Bulletin ID
DLB - 95 - 15
| PublicationDate: 10/1/95 BulletinID: DLB - 95 - 15 October 1995 DLB-15 SUMMARY: Request that schools submit Direct Loan origination records, promissory notes, and disbursement records no later than 30 days following the date of disbursement Dear Direct Loan School: First, let me take this opportunity to congratulate all of our 1995-96 Direct Loan participants on the successful implementation of our second year of operation. All indications are that Direct Loans will be even better this year than last. We also want to assure you that we are even more committed to providing schools and students with the best possible quality customer service. We are just as committed to ensuring the highest level of accountability and program integrity. This bulletin addresses an issue consistent with both of those commitments. Currently, there is no regulatory requirement that schools submit origination records, promissory notes, and disbursement records within a specified timeframe. However, in previous guidance to schools, we have stated that schools should reconcile and submit all the records listed above on a monthly basis [see the April 26, 1994, Announcement of Criteria for Loan Origination--1995-1996 Academic Year (59 FR 21804) and Chapter 7 of the DIRECT LOAN SCHOOL GUIDE]. In addition, the Department has included the requirement that schools submit origination records, promissory notes, and disbursement records (both initial and subsequent), to the Direct Loan Servicing Center no later than 30 days following the disbursement of a Direct Loan in a Notice of Proposed Rulemaking (NPRM) published on September 20, 1995 (60 FR 48858). While we are carefully reviewing all public comments on this NPRM, the Department is likely to adopt this requirement in the final regulations. This final regulation will be published by December 1, 1995, and will become effective July 1, 1996. Assuming the 30-day deadline is included in the final regulations, the Department will begin enforcing this requirement on July 1, 1996. For several important reasons, WE URGE ALL SCHOOLS TO IMPLEMENT ANY NECESSARY CHANGES AND BEGIN COMPLYING WITH THE 30-DAY REQUIREMENT AS SOON AS POSSIBLE. As a result of the experience we gained through administering the program for one year, the Department is convinced that services to borrowers and program accountability will be substantially improved if schools submit records and promissory notes to the Direct Loan Servicing Center no later than 30 days following disbursement. It is imperative that borrowers receive disclosure information and loan servicing information as quickly as possible after their loans are disbursed. The timely submission of data is critical for Direct Unsubsidized Loan borrowers, who need to receive interest billing statements, and Direct PLUS Loan borrowers, who enter repayment when the loan is fully disbursed. The Department must receive disbursement information from schools promptly in order to provide borrowers with the proper notifications and to establish repayment terms. The timely submission of origination records, promissory notes, and initial and subsequent disbursement records is particularly critical at the end of the Federal fiscal year (September 30th). TO PROMOTE PROGRAM INTEGRITY AND FACILITATE AUDIT REVIEW, WE REQUEST THAT ALL ELECTRONIC RECORDS AND PROMISSORY NOTES FOR LOANS MADE DURING FISCAL YEAR 1995 (THAT IS, PRIOR TO SEPTEMBER 30, 1995) BE SUBMITTED NO LATER THAN NOVEMBER 27, 1995. We also believe that implementation of this 30-day requirement is in the best interests of Direct Loan schools. Schools that do not report disbursements in a timely manner appear to have excess cash even when they have properly disbursed funds to borrowers in compliance with the cash management regulations. Even if there is no evidence indicating that a school is not disbursing funds properly, the APPEARANCE of excess cash may reflect unfavorably on a school's administration of the Direct Loan Program simply because the school has not provided the information needed to book loans in a timely manner. If your school will have any problems submitting loan records and promissoryynotes in a timely manner, we urge you to contact your account manager (see attached list of names and telephone numbers) or the Direct Loan Task Force (202-708-9951) immediately. We will work with you to address any problems. We can provide advice and assistance and even review your operation on-site to ensure that you are able to transmit these critical records within the 30-day timeframe. Also, if you have questions regarding this upcoming requirement or if you would like technical assistance in implementing changes in order to comply with this requirement, please contact your account manager. We look forward to continuing to work with you to ensure the success of this innovative new program. Sincerely, Leo Kornfeld Senior Advisor to the Secretary Enclosure |