Bulletin ID
DLB - 98 - 44
| PublicationDate: 12/1/98 BulletinID: DLB - 98 - 44 December 1998 DLB 98-44 Subject: Close Out of the 1997-98 Direct Loan Program Year Dear Colleague: As the Department completes closing out the 1995-96 and 1996-97 Direct Loan program years, we want to provide you with information to help you begin the close out process of the 1997-98 Direct Loan program year. The close out of the 1995-96 and 1996-97 Direct Loan program years was a major effort for many schools as well as the Department. We appreciate the additional time and effort that may have been required from your staff in order to assist the Department with reconciling your schools and the Departments Direct Loan data. The Departments overall success in the closing out of the 1995-96 and 1996-97 Direct Loan program years is directly attributable to the efforts, cooperation, and support of institutions such as yours. We believe that the close out of the 1997-98 Direct Loan program year will be a more simplified process for most schools for several reasons. First, the data conversion issues that complicated the close out of the 1995-96 and 1996-97 program years will no longer be inherent in the closeout process. Also, as school cash balances became year specific with the 1997-98 program year, the closeout process for 1997-98, as well as subsequent years, is being done on a single year basis. Most importantly, the 732-LOS file, which was the primary tool used by schools for closing out the 1995-96 and 1996-97 program years, is scheduled to be transmitted this month by the Loan Origination Center (LOC) to all schools that processed 1997-98 Direct Loans. This advanced delivery of the LOS file for 1997-98 will allow schools the opportunity to begin reconciling 1997-98 data with the LOC immediately and will help schools achieve a zero ending cash balance well before the 1997-98 processing deadline. Processing Deadline for 1997-98 Direct Loan Program Year The deadline for submitting all 1997-98 Direct Loan records to the LOC is July 31, 1999. Schools must ensure that all 1997-98 origination records, promissory notes (both hard copy and the electronic manifest) and disbursement records, including adjustments and cancellations, are transmitted to, and accepted by, the LOC no later than July 31, 1999. 30-Day Reporting Requirement Schools should be aware that the annual processing deadline for closing out a Direct Loan program year does not relieve a school from compliance with the regulatory requirement that the school submit the promissory note, loan origination record and initial and subsequent disbursements to the Department no later than 30 days following the date of disbursement. The disbursement record for each subsequent disbursement, including adjustments and cancellations of disbursements, must be submitted to the Department no later than 30 days following the date of each subsequent disbursement or disbursement adjustment and cancellation. The Department expects all schools to comply with the 30-day reporting requirement as part of their normal monthly Direct Loan processing. As a result, most schools will have closed out well before the 1997-98 processing deadline. There are, however, infrequent cases in which a 1997-98 loan disbursement could appropriately be made as late as July of 1999. For example, a borrower begins attendance in a 12-month program on June 15, 1998. Because the loan period began prior to the July 1 academic year change, the school may have chosen to make a 1997-98 academic year loan to the borrower. Even though it is possible to originate a 1997-98 loan for this borrower as late as June 14, 1999 (the last day of classes), the school must disburse the loan funds and submit all required records to the LOC by July 31, 1999. Additionally, although the regulations provide for a 90-day late disbursement period, the processing deadline mandates that all required records be submitted by July 31, 1999. Successful Close Out of the 1997-98 Direct Loan Program Year The Department considers a school to have successfully closed the 1997-98 Direct Loan program year when a school has an ending cash balance of zero. A zero balance indicates that a school has accounted for all 1997-98 funds received from the Department by either submitting to the Department all records necessary to book 1997-98 loans originated by the school or returning undisbursed 1997-98 funds to the Department. If a school is unable to reconcile to a zero ending cash balance upon the completion of submission of all the schools 1997-98 loan records, the school will be expected to return those funds immediately to the Department as excess cash. Waiver of Monthly Submission of Data Match (#L) Batches Effective with this bulletin, the Department of Education is waiving the requirement that schools submit monthly data match files (#L reconciliation batches) to the LOC for the 1997-98 program year. Instead, schools should utilize the 732-LOS file for 1997-98 in order to meet the Direct Loan reconciliation requirement for 1997-98. Starting with the release of the initial 732-LOS and with each subsequent monthly file, each school should reconcile the Departments ending cash balance as stated on the 732-LOS to the schools internal bank account records as well as student account records. 732-LOS File The Department will provide schools with their current 1997-98 ending cash balance with the release of the 732-LOS for 1997-98. This ending cash balance is calculated by the LOC by subtracting all booked disbursements from drawdowns (less returns of excess cash) as of the date the LOC processed the 732-LOS file. Schools should expect to receive the 732-LOS from the LOC in their TIVWAN mailbox during the week of December 14, 1998. The 732-LOS will be sent as two text files: a summary file and a detail file at the loan level (not disbursement level). The message class for the 732-LOS Summary file is DIS498OP. The message class for the 732-LOS Detail File is DIS598OP. Schools needing assistance with importing these message classes and/or assistance in preparing a report from these files should contact their LOC Customer Service Representative at 800/848-0978 or their regional Direct Loan Client Account Manager. Schools should reconcile the 732-LOS loan and cash data to their internal records. Loan data is provided at the loan level in order to reduce the size of the file and to make the comparison process easier for schools. If in comparing at the loan level, schools find discrepancies with total loan amounts, schools should contact their LOC Customer Service Representative at 800/848-0978 for detailed disbursement information. The file layouts for the 732-LOS Summary and Detail Files are the same as for the 732-LOS for 1995-96 and 1996-97 and are attached to this bulletin. 732-LOS-C Monthly Files After the release of the initial 732-LOS file for 1997-98, schools will begin receiving a monthly file, the 732-LOS-C, which will reflect cash and loan activity subsequent to the 732-LOS. Schools will only receive this file if they have had any 1997-98 activity during a month. The file will only include cash and disbursement transactions processed by the LOC for that month and will provide the updated ending cash balance created as a result of new activity. Each 732-LOS-C will include a listing of all remaining unbooked loan records at the LOC as of the processing date of the monthly 732-LOS. The 732-LOS-C will contain both summary and detail information in one text file. The message class for this file is DIS698OP; schools should follow the instructions above for the 732-LOS for assistance in importing this file and comparing the data to internal records. The file format for the 732-LOS-C is the same as that for the 732-LOS-C for 1995-96 and 1996-97 and is attached to this bulletin. Looking Ahead The Department is committed to continuing to evaluate and improve the Direct Loan reconciliation process for schools, as well as the annual close out process and we invite your suggestions. For the 1998-99 Direct Loan program year, schools began receiving the new Direct Loan School Account Statement (DLSAS) from the LOC in April 1998. The DLSAS enables schools to track cash balances concurrent with the processing of 1998-99 loan data. With the DLSAS, schools are able to reconcile data from the LOC to their internal records each month. By using the DLSAS, schools are able to essentially close out each month, well before the 1998-99 program year processing deadline. Additionally, the Department is committed to providing an enhanced level of customer service to assist schools as together we begin the process of closing the 1997-98 Direct Loan Program year. Additional bulletins will be forthcoming to assist you with closing out the 1997-98 Direct Loan program year. If you have any questions about the close out process for 1997-98 or have questions concerning your 1997-98 Direct Loan ending cash balance, please contact the Accounting and Financial Management Services Direct Loan Operations Team at 202/708-6466. We appreciate your participation in the Direct Loan program and thank you for your continued support. Sincerely, Linda L. Paulsen Joe L. McCormick Director Chair Accounting and Financial Management Service Direct Loan Task Force Enclosure A |