() 2001-2002 Processing Changes

Dear Partner:

This bulletin provides information concerning changes in processing procedures for the 2001-2002 school year. We hope you find the information useful and that it allows you to process Direct Loans more efficiently.

Implement Up-front Interest Rebate
The following changes apply to the 2001-2002 year and forward:

• The up-front interest rebate percentage for 2001-2002 is equal to 1.5 percent of the gross loan amount.
• The up-front interest rebate amount will be calculated at the anticipated and actual disbursement level by schools for each Direct Subsidized, Unsubsidized, and PLUS loan.
• Upon receipt of the Loan Origination Record (LOR), the Loan Origination Center (LOC) will continue to edit on the sum of all anticipated disbursements to ensure that the Loan Amount Approved is not exceeded.
• The LOC will continue to edit the Net Amount by comparing it to the Calculated Net Amount-LOC and will reject the Net Amount if the difference is more than plus or minus a dollar.
• Schools will send the Gross Disbursement Amount, Loan Fee Amount, Interest Rebate Amount, and Net Disbursement Amount for each anticipated disbursement to the LOC.
• The new full Loan Origination Record (LOR) layout is increased to 1,064 characters in length to accommodate the new anticipated disbursements interest rebate amounts.
• The LOC will reject the LOR with reject code A5 (Anticipated Interest Rebate Amount is not equal to the LOC's calculated interest rebate amount). The school must calculate the interest rebate as it is presented in the 2001-2002 Direct Loan Technical Reference. (To access the 2001-2002 Technical Reference, visit www.ed.gov/DirectLoan/pubs/profpubs.html)

Modify "Loan Amount Approved" (LAA) Change Process
The following changes apply for all open years and for all schools:

• When changes to reduce the LAA to zero are received and no actual disbursements exist, the Loan Origination System (LOS) will reduce all anticipated disbursement amounts to zero and inactivate the loan.
• When changes to reduce the LAA to zero are received and all actual disbursement activity has been reduced to zero, the LOS will reduce all anticipated disbursement amounts to zero and inactivate the loan.
• The LOS will reject all changes to reduce the LAA to zero if actual disbursement activity exists for the loan.
• Option 1 and Standard Origination schools can now send anticipated disbursement changes along with LAA changes (other than to zero) to the LOC.

Allow Schools to Flag Any Disbursement Number to be the First Disbursement
The restriction that schools must send actual disbursement number "01" as the first disbursement to the LOC is removed. Starting in 2001-2002, schools have the flexibility to select the first actual disbursement as any disbursement number from 01-20 for Subsidized/Unsubsidized loans and from 01-04 for PLUS loans. A new First Disbursement Flag field -Field #24-has been added to the Disbursement (DESD02IN/Batch Type #H) and the Disbursement Acknowledgement (DIODD02OP/Batch Type #H) record layouts.

If the first actual disbursement is disbursement number "01" and it has the earliest disbursement activity date, you do not need to populate the First Disbursement Flag field. If disbursement number 02-20 for a Subsidized/Unsubsidized loan or 02-04 for a PLUS loan is the first actual disbursement, you must populate the First Disbursement Flag field with an "F" on the disbursement record associated with that disbursement number. If a first disbursement has been established at the LOC and you realize that another disbursement was disbursed with an earlier activity date, you have the ability to submit a new first disbursement. This is accomplished by submitting the new disbursement record with a "C" in the First Disbursement Flag field. The "C" indicates to the LOC that the disbursement record being submitted is now the new first actual disbursement.

Ability to Change Loan Data Via the Loan Origination Web Site
Schools, third-party servicers, and LOC Customer Service Representatives (CSRs) will be able to modify certain loan origination data via the Direct Loan Origination Online at http://lo-online.ed.gov. The fields available for modification include: loan amount approved, loan period, borrower's academic year, HEAL indicator, additional unsubsidized eligibility, year in college, disclosure print indicator, and student name. The changes are made in real time so that schools can see the results of their actions immediately. However, no acknowledgement will be sent to the school for manual changes made through the web application. It is the responsibility of the school to ensure changes made on the web site match the data in their internal systems.

Note: Continue to use the regular processing methods to send change records to the LOC. Use this tool as a last resort effort to match the LOC and the school's records.

Allow Schools to Query LO Database for Active Master Promissory Note (MPN)
Schools can use the Direct Loan Origination Online to research whether an active MPN exists for a student. Schools can access this function at http://lo-online.ed.gov and will need to input the borrower's social security number and date of birth.

Modify Credit Check Request Process for PLUS Loans
A credit check request for PLUS LORs that pass the edits will be transmitted and acknowledged within the same batch. There will no longer be a 1 to 5 day delay in acknowledging PLUS batches to schools.

Modifications to the Disclosure Statement Form and Process

• Starting in 2001-2002, a new Disclosure Statement for Program Years 2001-2002 and beyond will be used in addition to the one used for Program Years 1999-2000 and 2000-2001. The new Disclosure Statement was created to include the interest rebate information. Up to 40 anticipated disbursements (20 for Subsidized and 20 for Unsubsidized) are printed on the front of the Disclosure Statement.
• On the new 2001-2002 disclosure statement, disbursements 1-10 are printed in the left- hand column and 11-20 are printed in the right-hand column.
• To accommodate the new up-front interest rebate, the gross loan amount, loan fee amount, interest rebate amount, and net loan amount for each loan are included on the new disclosure statement on a single line.
• The Total Net Amount and Total Fee Amount are added to the Disclosure Statement used for 1999-2000 and 2000-2001 loans.

Establish Parallel Testing Environment for Third Party Vendors and Schools
The LOC has established a parallel testing environment within the LOS that mimics production processing that allows schools and third-party servicers the flexibility to run their production processing and test new software simultaneously. This enhancement also allows third-party vendors to test directly with the LOS without relying on schools. To test and receive materials for testing, please contact Lynn Price at the LOC at (334) 206-6608.

Rebuild Capability for Direct Loan Participants
For Year 2000-2001 and forward, the LOC will allow schools, third-party vendors, and CSRs to request electronic rebuild data files by:

• Program year
• Date range (ex: mm/dd/ccyy - mm/dd/ccyy)
• Borrower (by providing social security number and date of birth)
• Loan
• "Combination" requests (for instance - by borrower, by date range)

Disbursement Adjustment Records Change
The LOC made a change to 1999-2000 and 2000-2001 disbursement adjustment records to return the LOC calculated Disbursement Actual Net Adjustment-LOC amount with accepted records, instead of blanks as it has in the past. If a record comes back as "accepted" and has no error codes associated with it then the record has passed the LOC edits. We recommend that you contact your software provider or on-campus systems personnel if your software creates a rejected record. They may want to remove the edit for field 22 and have the system check field 24 alone for reject codes.

Email Address on the LO Record
Email addresses can now be collected in the full origination record and changed in the change record process.

We hope that you find this information useful. Thank you for your ongoing partnership in the Direct Loan Program.

Sincerely,

Jane Holman
Acting Director, Title IV Delivery
Schools Channel