Posted Date:November 21, 2011
|Author:||William Leith, Service Director, Program Management, Federal Student Aid|
Subject: Direct Loan Processing Information – No Pennies in Direct Loan Disbursements, Disbursement Adjustments, Refunds of Cash
In this announcement, we remind schools that Direct Loan disbursements, disbursement adjustments, and refunds of cash should be reported or submitted in whole dollar amounts only. The use of pennies in Direct Loan processing will impact a school's ability to successfully complete its monthly reconciliation because its Net Drawdowns may not match the Net Disbursements reported to the Common Origination and Disbursement (COD) System.
Because this business rule applies to disbursement data and financial data, both the Financial Aid Office and Business Office should review the information provided below.
Direct Loan Disbursement and Disbursement Adjustments – Pennies are Truncated
The COD System will not process or store pennies for Direct Loan awards and disbursements. Awards and disbursement amounts must be submitted in whole dollar amounts. If a school submits an award, a disbursement, or a disbursement adjustment with pennies, the COD System will truncate the pennies. For example, a disbursement amount of $2549.68 will be processed as $2549.
Additional information about the handling of pennies for Direct Loan award and disbursement processing is found in Volume II, Section 1 (page 91) of the 2011-2012 COD Technical Reference posted on the Information for Financial Aid Professionals (IFAP) Web site.
Direct Loan Refunds of Cash – Pennies Should Not be Submitted
Because the COD System only processes whole dollar amounts for Direct Loan awards and disbursements, a school must only return whole dollar amounts when making a refund of cash (for any reason) to the Department of Education (the Department) via the G5 Web site. The dollar amount of the refund of cash must match the disbursement adjustment reported to the COD System.
In cases when a school is making a refund of cash to comply with the Return of Title IV Funds (R2T4) requirements after a student has withdrawn, the R2T4 calculation for a Direct Loan may result in an amount that includes pennies. If so, a school should round to the nearest whole dollar amount, using standard rounding rules. That is, if the amount after the decimal point is $0.50 or greater, round up to the next whole dollar amount. If the amount after the decimal point is less than $0.50, simply truncate the cents. The resulting whole dollar amount should be refunded to the Department (or disbursed to another eligible borrower) and the corresponding adjustments should be made to the borrower's award and disbursements in the COD System. For example, if the R2T4 calculation following a borrower's withdrawal results in a return of $2066.50, the school would round the amount upward to $2067 and return that amount. The school would also adjust the borrower's Direct Loan award downward by $2067. If the R2T4 calculation resulted in a return of $2066.40, the school would return $2066.00 and adjust the borrower's Direct Loan award downward by that amount.
- When sending Direct Loan award/disbursement adjustments to the COD System or returning Direct Loan funds via G5, the school should only include amounts that were credited to the borrower's account.
- The portion of any Direct Loan disbursement that was made directly to the borrower should not be included in the adjustment or return, unlee borrower should not be included in the adjustment or return, unlerect Loan funds should be returned to the Department via G5 only if they cannot be disbursed to another eligible borrower within the regulatory timeframes.
If you have questions about this announcement, contact the COD School Relations Center at 800/848-0978. You may also e-mail CODSupport@acs-inc.com.