(DL-23-01) Direct Loan Closeout Information for 2021–22 Program Year

Author
Federal Student Aid
Electronic Announcement ID
DL-23-01
Subject
Direct Loan Closeout Information for 2021–22 Program Year

The Direct Loan established data submission (closeout) deadline for the 2021–22 Program Year is Friday, July 31, 2023. This is the last processing day of the program year, so all school data must be received and accepted by this date to be included in a school’s final Ending Cash Balance for the year.

Note: Exceptions to the established data submission deadline may be made on a case-by-case basis if the school’s processing period extends beyond the deadline. Schools falling within this category should contact the FSA Partner and School Relations Center at the number provided below for further assistance. Once the closeout deadline has passed, a school may seek relief from the deadline via the Request Reopen/Extended Processing function on the COD website.

As a reminder, all cash management, disbursement reporting, and monthly reconciliation regulatory requirements supersede the closeout deadline. If a school is meeting these regulatory requirements, the final closeout stage should begin no later than the last award end date (also known as the loan period end date) at the school for a given program and year to reconcile to a zero Ending Cash Balance and close out soon after its final disbursements and should not wait until the closeout deadline.

To be considered successfully closed out, a school must—

  • Have an Ending Cash Balance of $0 and Total Net Unbooked Disbursements of $0 internally, and as reflected on the School Account Statement (SAS), and

  • Complete the School Balance Confirmation form on the COD website.

As part of the closeout process, the U.S. Department of Education (the Department) will send notices via Zero Balance or Remaining Balance emails. In addition, we will distribute a Notification Warning Letter via email to schools in early May 2023. This email will be sent to the Financial Aid Administrator and President at each school that has not confirmed closeout on the COD website (including any schools with a zero balance that have not confirmed closeout). It will serve as a reminder to finish processing and confirm closeout before the established data submission (closeout) deadline. After the closeout deadline, the school will be notified of its remaining balance through a Demand Letter or Negative Balance Letter. Any remaining positive balance will result in a final liability for the school.

A school must be aware of its closeout status even if its Direct Loan processing is handled by a third-party servicer. We encourage each school to communicate regularly with its third-party servicer to ensure closeout is completed. It is the school’s responsibility to ensure that it finishes processing and confirms closeout on time.

A key factor to an easy reconciliation and closeout is staying on top of the process. We encourage schools to review the following information:

  • Complete required monthly reconciliation, including:

    • Internal reconciliation - compare internal student accounts and Business Office or Bursar records with Financial Aid Office records. If your school uses a third-party servicer, you should also ensure your internal and servicer records match

    • External reconciliation - compare internal records to your Direct Loan School Account Statement sent via your SAIG mailbox, and

    • Resolve any discrepancies and document outstanding timing issues

  • Verify all drawdowns and refunds of cash are applied to the correct program and award year

  • Ensure all batches have been sent to and accepted by the COD System and all responses have been imported

  • Resolve all outstanding rejected records and ensure all disbursements and adjustments are accurately reflected

  • Review all pending disbursements and determine whether these need to be reported as actuals (DRI = TRUE). If not, reduce these to $0.

  • Return all refunds of cash electronically via G5 (g5.gov)

  • Request any remaining funds if supported by actual disbursement data

Contact Information

We appreciate your cooperation as we work to close out the 2021–22 Direct Loan Program Year. If you have questions about this announcement or need assistance with closeout, contact the FSA Partner and School Relations Center at 1-800-848-0978. You may also email CODSupport@ed.gov.

Questions and Answers

A1: A school should be able to confirm close out within a month or two of submitting its final actual disbursements, but no later than the established data submission (closeout) deadline of July 31, 2023. If your school will need to process actual disbursement data after the established processing closeout deadline, refer to Q7 for more information.

Note: As a reminder, cash management, disbursement reporting (including adjustments to disbursements), Subsidized Usage Limit Applies (SULA) updates, and monthly reconciliation requirements supersede the closeout deadline. If a school is meeting these regulatory requirements, a school should be able to reconcile to a zero Ending Cash Balance soon after its final disbursements, and if all processing is completed and all known issues have been resolved, the school should confirm closeout at that time. Schools should not wait until the closeout deadline.

A2: Yes. Based on a school’s successful balance confirmation for a Direct Loan Award Year, the following actions will occur:

  1. The U.S. Department of Education (the Department) will send a Program Year Closeout letter to the school’s President and Financial Aid Administrator (FAA).

  2. The COD website will reject award or disbursement changes per published edits.

  3. The Department will reduce the school's Current Funding Level (CFL) to the greater of Net Drawdowns or Net Accepted & Posted Disbursements.

