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() Summary: Refund of Cash (formerly Excess Cash) Guidance for the Direct Loan Program

Publication Date: July 2002

Bulletin ID: DLB-02-24

 

Summary: Refund of Cash (formerly Excess Cash) Guidance for the Direct Loan Program

 

July 2002

DLB-02-24

Subject: Refund of Cash (formerly Excess Cash) Guidance for the Direct Loan Program

Dear Partner,

This bulletin is a reminder on the proper process to returning cash to the Department of Education. With the implementation of the COD system and the modernization efforts of FSA, you may be uncertain as to what has changed and what has stayed the same with respect to returning cash. The text below and related attachment can be used for guidance. Specific addresses and bank information are provided in the attachment. Please note that this bulletin replaces DLB-02-12 sent out in April 2002.

Some general rules to follow:

· We are now using the term Refund of Cash instead of Excess cash to be consistent with GAPS and the COD website.

  • All cash not used within 3 business days (or within an additional 7 calendar days in certain circumstances) must be returned to the Department of Education (34CFR 668.166).
  • In most cases, schools must make the appropriate adjustment to the student's disbursement(s) and return the cash to the Department of Education.
  • Schools must NOT send cash to Servicing/Payment Center, except when
    • The student's account has a credit balance, AND the student refuses the money AND, it is 120 days AFTER the disbursement. The money must be sent to Servicing as a payment to the student's loan. Please include the loan identifier and borrower name on the check or manifest.
  • Direct Loan refunds of cash must NOT be sent to the St. Louis Lockbox Address.
  • We strongly encourage the use of electronic means for returning any cash to the Department. Refunded cash amounts of $100,000 or more MUST be returned electronically via GAPS.
  • For Award year 2002-2003, all refunds of cash should be sent to the COD School Relations Center via mail or processed electronically via GAPS. Please do not mail or wire money for 2002-2003 to the Loan Origination Center (LOC).
  • For Award year 2001-2002 and prior, all refunds of cash should be sent to the LOC via mail or ACH/FEDWIRE or processed electronically via GAPS.

We want to again encourage schools to use GAPS to return cash to the Department. This refund process is relatively simple, speeds up the return of cash and reduces errors of misapplied checks. To complete an electronic refund, please review the following steps:

1. Log into GAPS.

2. Click on the "�Refunds" button.

3.      Click on the "˜Refunds for Open Awards" button.

4.      Click the "˜Initiate Refunds" button.

5.      Enter the amount of the refund next to the appropriate award document.

6.      Click Submit.

This is a simplified list of steps. Please consult the GAPS website or Helpdesk for more detailed instructions. NOTE: When using e-Refunds, you can only return funds to the Direct Loan award documents listed.Â

Finally, in the past, a payment transmittal sheet was used to help schools document and identify where and how to return cash. This form should no longer be used. However, regardless of whether funds are returned electronically or by check, ALWAYS make sure you identify the return of cash with the following information:

·        School Name

·        Direct Loan School Code

·        Award Year to which the funds apply (i.e., 2000-2001)

If you have any questions about this bulletin or returning cash, please contact the COD School Relations Center at 800/848-0978. For additional information on returning cash via GAPS, please visit http://e-grants.ed.gov/gapsweb/ or call GAPS Helpdesk at 888/336-8930 for assistance.

The attachment to this bulletin provides a simple chart that summarizes the information above and provides addresses and bank information for the different methods used to return cash. Thank you for your ongoing partnership in the Direct Loan program.

Sincerely,

Jane Holman
Acting Director, Title IV Delivery
Schools Channel

Refund of Cash Guidance for the Direct Loan Program -- Not Available

Refund of Cash Guidance for the Direct Loan Program -- Not Available