Bulletin ID
DLB - 97 - 19
| PublicationDate: 7/1/97 BulletinID: DLB - 97 - 19 DLB-97-19 July 1997 SUMMARY: Information on Loan Origination Center (LOC) Processing Procedures Dear Colleague: During the past few months, various questions have been raised by schools concerning some of the processing differences since changing to the new Loan Origination contractor on March 3, 1997. While some of these processes have been addressed in various transition updates, this letter will summarize those procedures that comprise the major issues schools are continuing to encounter. This letter also provides you with the resolutions that either have been put in place or are under development: 1) The current Loan Origination Contractor (LOC) will only accept a loan cancellation change record (#E batch) on a loan if all actual disbursements have been canceled. If any actual disbursements have not been canceled, then the loan will not be canceled and a reject acknowledgment will be sent back to the school with a reject error code of "80" ( loan cancellation record received without all corresponding actual disbursement cancellations). THE ONLY WAY A SCHOOL CAN CANCEL A LOAN THAT HAS ACTUAL DISBURSEMENTS RECORDED IS TO CANCEL THE ACTUAL DISBURSEMENTS AND THEN CANCEL THE LOAN. These procedures have created problems for schools who use EDExpress when trying to cancel a loan when the change record (#E) is received at the LOC prior to the disbursement cancellation record. EDExpress automatically creates both a change record and a cancellation disbursement when the loan is canceled. These records are batched separately, and should be, but are not always, transmitted at the same time. If the change record is transmitted prior to the LOC receiving the disbursement record, the change record rejects and the loan will not be canceled. If a loan cancellation has been rejected as a result of this current LOC process, the school should call their Customer Service Representative (CSR) for a work around which will allow the change record to be accepted. These procedures have been put in place at the current LOC because, as information is sent from the LOC to the Direct Loan Servicer(s), the Direct Loan Servicer(s) will reject any loan cancellation for a loan on which disbursements have been made but not yet canceled. These procedures at the LOC will ensure that the Direct Loan Servicer(s) receives accurate information in the appropriate order from the LOC. A message has been sent out by the CPS Customer Service advising schools on the proper procedures to follow to avoid having loan cancellation change records reject. The EDExpress software for 98-99 processing will be changed to prevent the creation of a loan cancellation change record when there are uncanceled actual disbursements. Until that version is available to schools, schools using EDExpress to cancel loans on which there are actual disbursements, need to: 1) EXPORT (BATCH), 2) TRANSMIT, AND 3) RECEIVE BACK AND IMPORT THE ACKNOWLEDGMENTS FOR THE CANCELED ACTUAL DISBURSEMENT RECORDS PRIOR TO EXPORTING AND SENDING THE CHANGE CANCELLATION RECORDS FOR THOSE LOANS. 2) Schools have had disbursement records reject when a new disbursement record is transmitted which has a disbursement date prior to a disbursement date on the record which was previously canceled. This could occur when a disbursement is recorded with the wrong disbursement date, is then canceled, and a new disbursement is recorded with a corrected date that may be an earlier date than the incorrect date on the canceled disbursement. For the processing of disbursements, the LOC has edits in place to make sure that disbursements are sent in transaction and date order. However, the original edits did not recognize the cancellation status when editing against date order and disbursements were being rejected when there was a canceled disbursement with a later date then the new disbursement. These edits in the LOC are being modified. Disbursements that were originally rejected for being out of date order due to a previously canceled disbursement can be resent to the LOC and will be accepted. Until these modifications are in place, if you are having disbursements reject for being out of date order, call your CSR for assistance. 3) For those schools who serve as a central drawdown point and then allocate funds among multiple campuses, cash receipt records recorded by these campuses are, in some instances, being returned in reconciliation acknowledgments as unreconciled. This will occur when the LOC receives the school's Drawdown Reconciliation/Allocation Statement (#K batch) before it receives a record of the drawdown from EDPMS. Drawdown information from EDPMS is downloaded to the LOS on a daily basis, based on the date we anticipate the funds will be in the school's bank account. If a #K batch is received at the LOC before the drawdown information has been loaded at the LOC, then the #K batch will reject. Because no acknowledgment is returned to schools for a #K batch, schools have not been aware that the drawdown allocation sent to the LOC has rejected until receiving a reconciliation acknowledgment which shows unreconciled cash receipts. Beginning with the 97-98 processing year, a Reconciliation Allocation/Reallocation Statement Acknowledgment (DIRS message class) will be returned to schools which will alert the school that the #K batch was received before the EDPMS record for that drawdown was loaded into the LOS. In order to avoid any reconciliation problems or DIRS rejects, schools should wait at least 5 days after requesting a drawdown before exporting a #K batch. 4) Previously, procedures were in place to allow for promissory notes and endorser addenda from a canceled loan to be merged with a new loan record. These procedures were established in order to allow schools that either canceled a loan in error or canceled a loan to correct an error, to originate a new loan without having to obtain a new promissory note from a borrower. Although the ability to merge promissory notes and endorser addenda was not initially part of the functionality of the new Loan Origination Center, this functionality is under development and should be in effect by the end of July. We will notify schools when this occurs and until that time, we appreciate your patience in this matter. 5) Reconciliation processing is now current. As discussed in earlier transition updates, the processing of reconciliation files at the LOC now may involve a delay of up to five days in order to allow the LOC Reconciliation Accountants additional time to research rejects that may have resulted from the transition to the new LOC. If the necessary research can not be completed within five days, the acknowledgment is then returned with an "R9" code on those records. Schools were instructed that no research on their part would be needed and that these records should be returned to the LOC with the school's next reconciliation file. The R9 code and five-day delay were put in place as part of the transition processing in an effort to reduce the burden on schools for researching rejects that were caused by the transition between the system of the former LOC and the new LOC. If a file contains no R9 records, it will be acknowledged within the required 1-2 days. If the file is not returned within that time frame, the school should understand that the manual research process is taking place which requires this additional time. SCHOOLS WHO HAVE YET TO SUBMIT A RECONCILIATION FILE SINCE THE CHANGE OF THE NEW LOC ON MARCH 3 SHOULD SUBMIT A FILE AS SOON AS POSSIBLE. 6) Schools have reported reconciliation acknowledgments in which cash receipts are reflected as unreconciled due to no corresponding drawdown data at the LOC. While drawdown data is sent to the LOC from EDPMS on a daily basis, we have found that for the period 2/15- 3/30, this data was not loaded at the LOC. Therefore, cash receipts from that period sent in reconciliation files to the LOC were returned as unreconciled. Drawdown data from 2/15-3/30 has since been loaded at the LOC. Drawdown data from April to the present is also being compared to EDPMS records to ensure that complete drawdown data is at the LOC. As a reminder, drawdowns for Year 4 must be separated from drawdowns for any prior award year. The Loan Origination Center will generate separate Year 4 drawdown requests to the Department of Education's Payment Management System (EDPMS) for Option 1 and Standard Origination schools. If you are an Option 2 school, and you draw down on the same day for both Year 4 and a prior year, please be sure to perform two separate drawdown requests. Thank you for supporting the Direct Loan Program. Sincerely, Joe L. McCormick, Chair Direct Loan Task Force |