PublicationDate: 7/1/95 ChapterNumber: 4 ChapterTitle: Obtaining, Managing, and Returning Title IV Funds SectionNumber: 4 SectionTitle: Drawing Down Federal Cash PageNumbers: 93-99 Once a school has determined its cash needs for a given time period, it may initiate the process of drawing down funds. 4.4.1 Overview of ED/PMS ED/PMS is the central repository for payment transactions of schools that receive funds from ED through Financial Services (FS). ED/PMS is a system; FS is the office within ED that administers the system. ((Title IV funds drawn down)) A school uses ED/PMS to draw down funds for: - the Federal Pell Grant Program, - the Federal Supplemental Educational Opportunity Grant (FSEOG) Program, - the Federal Work-Study (FWS) Program, - the Federal Perkins Loan Program, and - the Federal Direct Loan Program (Level 1 schools only; Level 2 and alternative origination [Level 3] schools do not request [draw down] funds from ED/PMS.). NOTE: Federal Direct Loan Program expenditures are not reported through ED/PMS 272 Reports. (Information on Federal Direct Loan Program reporting is contained in section 6.1.2, and information about reporting other Title IV program expenditures through ED/PMS 272 Reports is contained in section 6.3.2.) ((ED/PMS account)) For the Federal Pell Grant Program, FSEOG, FWS, and Federal Perkins Loan Program, each school has an account with ED/PMS. Once a school receives an official award authorization or allocation, the authorization amount is recorded in the school's ED/PMS account. Once the start-date of an award authorization has occurred, a school may request payments against the funds available in its account. (NOTE: There is no award authorization for the Federal Direct Loan Program. Each school has a separate ED/PMS account for its Direct Loan funds. See section 4.3.2.3.) ((Advance payment method)) A school may receive funds through ED/PMS in advance or by reimbursement. ED/PMS mainly uses the advance payment method because it provides flexibility and the ability to handle the large volume of funding requests ED/PMS receives. A new institutional recipient is not entitled to draw down funds until it receives a countersigned Program Participation Agreement from ED. If a school is a new recipient, it will be placed on advance payment as soon as ED/PMS receives information about the school's financial institution. (Reimbursement payment is discussed in section 4.4.4.) In addition, a school may also receive other ACH/EFT payments for certain reimbursements such as Pell Grant and Direct Loan administrative allowances and Perkins Loan service cancellations. Advance payment schools use one of two electronic methods to request funds from ED/PMS: ACH/EFT or FEDWIRE. 4.4.2 Automated Clearinghouse/Electronic Funds Transfer (ACH/EFT) ((Enrolling in ACH/EFT)) Before an advance payment school can request and receive payments using Automated Clearinghouse/Electronic Funds Transfer (ACH/EFT), the school must enroll in direct deposit with the Financial Payments Group (FPG) of ED's Financial Services (FS). This requires completing a Direct Deposit Sign-Up Form (SF-1199A). Once FPG receives a school's SF-1199A, it takes at least two weeks to enroll the school in ACH/EFT. This period includes time needed to verify school-provided enrollment information. (More information about enrolling in ACH/EFT can be found in Chapter 3 and Appendix A of the ED/PMS Recipient's Guide.) ((Calling in requests)) A school requests ACH/EFT direct-deposit payments by calling the ED/PMS service bureau's toll-free telephone number (1-800-654- 8341). A school can call any business day from 9 a.m. to 7 p.m. (ET). However, requests made after 2 p.m. (ET) will not be forwarded to ED/PMS until the next business day. (Complete instructions for placing calls are contained in Appendix C and Appendix D of the ED/PMS Recipient's Guide.) ((Processing requests)) The service bureau sends a school's request to ED/PMS for validation. If the request meets ED/PMS validation criteria, payment will be transmitted to the Federal Reserve Bank (FRB) the next business day and the school will be able to withdraw funds from its bank account approximately two to three days later. If a school's request fails to meet ED/PMS validation criteria, the request will be rejected and sent to the school's FPG account representative for review. The FPG account representative will send the school a written notice explaining why the payment request was rejected. The FPG representative must respond with the written notice to the school within three working days. ((Verifying and recording payments)) A school should always check its bank account for an ACH deposit to make sure that an ED payment has been received before it begins disbursing funds. A school should also keep records of all payments it has requested. These records provide an audit trail of funds requested and help the school reconcile its accounts with the Federal Cash Transaction Report (ED/PMS 272A Report). A detailed explanation of the ACH/EFT process can be found in Chapter 3 of the ED/PMS Recipient's Guide. 4.4.3 FEDWIRE ((Enrolling in FEDWIRE)) Enrollment in FEDWIRE is limited to states and some large postsecondary institutions, including large public institutions in a state. A school must be selected to enroll in FEDWIRE by the Financial Payments Group (FPG) of ED's Financial Services (FS). However, schools new to Title IV participation are no longer placed on FEDWIRE. Once a school has enrolled, FPG accepts FEDWIRE requests only from school personnel who have been designated by a school's authorizing official (usually, the school's chief fiscal officer or treasurer). ((Automated FEDWIRE System)) A school requests FEDWIRE payments through the Automated FEDWIRE System, a fully integrated subsystem of ED/PMS that runs on a mainframe computer located at the National Institutes of Health (NIH). This system allows schools to transmit FEDWIRE payment requests directly to the NIH computer using a PC and modem. When a school uses this system, the school will know immediately if a request is accepted or rejected through messages that appear on its computer screen. If a request is rejected, an error message will appear that explains the problem. The Automated FEDWIRE System reduces payment-request input errors and helps schools solve problems with payment requests quickly. With FEDWIRE, a school's funds are available the next business day. (Only state agencies using CFDA codes [Catalog of Federal Domestic Assistance codes] may request same-day payments.) All recipients will be allowed to make same-day payment requests at some point in the future. To receive a same-day payment, the transaction must be completed no later than 