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Obtaining, Managing, and Returning Title IV Funds

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

((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

((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

((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

((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.


((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

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. 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 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. Schools Participating Under Alternative Origination
(Level 3) and School Origination (Level 2)
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.

Last Modified: 06/30/1995