  4. The Department will reduce remaining anticipated disbursements to zero, adjust all award amounts to equal the sum of actual disbursements, adjust loan period dates so that all zero-dollar disbursements are outside the loan period, and recalculate subsidized usage for each borrower.

  5. The School Account Statement (SAS) and other reports for this award year and program will no longer be sent.

A3: Schools should not delay closeout activities based on transactions that may occur later. If a school has completed all known cash and disbursement activity in the award year, the school must complete their reconciliation to a zero Ending Cash Balance and confirm closeout, as indicated in Q1.

Delays should only occur if a school has specifically identified additional transactions needing to be reported or corrected immediately. These may include, but are not limited to the following:

  • Eligible late disbursements

  • Downward disbursement adjustments due to changes in student enrollment or eligibility

  • Unclaimed credit balances needing to be refunded

These changes should be reported in a timely manner, per regulatory requirements, and then final reconciliation and closeout should be completed.

A4: The benefits to confirming closeout include:

  • Receiving a Program Year Closeout Letter to include with your final reconciliation documentation. This letter confirms the date your school officially closed out the award year.

  • Tighter controls over available funds in G5. With the closeout confirmation process, a school’s CFL is reduced to the greater of Net Drawdowns or Net Accepted and Posted Disbursements, which prevents further funds being requested or received for the closed year. This also prevents funds from being accidentally drawn in the wrong award year when a new award year is added.

  • No additional monthly reconciliation to the SAS, unless your school’s disbursement or cash balances change (see Q9 for more details).

  • Changes to cash and/or disbursement balances after a school has confirmed closeout (i.e., downward disbursement adjustments, refund of cash, or a drawdown adjustment) will trigger a Reopen Change Letter via email which notifies the school that a change in balance has occurred, and the balance needs to be researched and resolved. This aids schools in monitoring when changes occur late in the award year so reconciliation efforts can resume, and the school can reconfirm closeout.

  • Tighter controls over submitting disbursement or award level changes per published edits. Confirming closeout allows schools the ability to review changes to disbursement and award data more closely prior to requesting to be reopened or placed on extended processing.

  • A Reopen Change or Extended Processing Letter will be sent via email to the President and FAA as notification that your school was reopened or placed on extended processing due to a request made by your school or by a change in balance. If one of these emails are received, your school is no longer considered confirmed closed out and it indicates your school must resume reconciliation and reconfirm closeout.

    Note: Any change in balance requires a school to complete an additional reconciliation to fulfill its monthly reconciliation requirements.

  • Discontinues year specific reports which reduces clutter in SAIG mailbox and student data from being sent unnecessarily.

A5: Once a school completes a final reconciliation of its internal Financial Aid and Business Office records to its Direct Loan SAS and reflecting a zero Ending Cash Balance, the school must go to the COD website and complete the School Balance Confirmation form (found under the “School” link in the blue tool bar along the top of the main page and the “Balance Confirmation” link on the left-hand tool bar under School Information).

Note: Prior to program year close out, schools should ensure that fields related to Subsidized Usage Limit Applies (SULA) are updated appropriately. See Q6 for more detail on this issue.

A6: Subsidized usage limit applies to loans first disbursed on or after July 1, 2013, and prior to July 1, 2021. For loans in this timeframe, ensure that:

  • Any pending disbursements have been reduced to zero.

  • All loan amounts reflect the gross amount of the total disbursed to students.

  • The loan period dates (<FinancialAwardBeginDate> and <FinancialAwardEndDate>) include only those payment periods for which the student received and retained an actual disbursement.

  • The academic year dates (<AcademicYearBeginDate> and <AcademicYearEndDate>) reflect the defined length of program’s academic year. Remember, an academic year for a credit-hour or direct assessment program must include at least 30 weeks of instructional time (except in certain cases when Borrower Based Academic Year (BBAY) 1 is used to monitor annual loan limits) and, for a clock-hour program, at least 26 weeks of instructional time. See Federal Student Aid Handbook, Volume 3, Chapter 1 and the information on BBAY 1 in Volume 3, Chapter 5.

  • Records that have been updated in the COD website to ensure the 150% Direct Subsidized Loan Limit calculations are accurate for your students (applies to loans first disbursed on or after July 1, 2013, and prior to July 1, 2021). Refer to following guidance for additional information: June 11, 2021 Electronic Announcement, 150% Direct Subsidized Loan Limit: Electronic Announcement #25 – Guidance and Operational Information for the Repeal of 150% Subsidized Usage Limit (EA ID: DL-21-04).

