work Study, and FSEOG Program funds in interest-bearing accounts must remit to the Department any interest over $250 that they earn on those funds, including interest on funds they receive for the transition to GAPS. Please make note of this correction. ******************************************************************* February 1998 GEN-98-5 SUMMARY: Temporary procedures for drawing down Federal Direct Loan, Federal Pell Grant, and Campus-Based Program funds during the period in which the Department converts its payment system from the Payment Management System (PMS) to the new EDCAPS Grant Administration and Payment System (GAPS). REFERENCE: Cash Management regulations under subpart K of the Student Assistance General Provisions, 34 CFR Part 668. Dear Colleague: In a previous letter to your Chief Financial Officer dated January 21, 1998, Donald Rappaport, Chief Financial Officer of the Department of Education, notified your institution that the Department was converting its payment system from the Payment Management System (PMS) to the new EDCAPS Grant Administration and Payment System (GAPS). As discussed in that letter, during the transition from PMS to GAPS, February 26 through March 15, 1998, institutions will not be able to draw down Federal funds from the Department. The letter indicated that to obtain funds before the conversion, an institution had to draw down those funds by a certain time and date. For institutions that receive funds through the ACH/EFT system, the deadline to draw down funds is 3:00 p.m. on February 25, 1998; for institutions that receive funds by FEDWIRE, the deadline to draw down funds is 6:00 p.m. on February 26, 1998. To receive a duplicate copy of the January 21, 1998 letter that was mailed to your institution's Chief Financial Officer previously, please contact the appropriate GAPS representative noted in the enclosure. To minimize the problems that may arise during this transition, the Department will allow institutions to draw down all the Federal Direct Loan, Federal Pell Grant, and Campus-Based Program funds they reasonably expect to disburse or deliver to eligible students or parent borrowers during the transition period if they comply with the deadline dates and procedures described in this letter. An institution that receives Federal Direct Loan, Federal Pell Grant, and Campus-Based Program funds from the Department under the advanced system of payment should follow normal procedures to obtain those funds. However, it must draw down those funds during the period of February 20, 1998 through February 25, 1998 at 3:00 p.m. if it receives funds through the ACH/EFT system; or it must draw down those funds during the period of February 24, 1998 through February 26, 1998 at 6:00 p.m. if it receives funds by FEDWIRE. An institutions that receives Federal Direct Loan, Federal Pell Grant, and Campus-Based Program funds from the Department under the reimbursement system of payment must notify the appropriate reimbursement analyst of the amount of disbursements that it expects to make to students during the transition period. This notification must be submitted to the appropriate reimbursement analyst on or before February 18, 1998. The Department will provide the requested amount of funds in advance of receiving a reimbursement request for those funds, if the Department determines that the requested amount is reasonable. The Department will make that determination on the basis of the institution's previous reimbursement requests. The Department will also advance to the institution Federal Direct Loan, Federal Pell Grant, and Campus-Based Program funds for pending reimbursement requests. Any funds the Department advances to the institution during the transition period must be maintained in the institution's Federal account, as required by 34 CFR 668.163 of the Cash Management regulations, until the Department approves the reimbursement request related to those funds. Because of the unusual circumstances posed by the transition period (i.e., the inability to obtain Title IV, HEA program funds from the Department), the Department will allow the above draw-downs, despite the regulatory provisions in 34 CFR 668.162(b)(3) and (d) of the Cash Management regulations. The Department will not count any funds drawn down for the transition period in determining interest calculations under 34 CFR 668.163(c)(3)(ii) and (c)(4) of the Cash Management regulations. Further, the Department will not count these funds for purposes of determining an institution's compliance with the excess cash provisions in 34 CFR 668.166 of the Cash Management regulations. However, please note that all other Cash Management and program regulations apply during the transition period. Of course, after the transition period ends, all of the Cash Management regulations apply. The Department appreciates your patience and cooperation during the transition to the new EDCAPS system. You may obtain the latest information on the new system by accessing the Department's home page at http://www.ed.gov/offices/OCFO. If you have any questions or problems with the EDCAPS system, please contact the appropriate representative noted in the enclosure. Sincerely, Diane E. Rogers Acting Deputy Assistant Secretary Student Financial Assistance Programs Attachment |