Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

Obtaining, Managing, and Returning Title IV Funds

PublicationDate: 7/1/95
ChapterNumber: 4
ChapterTitle: Obtaining, Managing, and Returning Title IV Funds
SectionNumber: 2
SectionTitle: Requesting Funds
PageNumbers: 87-89


((FFEL funds))
Schools request funds for all Title IV program expenditures directly
from the federal government, with the exception of the Federal
Family Education Loan (FFEL) Program. FFEL Program funds are
obtained by schools from banks, savings and loan organizations,
credit unions, and other financial institutions that serve as FFEL
Program lenders. (See section 4.6.)

((ED/PMS))
Schools request federal funds via the Department of Education
Payment Management System (ED/PMS). (ED/PMS is discussed in
detail in sections 4.2.1- 4.2.2, 4.4.1-4.4.4, and 6.3 of this book.)
ED/PMS pays funds to schools using one of two electronic systems:

((ACH/EFT))
- Automated Clearinghouse/Electronic Funds Transfer
(ACH/EFT)--A school contacts the ED/PMS service bureau and
the bureau sends the request to ED/PMS for validation (approval).
If approved, ED/PMS electronically transfers a school's payments
through the Federal Reserve Bank (FRB) network to the school's
depositor account at a designated financial institution. ACH/EFT
also is referred to as direct deposit.

((FEDWIRE)
- FEDWIRE--A school contacts the Financial Payments Group
(FPG) in ED to request funds. The funds are then transferred
directly from ED through the FRB network to the school's
depositor account at a designated financial institution. FEDWIRE
is generally used to transfer funds to states and some large
postsecondary institutions.

ED/PMS may pay schools in advance (BEFORE Title IV program
funds are disbursed to students), or a school may be paid by
reimbursement (AFTER institutional funds have been disbursed to
students). NOTE: No school chooses to be paid by reimbursement.

4.2.1 Advance Payment Method

ED/PMS pays most schools in advance. Under the advance payment
method, ED/PMS accepts a school's request for cash and
electronically transfers the amount requested to the school's bank
account via ACH/EFT or FEDWIRE.

((Request may not exceed need))
A school's advance request for cash may not exceed the amount of
funds the school needs within two to three business days to make
disbursements to students. A school must make the disbursements as
soon as administratively feasible but no later than three business days
following the date the school receives the funds.

More information about the advance payment method can be found
in Chapter 3 of the ED/PMS Recipient's Guide.

4.2.2 Reimbursement Payment Method

((Placing schools on reimbursement))
A school may be placed on reimbursement if ED determines that
there is a need to monitor the school's use of federal funds or if a
school has monetary liabilities that need to be recovered by
administrative offset (for example, owing funds to ED as a result of
an audit or program review finding).

The Regional Office of ED that had ED/PMS place the school under
the reimbursement payment method will tell the school how to
request payment. The procedure begins with the school filling out a
Request for Advance or Reimbursement Form (SF-270) and sending
it to the Regional Office for approval. After approving the request,
the Regional Office sends it to the Compliance and Enforcement
Division in the Central Office for approval. After approving the
request, that division authorizes the Financial Payments Group (FPG)
of ED/PMS to send an ACH/EFT payment to the school. FPG must
have written authorization from the Compliance and Enforcement
Division before an ACH/EFT payment can be sent.

Under the reimbursement payment method, a school must make
disbursements to eligible students before it may submit a request to
ED/PMS for cash. The amount of the school's request may not
exceed the amount of actual disbursements the school made to
students included in the request.

((Documentation required to support request))
ED/PMS may require a school to submit documentation that each
student included in a request was eligible to receive and did receive
payment for Title IV program funds for which the school is
requesting reimbursement.

ED/PMS approves a school's request for reimbursement and
electronically transfers the requested amount to the school's bank
account if:

((Requirements for approving requests))
- the school properly determined each student's eligibility for
Title IV program funds;

- the school made payments to students for the correct amounts of
Title IV program funds;

- the school submitted any required documentation to support its
request for reimbursement; and

- sufficient funds are available to the school in the ED/PMS
payment system.

More information about the reimbursement payment method can be
found in Chapter 3 of the ED/PMS Recipient's Guide.

Last Modified: 06/30/1995