A7: Exceptions to the last processing day of the program year may be made on a case-by-case basis if a school’s processing period extends beyond the closeout deadline and the school needs to report new or increased award or disbursement amounts. Schools falling within this category should contact the FSA Partner and School Relations Center at CODSupport@ed.gov for further assistance. Once the closeout deadline has passed, requests for extended processing may be made directly through the COD website (refer to Q11 for more information).

A8: If a school identifies additional new awards, new disbursements, or upward disbursement adjustments that need to be submitted after completing the balance confirmation process but prior to the closeout deadline, the school can request to be reopened via the Request Reopen/Extended Processing page on the COD website (refer to Q11 for more information). Once the request is processed, the school can start processing immediately.

If a school identifies downward adjustments to disbursements and non-financial changes that need to be submitted after completing the balance confirmation process but prior to the closeout deadline, you do not need to request to be reopened via the Request Reopen/Extended Processing page on the COD website (refer to Q11 for more information). If the downward adjustments records are accepted, the school will be automatically reopened.

Note: The school will be considered no longer confirmed closed out and will receive a Reopen Change Letter. The email will be sent to the FAA and President. Your school must resume reconciliation and reconfirm closeout.

A9: If a school’s balance changes due to downward disbursement adjustments, refunds of cash, or adjustments in G5, the school:

  • Will receive a Reopen Change Letter via email.

  • Will receive an updated Direct Loan SAS at the end of the month.

  • If the balance change occurs before the closeout deadline, the school will be automatically reopened and is considered no longer confirmed closed out.

  • If the balance change occurs after the closeout deadline, the school is considered no longer confirmed closed out. The school can request extended processing to submit new awards, new disbursements, or upward adjustments to awards or disbursements only to resolve the balance. You do not need Extended Processing to process downward adjustments to disbursements or non-financial changes (refer to Q11 for more information).

  • Must reconcile to a zero balance and complete the closeout confirmation process again.

A10: The Department:

  • Reduces the CFL to the greater of Net Drawdowns or Net Accepted and Posted Disbursements for all remaining open schools.

  • Rejects award year-specific Direct Loan awards and disbursements per established edits.

  • Discontinues year-specific Direct Loan reports.

  • Discontinues year specific Zero Balance and Remaining Balance emails.

  • Issues a final Direct Loan SAS to all schools, using existing school SAS options.

A11: Extended processing is not needed to submit decreases to award or disbursement amounts or any non-financial changes. If you need to submit increases to award or disbursement amounts or new award or disbursements after the data submission (closeout) deadline, you will need to request an extension to the deadline via the COD website Request Reopen/Extended Processing page. However, you should not submit a request until after you have completed reconciliation of all program records and are ready to submit increases or new award or disbursement data to the COD System. Extended processing is available on a case-by-case basis.

To request Extended Processing, log in to the COD website and complete the following steps:

  1. Go to the School Summary Information screen by clicking the School tab on the top blue bar and entering your school identifier information.

  2. Once on the School Summary Information screen, click on “Request Reopen/Extended Processing” link located on the left-hand tool bar under School Information.

  3. Complete all required fields—including choosing the reason for the request from the drop-down menu—and provide a detailed description of the problem. Do not include Personally Identifiable Information (PII) data in this field (i.e., SSNs, award identifiers, etc.). The Help link in the upper right corner has additional information to assist you in filling out the form.

  4. Click on the “SUBMIT” button below the data fields.

If the request is approved, an Extended Processing Letter will be sent via email to the FAA and President.

Note:

  • An extension to the data submission (closeout) deadline does not negate any other data reporting deadline, student eligibility or disbursement requirements pertaining to the Title IV programs, nor does it imply the Department approves the school’s failure to meet the established data submission (closeout) deadline.

  • Prior to seeking relief from the data submission (closeout) deadline the school should have reviewed its records and consulted with the FSA Partner and School Relations Center, if necessary. Therefore, if Extended Processing is requested and granted, the school knows exactly what data needs to be submitted and how to submit it to the COD website, so that the school’s records are accurate at the end of the extension period.

  • A school on Heightened Cash Monitoring 2 (HCM2) must coordinate with its Institutional Review Specialist/Payment Analyst if the school finds it still needs to submit data after the established data submission (closeout) deadline. The Payment Analyst will contact the appropriate FSA staff on the school's behalf via email with an appropriate extension period for processing.

A12: The school will be notified of its remaining balance through the Combined Programs Demand Letter or Combined Programs Negative Balance Letter process conducted three times a year (3 Cycles), for new and existing positive and negative balances. Any remaining positive balance will result in a final liability for the school.

