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(Direct Loans) Subject: Updated Guidance on Making Direct Loan Refunds of Cash (Returning Excess Cash)

Posted Date:January 28, 2009

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

Subject: Updated Guidance on Making Direct Loan Refunds of Cash (Returning Excess Cash)

Each year, we remind schools of the correct process for making a refund of cash (i.e., returning unused Direct Loan funds; also referred to as excess cash) to the Department of Education (the Department). As a reminder, all Direct Loan funds that are not disbursed to student or parent borrowers within three business days after they are received from the Department are considered excess cash and must be returned to the Department in accordance with the cash management regulations at 34 CFR 668.166.

To ensure the most accurate and timely processing of a refund of cash, please use one of the following methods:

  1. Electronically via G5 Web site. We strongly recommended returning funds electronically because it is faster, more secure, and reduces errors in manual/paper processing. Note that refunds of cash greater than $100,000 must be returned electronically via G5.

  2. Manually Via Paper Check. If you need to return funds via a paper check, make sure to:

    • Issue the check to the U.S. Department of Education and include your Direct Loan School Code and the award year to which the funds apply on the check.

    • Include a completed Direct Loan Refunds of Cash form (attached below) with the check. Note: Funds should not be combined for multiple award years or multiple school codes. A separate check and form should be used for each award year or school.

    • Mail the check to the COD School Relations Center at:

U.S. Department of Education
Attention: Refunds of Cash
P.O. Box 9001
Niagara Falls, NY 14302

For additional information on returning funds via G5, refer to the G5 Web site or call the G5 Hotline at 888/336-8930 for assistance. For questions about this bulletin or returning funds via a paper check, contact the COD School Relations Center at 800/848-0978 or e-mail CODSupport@acs-inc.com.

Last Modified: 01/27/2009