(GENERAL-24-146) Reconciliation Information for the Direct Loan, Federal Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant Programs

Posted Date
December 17, 2024
Author
Federal Student Aid
Electronic Announcement ID
GENERAL-24-146
Subject
Reconciliation Information for the Direct Loan, Federal Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant Programs

In a Nov. 18, 2024 Electronic Announcement we published general information regarding Title IV aid disbursement reporting, excess cash, and reconciliation requirements. In addition, updated disbursement reporting and data submission timelines for all programs were published in a recent Federal Register Notice (Federal Register / Vol. 89, No. 181 (Wednesday, September 18, 2024) for the 2024–2025 deadlines). Note: A temporary extension of the deadline for reporting disbursement records to the COD System was published in a July 30, 2024 Electronic Announcement (GENERAL-24-94).

In this announcement, we provide specific information to assist schools with reconciling the William D. Ford Federal Direct Loan (Direct Loan) Program, Federal Pell Grant (Pell Grant), Iraq and Afghanistan Service Grant, and Teacher Education Assistance for College and Higher Education Grants (TEACH Grant) Program. The information provided below is for both the financial aid office and business office.

Reconciliation Defined

Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant Reconciliation is the process by which a school reviews and compares grant data recorded on the U.S. Department of Education’s (the Department’s) systems with the information in the school’s internal records; AND

Direct Loan Reconciliation is the process by which Direct Loan funds received and disbursed as recorded on the Department’s systems are reviewed and compared with a school’s internal records; AND

For all programs listed above:

  • Discrepancies are identified and resolved

  • Reasons for remaining cash balances are documented

For Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant, it is recommended that schools reconcile at least monthly or as frequently as necessary to identify issues and maintain compliance with the cash management and disbursement reporting requirements. For Direct Loans, it is a mandatory monthly process, as required under 34 CFR 685.300(b)(5). A school should reconcile all cash (drawdowns and refunds of cash) and disbursement records (actual disbursements and adjustments) with information in the Common Origination and Disbursement (COD) System on an ongoing basis.

There are two types of reconciliation, which can be performed separately or simultaneously during the month, including:

  • Internal Reconciliation

    This is the process where the business and financial aid offices compare the monthly financial aid office roster of scheduled and actual disbursements and compare the disbursement transactions (actual disbursements and adjustments) and related cash transactions (Drawdowns, Drawdown Adjustments, Refunds of Cash, and Returns) in each office’s system to a monthly business office cash detail report that reflects funds drawn down and funds disbursed for the month. If discrepancies are found, the school must document and resolve them in a timely manner.

  • External Reconciliation

    The school compares its reconciled internal records to the Department’s records of funds received and returned, and to loans originated and disbursed to students for Direct Loans, to student disbursements and adjustments, and to cash balances recorded in the Common Origination and Disbursement (COD) System for Pell Grants. At a minimum, this reconciliation must be completed at least monthly to ensure that data is correct in all systems and that cash management and disbursement reporting timelines are being met. If you have completed the internal reconciliation first, there will be fewer discrepancies to resolve when you perform this external reconciliation. The Department offers various tools to assist you with external reconciliation. For more information, see the questions and answers below.

    It is very important for schools to maintain good communication between the Business Office and the Financial Aid Office to successfully reconcile both internally and externally. Reconciliation is a shared responsibility. It requires joint action by the Financial Aid and Business Office to identify discrepancies and any missing data, and to correct these in a timely manner.

    Schools should document their reconciliation process and the resolution of any identified discrepancies.

Final Reconciliation of a Direct Loan Award Year

Direct Loan schools must also complete a final reconciliation to a zero ($0) Ending Cash Balance at the end of their processing year. This should occur within a month or two of the school’s final disbursements but no later than the data submission (closeout) deadline, which is the last processing day in July of the year following the end of the award year. Information regarding this final reconciliation and the Program Year Closeout deadline is published in three (3) Electronic Announcements posted to the FSA Partner Connect - Knowledge Center, in February, May, and July prior to the deadline.