A13: There are various tools provided by the Department that your school can use to reconcile externally the cash and disbursement data from the COD website. The following tools are available:

  • Direct Loan School Account Statement (SAS) – The Department provides a School Account Statement (SAS) to all schools on a monthly basis. The SAS is similar to a bank statement and provides the Department’s official Ending Cash Balance as of the end of the reported month, as well as detailed cash and loan or disbursement detail transactions for the reported period. The SAS is the school’s primary tool used in reconciliation and program year closeout and should be compared to both financial aid and business office records. Tip: Schools can choose to update SAS Options at the end of their processing period to receive year-to-date detail data for final reconciliation activities, even if they routinely receive monthly data as their default.

    Additional information on the content and formats available for the SAS is available in the COD Technical Reference, Volume 6, Section 7: COD Reports.

  • Direct Loan SAS Disbursement Detail on Demand – This ad-hoc report allows schools to get SAS Disbursement Detail data independent of the school’s monthly SAS file.

  • Direct Loan SAS Disbursement Detail on Demand Report Reader and Instructions – This tool formats the fixed length SAS Disbursement Detail on Demand Report into an Excel spreadsheet. Found under the “COD Resources” link at the bottom of any COD website page.

  • Pending Disbursement List Report – It contains disbursements not yet funded in the COD website (Disbursement Release Indicator (DRI) = False).

  • Discrepant Loan Data Report – This report helps schools identify awards with disbursements dates prior to July 1, 2021, which should be adjusted and/or corrected in their system in accordance with the 150% Direct Subsidized Loan Limit requirements.

  • COD website pages:

    • School Funding Information page (found under the “School” link in the blue tool bar along the top of the main page and the “Funding Info” link on the left-hand tool bar under School Information)

    • School Summary Financial Information page (found under the “School” link in the blue tool bar along the top of the main page and the “Summary Financial Info” link on the left-hand tool bar under School Information)

    • Cash Activity (found under the “School” link in the blue tool bar along the top of the main page and the “Cash Activity” link on the left-hand tool bar under School Information) – shows all individual Drawdown, Refund of Cash, and Drawdown Adjustment transactions. This information is sent to the COD website from G5. This information can be used to reconcile to internal bank statements and cash transactions.

    • Anticipated Disbursement Queue (found under the “Batch” link in the blue tool bar along the top of the main page and the “Anticip Disb Queue” link on the left-hand tool bar) – lists all anticipated (pending) disbursements. It can be used to determine if anticipated disbursements need to be canceled (reduced to zero) or made into actual disbursements (DRI = True). This information is updated daily.

    • Action Queue (found under the “Batch” link in the blue tool bar along the top of the main page and the “Action Queue” link on the left-hand tool bar) – lists records that are in review by FSA’s Payment Analysts for schools on HCM2. Can be used by schools to ensure all records that the school intends to submit in their HCM2 submission have been sent to the COD website.

  • Direct Loan Tools Software – The main function of this tool is to compare cash and disbursement data from EDExpress or a school’s custom software/website to the cash and disbursement data from the SAS and produce a discrepancy report. Schools with other software can create an external file to be used with DL Tools as well.

A14: Additional resources for reconciliation can be found on the FSA Partner Connect - Knowledge Center website, which includes:

A15: FSA Partner Connect is a website for individuals involved in the administration of Title IV financial aid for postsecondary education. On this site, users can explore policy and guidance in the Knowledge Center, access helpful tools, find training announcements, or link to other Federal Student Aid websites to manage Title IV program eligibility and complete aid administration tasks.

Below are the different features of the FSA Partner Connect Portal:

  • Knowledge Center: Repository of articles about the administration of Title IV federal student aid

  • Federal Student Aid Handbook: Web-based, searchable version of the handbook

  • Training: Information about training and links to important training sites

  • Financial Aid Delivery: Information about the financial aid delivery process as well as links to sites to complete related tasks

  • Title IV Program Eligibility: Information about how schools can apply and maintain Title IV program eligibility as well as links to various sites to complete tasks in the eligibility process

  • Dashboard: A quick, top-level overview of an organization’s current operational status with callouts for the most important information

  • Student, Parent, Borrower Accounts: Simplified search functionality to access information about a student, parent, or borrower more easily

  • Partner Search: Provides the ability to search and view information about a school

You can subscribe to get the latest news and updates from the FSA Partner Connect - Knowledge Center by clicking this link: https://fsapartners.ed.gov/subscriptions/.