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(GEN-99-42) SUMMARY: This letter updates the contingency plans that the Department will implement in the event of a Year 2000 related computer system failure at a school or third-party servicer.

DCLPublicationDate: 12/20/99
DCLID: GEN-99-42
AwardYear:
Summary: SUMMARY: This letter updates the contingency plans that the Department will implement in the event of a Year 2000 related computer system failure at a school or third-party servicer.


December 1999

GEN-99-42

SUMMARY: This letter updates the contingency plans that the Department will implement in the event of a Year 2000 related computer system failure at a school or third-party servicer.

Dear Partner:

Secretary Riley has asked me to advise you about our Year 2000 (Y2K) contingency plans and describe the conditions under which a school or servicer, without incurring program liabilities, may use the contingency plans to carry out critical financial aid activities.

As you know, the Department’s computer systems are Y2K-compliant. Nevertheless, we have been working for some time now to develop and test contingency plans that can effectively be implemented in the event that a Y2K anomaly causes a system failure or otherwise disrupts critical financial aid processes. In short, the contingency plans provide alternative processes or workarounds for Y2K-related system failures that could occur at the Department, schools, third-party servicers, lenders, guaranty agencies, and at other program participants. Detailed information about these plans is available on the Department’s web site at
http://www.ed.gov/offices/OCIO/year/e3toc.html.

We have made a few changes in the contingency plans for school and third-party servicer failures since we last posted information on our web site, particularly with the plans that have regulatory implications. The contingency plans in this letter contain those changes as well as additional information about how schools and third-party servicers may use the plans. Shortly, we will also provide similar guidance regarding our contingency plans for Y2K failures at lenders and guaranty agencies. In addition, please refer to GEN-99-41 for information about what schools and third-party servicers can still do to mitigate the impact of Y2K failures.

We understand that a Y2K failure may prevent a school or its servicer from complying with certain regulations. Therefore, for a limited time, we will not enforce certain regulations as discussed more fully in the attached contingency plan charts. For example, if a system failure prevents a school or servicer from preparing and transmitting to the Department Federal Pell Grant disbursement records within the regulatory required 30-day timeframe, we will not enforce the 30-day reporting requirement until after the date the school or servicer repairs its system or March 1, 2000, whichever date occurs first. However, the school’s or servicer’s failure to meet current regulatory requirements will trigger a finding of non-compliance in an audit or program review. We will not assess a liability or impose a fine for violations of program requirements that occur solely because of a Y2K system failure as long as the school or servicer:

1. Follows the guidance and procedures contained in this letter and detailed in the contingency plan charts, and ensures that all corrected amounts of federal student aid funds associated with that Y2K system failure have been properly paid or returned to the appropriate party;

2. Informs the auditor or reviewer of the Y2K system failure before the audit or review is conducted; and

3. In response to the audit or review finding, prepares a letter signed by the President or CEO that describes the system failure, identifies the date the system failed and the date it was repaired, and notes briefly the actions previously taken to make that system Y2K compliant. The school or servicer must submit this letter along with its audit or provide it to the reviewer at the time of the review.

Please note that a school does not have to notify the Department if it repairs its system on or before the end of the time allowed under the applicable contingency plan, e.g., in the example above, if the school repairs its system on or before March 1, 2000 the school does not need to notify the Department. However, if the school does not complete repairs or cannot otherwise begin to comply with regulatory requirements after the time allowed, it must promptly notify the appropriate Case Team (list attached) or designated program office as provided under each contingency plan. Although the contingency plans are the same for a school and a third-party servicer, if a servicer does not repair its system in time to comply with a regulatory requirement it must immediately notify the appropriate Case Team or program office and provide a list of its school clients. For example, a servicer located in Georgia must notify the Atlanta Case Team the day after it cannot comply with the 30-day reporting requirements. The Atlanta Case Team will inform the other appropriate Case Teams. In either case, the school or servicer must document the Y2K failure for audit and program review purposes.

For additional information about the contingency plans or guidance provided in this letter, you can contact the Customer Support Branch at 1-800-4ED SFAP
(1-800-433-7327).

Yours sincerely,


Greg Woods
Chief Operating Officer
Office of Student Financial Assistance


Attachment A
Attachment B

Last Modified: 12/21/1999