Final Reconciliation of a Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant Award Year

In addition to regular monthly reconciliation of Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant data, a final reconciliation should be performed as soon as possible after final scheduled disbursements have been made for the award year. This final reconciliation should ensure that all data is correct, and the Total Net Drawdowns equals the Net Accepted and Posted Disbursements (NAPD) in the COD System (Cash >NAPD balance should equal $0.00). This process must be performed within the applicable data submission (closeout) deadline (defined below), as well as immediately following processing of any additional data by the school (for example, eligible late disbursements or disbursement adjustments made within regulatory timeframes, but which occur after the data submission deadline). There are two deadlines which impact this process:

  • Data Submission (Closeout) Deadline – The data submission (closeout) deadline is published annually in a Federal Register Notice. It is generally the end of September following the end of the award year. For example, the Pell Grant and TEACH Grant 2024–25 award year will close on Sept. 30, 2025, and Direct Loan 2023–24 award year will close July 31, 2025. After this date, the COD System will not accept new or increased awards, or new or increased disbursement amounts without prior approval for an extension to the established data submission (closeout) deadline. Downward adjustments will continue to be accepted without an extension. If your school needs to request an extension to the data submission deadline, this request must be submitted via the COD website at https://cod.ed.gov. For more information on Extended Processing, see question #10 in the questions and answers below.

  • Funding Cancellation Deadline – Pell Grant funding availability is canceled five years after the data submission (closeout) deadline for the award year. For example, for the 2019–20 Federal Pell Grant award year (July 1, 2019 - June 30, 2020), the funding cancellation date is Sept. 30, 2025 [2020 + 5 = 2025]. After the funding cancellation deadline, schools will be unable to report any further award or disbursement changes to the COD System for that award year. In addition, schools will be unable to draw down or adjust funds via the G5 website, and any refunds of cash must be made to the Pell miscellaneous account (contact the G5 help desk for instructions). As such, schools must complete all final reconciliation activities well before this final deadline and in accordance with disbursement reporting timelines and the data submission (closeout) deadline defined above.

Note: Schools should confirm closeout via the School Balance Confirmation page on the COD website once your school has completed its final reconciliation and reached a $0.00 Cash>NAPD for Pell Grant and $0.00 Ending Cash Balance for Direct Loan and TEACH Grant.

Contact Information

For additional information on reconciliation, refer to the Questions and Answers below. If you have questions about this announcement, contact the FSA Partner and School Relations Center at 1-800-848-0978. You may also email CODSupport@ed.gov.

Questions and Answers

A1: Per regulatory requirements for the Direct Loan Program a school must reconcile both internally and externally at least monthly to help meet all cash management and disbursement reporting requirements. For the Pell Grant and TEACH Grant Programs, it is recommended that a school reconcile both internally and externally at least monthly to help meet all cash management and disbursement reporting requirements. However, the more frequently a school performs reconciliation, the more likely it will be able to identify issues and resolve them before they become part of a systemic problem.

A2: The following items should also be verified during the reconciliation process:

Direct Loan Program

  • Check disbursement dates to ensure the correct actual disbursement date is on file in the COD website. Refer to the Jan. 29, 2014 Electronic Announcement, “Direct Loan Processing Information - Accurately Reporting Direct Loan Disbursement Dates.”

  • Confirm scheduled disbursements to ensure the disbursement has either been recorded as actual (Disbursement Release Indicator = True) or reduced to $0 in both the school’s internal systems and COD.

  • Resolve stale dated or uncashed checks (unclaimed credit balances) by returning any unclaimed funds and processing the corresponding downward adjustments to disbursements.

Pell Grant and TEACH Grant Program

  • Check disbursement dates to ensure the correct actual disbursement date is on file in the COD System.

  • Confirm that no disbursements are in a Pell Grant Potential Overaward Process (POP) situation.

  • Resolve stale dated/uncashed checks (unclaimed credit balances) by returning any unclaimed funds and processing the corresponding downward adjustments to disbursements.

A3: Reconciliation is a team effort consisting of the business office and the financial aid office, both of which have information that is needed to reconcile.

Note: If a school uses a third-party servicer, the school is ultimately responsible for ensuring that all regulatory requirements are being met and that the school is reconciling on a regular basis. The school should request and retain documentation of all reconciliation efforts. Also, a part of the reconciliation should include ensuring that the school’s internal records match the third-party servicer’s records as well as what is in the COD website.

A4: The Department provides a School Account Statement (SAS) to all schools each month. The SAS is similar to a bank statement and provides the Department’s official Ending Cash Balance and the official Cash > NAPD 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.

Note: Schools should review SAS format and content options at least annually to ensure these continue to meet their reconciliation needs.

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

Additional optional tools for assistance in reconciliation processes are addressed under Q12 below. However, the SAS must be used for required and regular monthly reconciliation.

A5: A school’s Ending Cash Balance Cash > NAPD balance can be found on the COD website’s School Summary Financial Information page and School Funding Information page (select the “School” link in the blue tool bar along the top of the main page, then the School Summary Financial Information and Funding Info links are on the left-hand tool bar under School Information). For Direct Loan ONLY - This page mirrors the SAS Cash Summary section of the SAS and provides updated summary cash and disbursement information daily. This can assist schools with monitoring their cash balances, in addition to completing required monthly reconciliation to the SAS.

