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(Direct Loans) Subject: Updated Guidance on Making Direct Loan Borrower Payments

Posted Date:January 28, 2009

Author: William Leith, Service Director, Program Management, Federal Student Aid

Subject: Updated Guidance on Making Direct Loan Borrower Payments

Each year, we remind schools of the correct process for making a borrower payment by sending a check to the Direct Loan Servicing Center's (DLSC's) Payment Center. A borrower payment is made in order to return funds at the borrower's request more than 120 days after disbursement.

If you are returning funds at a borrower's request within 120 days of disbursement, or are returning funds at any time in order to comply with a statutory or regulatory requirement, you should make the appropriate adjustment to the borrower's loan record or records and follow the process for making a refund of cash as updated in the Electronic Announcement posted on the Information for Financial Aid Professionals (IFAP) Web site.

To ensure the most accurate and timely processing of a borrower payment, please follow these guidelines:

  1. Issue a check to the U.S. Department of Education and include the borrower's name, loan ID, and loan amount being returned on the check.
  2. Include a completed Direct Loan Payment to Borrower Account form (attached below) with the check.
  3. Mail the check and completed form to the DLSC's Payment Center at:

    U.S. Department of Education
    Attention: Payment Center
    P.O. Box 530260
    Atlanta, GA 30353-0260

If you have questions about this bulletin or returning funds at the borrower's request more than 120 days after disbursement, contact the COD School Relations Center at 800/848-0978 or e-mail CODSupport@acs-inc.com.

Last Modified: 01/27/2009