(Direct Loans) Subject: Updated Guidance on Making Direct Loan Refunds of Cash (Updated March 11, 2011)

Posted Date:July 23, 2010

Subject: Updated Guidance on Making Direct Loan Refunds of Cash (Updated March 11, 2011)

Note: This announcement has been superseded by updated guidance posted on March 11, 2011. Please refer to this new announcement.

Each year, we remind schools of the correct process for making a refund of cash (i.e., returning unused Direct Loan funds) to the Department of Education (the Department). All Direct Loan funds that are not disbursed to student or parent borrowers within three business days (or within seven calendar days in certain circumstances) must be returned to the Department in accordance with the cash management regulations at 34 CFR 668.166.

As a reminder, Direct Loan funds are not student-specific, but are award year-specific. This means that when one student will not use the funds or returns them to the school, they can be disbursed to other eligible students for that same award year. If the funds cannot be disbursed within the regulatory timeframes, they must be returned.

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 or OPE ID and the award year to which the funds apply on the check. Note: If there is not enough information to allow us to process the check, it will be returned to the school.

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

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

     Regular Mail/No Signature Required
     U.S. Department of Education
     Attention: Direct Loan Refunds of Cash
     P.O. Box 9001
     Niagara Falls, NY 14302

     Overnight Address/Requiring Signature
     U.S. Department of Education
     Attention: Direct Loan Refunds of Cash
     2429 Military Rd, Suite 200
     Niagara Falls, NY 14304
     (Phone number for tracking form only: 716/284-2225)

Note to Foreign Schools: The way a foreign school will refund Direct Loan funds will differ depending on whether the school has a foreign bank account or a U.S. bank account. With a foreign bank account, a school must return funds via paper check. A school can use the attached transmittal sheet to send information about the funds being returned. With a U.S. bank account, a school can return funds electronically as explained in #1 above.

For additional information, foreign schools can refer to Section 7 of the Funding Process Overview in the Direct Loan Processing area of the Foreign School Information Page.

Contact Information

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 announcement or returning Direct Loan funds via a paper check, contact the COD School Relations Center at 800/848-0978. You mail also e-mail CODSupport@acs-inc.com.