Note: A school can also find Cash>NAPD and balance information by logging in to the FSA Partner Connect website. Once on the School Profile page, click on the School Financial Information link and then expand the School Funding Information section for the program and award year you are reconciling. For more information on FSA Partner Connect, refer to A13.

A6: Ending Cash Balance and Cash > NAPD Balances are calculated as follows:

Direct Loan Program

  • Ending Cash Balance = Beginning Cash Balance + Net Drawdowns/Payments – Total Net Booked Disbursements

  • Net Drawdowns/Payments = Cash Receipts (Drawdowns + Drawdown Adjustments) – Refunds of Cash (Refunds)

  • Total Net Booked Disbursements = Booked Disbursements + Booked Adjustments (upward or downward)

Note: The Department does not include unbooked, future-dated disbursement transactions in the calculation of official Ending Cash Balance. These are calculated separately and are included in the calculation of Cash > Net Accepted and Posted Disbursements (NAPD). In the SAS, Cash > NAPD is calculated as follows:

  • Cash > NAPD = Ending Cash Balance – Total Net Unbooked Disbursements

  • Total Net Unbooked Disbursements = Unbooked Disbursements + Unbooked Adjustments (upward or downward)

Note: A loan is considered booked when there is an accepted origination, and an accepted and linked Master Promissory Note (MPN), along with an accepted actual/funded disbursement on file in the COD website.

Pell Grant Program

The below formulas and examples illustrate this calculation:

Net Drawdowns - NAPD = Cash > NAPD

  • Example: $155,000 – $115,000 = $40,000

Drawdowns – Refunds of Cash = Net Drawdowns

  • Example: $159,750 – $4,750 = $155,000

Disbursements + Net Disbursement Adjustments (upward or downward) = NAPD

  • Example: $175,859 + ($60,859) = $115,000

Upward Disbursement Adjustments + Downward Disbursement Adjustments = Net Adjustments

  • Example: $10,000 + ($70,859) = -$60,859

If the Cash > NAPD is greater than zero ($0), your school needs to reconcile and determine if you need to report disbursements and/or return funds (excess cash).

If the Cash > NAPD is less than zero ($0), your school needs to reconcile and determine if you need to report downward disbursement adjustments and/or draw funds.

A7: Direct Loan schools should be able to reach a zero Ending Cash Balance for the award year within a month of making their final disbursements, if they are meeting all cash management, disbursement reporting, and monthly reconciliation requirements. Schools should then reconcile to a Zero Ending Cash Balance on their monthly SAS. If the school has completed all required processing per regulatory requirements and is ready to complete Direct Loan closeout, the school should:

  • Document their final reconciliation to a zero Ending Cash Balance on their SAS; and

  • Confirm closeout using the form on the School Balance Confirmation page on the COD website.

For more information on this final reconciliation and program year closeout, refer to Direct Loan Closeout Electronic Announcements posted on the FSA Partner Connect - Knowledge Center website.

Pell Grant and TEACH Grant schools should be performed as soon as possible after your school’s final scheduled disbursements have been made for the award year. This process must be performed within the applicable data submission deadline, as well as immediately following processing of any additional data by the school (for example, disbursement adjustments made within regulatory timeframes, but occurred after the data submission (closeout) deadline, as well as returns of unclaimed credit balance checks; see Federal Student Aid Handbook, Volume 4, Chapter 5).

Note: For both Direct Loans and Pell Grants, schools should confirm closeout via the School Balance Confirmation page on the COD website by completing the School Balance Confirmation form (select the “School” link in the blue tool bar along the top of the main page, then the “Balance Confirmation” link on the left-hand tool bar under School Information). Balance confirmation will allow your school to receive a Program Year Closeout Letter to document completion of final reconciliation. It also provides tighter controls over available funding and data submission.

Note: Schools can see additional Balance Confirmation information via the FSA Partner Connect website School Dashboard under the Origination and Disbursement Notification section. This section will notify your school of balance confirmations needed for closed programs and award years and balance confirmations recently completed. For more information on FSA Partner Connect, refer to A13.

A8: Yes, a school should check their balances regularly even after the data submission (closeout) deadline and/or after you have reached a zero Cash> NAPD Balance because of POP situations (Pell Grant ONLY), system-generated negative disbursements, and/or changes made in G5 that impact balances on the COD website. We recommend adding this step to your procedures and processing schedule.

