Bulletin ID
DLB - 95 - 8
| PublicationDate: 4/1/95 BulletinID: DLB - 95 - 8 April 1995 DLB-8 Summary: Draw down instructions for Year Two participants in the William D. Ford Federal Direct Student Loan Program Dear Colleague, You will be participating in the William D. Ford Federal Direct Student Loan Program (Direct Loans) beginning with your 1995-96 academic year. As you know, there are three levels of participation in Direct Loans. Level One participants are responsible for originating loans, obtaining signed promissory notes and sending them to the Direct Loan Servicing Center and drawing down funds to make loans. Level Two participants are responsible for originating loans and obtaining signed promissory notes, but do not drawdown funds. The Alternative Originator draws down funds for Level Two schools based on submission of loan origination records and an accepted promissory note. The drawn down funds are deposited into the schools bank account. Alternative Origination (also referred to as Level Three) participants are only responsible for originating loans. The Alternative Originator handles everything related to promissory notes and, as with Level Two, draws down funds. Level One participants will receive a Direct Loan PIN and password shortly. If you have not received this information by April 30, please call (202) 708-9776. Level Two and Alternative Origination participants do not receive a password since the Alternative Originator is responsible for drawdown requests. If you are a Level One or Level Two participant you will receive a Payment for Origination Services three times per year. The payment is based on the number of borrowers whose first disbursement has been reconciled during the academic year. This means that the Direct Loan Servicing Center has received and accepted a loan origination record, promissory note and disbursement record which has also been reconciled. Level One participants receive $10 per borrower and Level Two participants receive $7 per borrower. These payments are disbursed automatically and are deposited into the bank account you have established. You will receive a letter from the Department a few days prior to the disbursement of these payments indicating the amount you will be receiving. Level One participants are responsible for drawing down Direct Loan funds directly. There are two ways to drawdown funds: Automated Clearing House (ACH) and FEDWIRE. It generally takes up to three days to receive funds via the ACH process. FEDWIRE can either be a manual or automated process. Requests made by FEDWIRE generally take one to two days to be processed and credited to your bank account. Please see Recipients Guide for the Department of Education Payment Management System (EDPMS) for more information on how to request funds. A school may wish to ensure that the process will work smoothly prior to actually needing funds for loans. This can be accomplished by the school requesting one dollar. This request cannot be made until after April 30. The dollar must either be returned as excess cash or used as part of loan funds. It is not required that it be used within three days of receipt, however. Also, if you decide to do this test, be sure to enter this drawdown in your cash management database as you would any other drawdown request. There may be times when a school will be required to send money back to the Department. The excess cash may be the result of drawing down more funds than are used within the prescribed time period or due to student cancellations and adjustments. In either case, the funds should be returned as quickly as possible. If the amount of excess cash is less than $100,000 it can be returned by check to: Direct Loan Servicing Center Attn.: Excess Cash PO Box 4639 Utica, New York 13504-4639 Alternatively, the excess cash may be returned electronically using ACH. To use this method, you must supply your bank with the following information about the receiver (the Direct Loan Servicing Center): Financial Institution: Fleet Bank Genes St. Utica, NY Account Number: 9380602353 Routing Number: 021300019 Amounts greater than $100,000 should be returned by FEDWIRE directly to the Department of Education. Procedures for sending funds via FEDWIRE can be found in The Blue Book, Accounting, Recordkeeping, and Reporting by Postsecondary Educational Institutions for Federally-Funded Student Financial Aid Programs. Instruct your bank to use the following reason for the remittance: Direct Loans Excess Cash Many schools are required to use interest bearing accounts for all Title IV funds which they receive, including funds received for Direct Student Loans. All interest earned on these accounts must be returned to the Department of Education using ED/PMS 272 reports. It is not required that interest on Direct Loan accounts be reported or returned separately from other Title IV funds. If you have any questions regarding requests for funds or return of excess cash, please call the Direct Loan Task Force at 202-708-9951. Sincerely, Diane Voigt, Chair Direct Loan Task Force |