12:30 p.m. (ET). For next-day payments, the transaction must be completed no later than 6:00 p.m. (ET). A payment request will be sent to a school's bank no later than 3:00 p.m. (ET) through the Federal Reserve Bank (FRB) in Richmond, Virginia. If a school's bank does not process wire payments up to 3:00 p.m. (ET), the funds might not be available until the next business day (the second business day after the transaction). A school should be aware of this and check with its bank. ((Calling in requests)) A school may request FEDWIRE payments by calling FPG directly. This method is reserved for times when the automated system is malfunctioning or the school is having difficulty accessing the system. (This is not considered an alternative method.) FPG will accept phone calls between 8:30 a.m. and 3:30 p.m. (ET). The phone numbers for making requests are 202-401-2093, 202-401-1094, and 202-401-1092. These numbers should be used only for making and checking payment requests. A school should always check its bank account to make sure that a FEDWIRE payment has been deposited before it begins disbursing funds. A school should also keep records of all payments it has requested. These records provide an audit trail of funds requested and help the school reconcile its accounts with the Federal Cash Transaction Report (ED/PMS 272A Report). A detailed explanation of the FEDWIRE process can be found in Chapter 3 of the ED/PMS Recipient's Guide. 4.4.4 Reimbursement Payment Requests ((Filing a request)) Schools that have been placed on reimbursement do not request funds through ED/PMS. ED notifies these schools how to request payments. In most cases, a school completes a Request for Advance or Reimbursement Form (SF-270) and sends it to the appropriate ED Regional Office. ((Receiving payment)) After a school's request has been approved, ED sends the school's SF-270 to the Financial Payments Group (FPG) for processing. FPG generally uses direct deposit (ACH/EFT) to make reimbursement payments. More information about reimbursement payments can be found in section 4.2.2 of this book and in Chapter 3 and Appendix I of the ED/PMS Recipient's Guide. 4.4.5 William D. Ford Federal Direct Loan Program Procedures used to draw down funds for the William D. Ford Federal Direct Loan Program (Direct Loan Program) differ from those used to draw down other Title IV funds. In addition, requests for Direct Loan funds may not be combined with requests for other Title IV funds. 4.4.5.1 Schools Participating Under School Origination (Level 1) Level 1 Direct Loan schools initiate their own funding requests. These requests are made separately from those requests made for Pell Grant, campus-based, and other ED program funds because Direct Loan funds come from a different appropriation than other ED program funds. ((Requesting payment)) Once a school has determined its immediate cash needs, it transmits either an ACH/EFT or FEDWIRE payment request to the ED/PMS service bureau. In the case of an ACH/EFT request, a Level 1 school can request Direct Loan funds by one of two methods. The school can either make an ACH/EFT request by telephone to the ED/PMS service bureau or the school can make a request by using the Export File Option in the Direct Loan software. In the case of a FEDWIRE request, a school requests Direct Loan funds by telephone to the ED/PMS service bureau. The service bureau validates the school's request and forwards it to ED/PMS for additional processing. Level 1 schools should retain copies of their ACH/EFT or FEDWIRE Payment Request Records for Direct Loans to record those requests and to resolve any payment problems with ED/PMS.*15* ED/PMS edits a school's drawdown request and creates an ACH/EFT payment file for transmittal to the Federal Reserve Bank (FRB). Any problems with requests are transferred to a holding file so ED personnel can either approve the transaction or contact the school to resolve the problem. ((Direct deposit)) The FRB receives the ACH/EFT file and transfers funds directly to the school's bank account. A school's bank should receive funds within 48 to 72 hours after the school transmits the drawdown request. FRB notifies ED if there is a problem with an ACH/EFT transmission or if a school's transaction is rejected. ED then contacts the school to resolve the problem. 4.4.5.2 Schools Participating Under Alternative Origination (Level 3) and School Origination (Level 2) *16* Schools participating in the Direct Loan Program under these options do not initiate funding requests. Rather, their funding requests are handled by the Direct Loan Servicing Center (Servicing Center). The Servicing Center requests funds for schools using these participation options on the basis of records submitted to it by a school. For borrowers' records to be included in a funding request, a school must send the borrowers' loan origination records and promissory notes to the Servicing Center and the Servicing Center must accept the records. ((Anticipated disbursement roster)) Approximately 30 to 45 days before the anticipated disbursement dates listed in the loan origination records, the Servicing Center sends an electronic list to the school that shows anticipated disbursements by borrower and by loan type. The school reviews the list and updates or adjusts the information, paying special attention to disbursement amounts and anticipated disbursement dates. The school then sends any changes to the Servicing Center. No paper is sent back and forth; the process is entirely electronic. ((Actual disbursement roster)) The Servicing Center requests a school's funds from ED three days prior to the anticipated disbursement dates. The same day the request is made, the Servicing Center creates and sends an electronic actual disbursement roster to the school that lists individual borrowers, their loan types, and their actual disbursement amounts, minus loan fees, as well as the total amount of funds included in the request. Level 2 and 3 schools should retain copies of their disbursement rosters as records of the funds they receive. ((Direct deposit)) Funds are deposited directly into a school's bank account through the Automated Clearinghouse (ACH). *15* Many schools choose not to exercise the software method because the school is not given a confirmation or control number from ED/PMS to record the request and to resolve any payment request problems with ED/PMS. *16* The school designations Standard Origination and School Origination Option 1 do not apply until the 1996-97 award year. In 1995-96, Level 1 (all functions performed by schools) and Level 2 (school does not draw down from ED/PMS) and Alternative Origination are the designation levels of Direct Loan participation. |