Note: Schools can see notifications about unresolved Cash>NAPD balances for closed programs and award years via the FSA Partner Connect website under the Origination and Disbursement Notifications section, Unresolved Cash Balances Greater Than $25 for Closed Program or award year notification. For more information about FSA Partner Connect, refer to A13.

A9: The Department performs periodic global reductions of schools’ Current Funding Levels (CFL) after an award year closes. This global reduction reduces a school’s Available Balance in G5 and the COD System to zero. This zero Available Balance should not be confused with reconciling your net drawdowns to your net disbursements. Schools should monitor their “Cash>NAPD” on the School Funding Information page on the COD website to determine if they have completely reconciled to a zero balance.

Note: A school can find CFL information by logging in to the FSA Partner Connect website. Once on the School Profile page, click on the School Financial Information link and then expand the School Funding Information section for the program and award year you are reconciling. For more information about FSA Partner Connect, refer to A13.

A10: Extended processing is not needed to submit decreases to award or disbursement transaction changes, non-financial changes, or upward changes due to POP. 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 website.

After the data submission deadline, Extended Processing is not needed for:

  • Downward award changes

  • Downward disbursement adjustments (reduction to actual disbursements)

  • Non-financial changes

  • Upward changes due to POP

Extended Processing is needed for:

  • Increases to Awards

  • Upward Disbursement Adjustments (increases to actual disbursements)

  • New disbursements

Note: You must submit a separate request for each program and award year for which extended processing is needed.

To request extended processing for the Direct Loan Program, log in to the COD website and complete the following steps:

  1. Go to the School Summary Information screen by clicking on the School tab on the top blue bar and enter your school identifier information and click Search at the bottom of the page.

  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 a drop-down menu and providing the required additional information. (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.

A11: There are various tools provided by the Department that your school can use to reconcile externally to cash and disbursement data and records maintained in the COD website.

  • Direct Loan School Account Statement (SAS), Pell Grant School Account Statement (SAS), and TEACH Grant School Account Statement (SAS) (refer to Q4 above)

  • Direct Loan SAS Disbursement Detail on Demand, Pell Grant SAS Disbursement Detail on Demand, and TEACH Grant SAS Disbursement Detail on Demand – these ad-hoc reports allows schools to get SAS Disbursement Detail data independent of the school’s monthly SAS file. This ad-hoc report can be modified to show monthly, year-to-date, or a selected date range to help customize the report for a user’s specific need.

  • SAS Disbursement Detail on Demand Report Reader and Instructions – 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 – contains disbursements not yet funded in the COD website (Disbursement Release Indicator (DRI) = False).

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

  • Pell Grant Reconciliation Report – provides a one-record summary by student which includes the total year-to-date disbursement amount accepted in the COD System.

  • Pell Grant Year-to-Date (YTD) Report – contains detailed Pell Grant origination and disbursement data at a transaction level.

  • Pell Grant Electronic Statement of Account (ESOA) – summarizes the status of a school’s CFL versus the net drawdown for that award year, and includes YTD Unduplicated Recipient Count, YTD Total Accepted and Posted Disbursements, YTD Total ACA paid to school, and the net drawdown payments in G5 up to the current processing day.

COD website:

  • School Funding Information and Funding History Report – (refer to Q5 above) Note: The Funding History Report is the downloadable csv file available on the COD Funding Information Screen.

  • School Summary Financial Information – (refer to Q5)

  • 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, refunds 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 the Department’s payment analysts for schools on Heightened Cash Monitoring 2 (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.

  • Pell and DL EDExpress – main function is to compare cash and disbursement data from EDExpress or a school’s custom software/system to the cash and disbursement data from the SAS and produce a discrepancy report. For more information about Pell and Direct Loan EDExpress refer to the 2024–2025 COD Technical Reference, Vol 3.

A12: Additional resources for reconciliation can be found on the FSA Partner Connect - Knowledge Center website, which includes:

A13: 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. You can subscribe to get the latest news and updates from the FSA Partner Connect - Knowledge Center by clicking on this link: https://fsapartners.ed.gov/subscriptions/.

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 found within the Knowledge Center portion of FSA Partner Connect

  • 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

  • School’s Dashboard – This page has a section for Origination and Disbursement Notifications that can help identify areas that need your immediate attention like unsubstantiated cash > 30 days, unresolved balances in closed award years, and balance confirmations needed.

  • School Profile, School Financial Information – This page contains sections that are very similar to the financial pages within COD but with some enhanced features. They include the School Daily School Account Statement (SAS) Cash Information, School Funding Information, Cash Activity, and Refunds of Cash Information sections.

  • School Options and General Information – This page contains sections with information on Extended Processing status and your SAS Report Selections.

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

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