Publication Date: September 2002
Bulletin ID: DLB-02-30
Summary: Guidance for 2002-2003: Adjustments and Netting of Disbursements for Pushed Cash Schools
September 2002
DLB-02-30
Subject: Guidance for 2002-2003: Adjustments and Netting of Disbursements for Pushed Cash Schools
Dear Partner,
This bulletin contains some additional guidance about processing changes for PUSHED CASH SCHOOLS (former Standard and Origination Option 1 schools). In previous award years, schools that didn't initiate their own draws received payments based on anticipated disbursements reported in the Loan Origination Record (LOR). Schools also received an Actual Disbursement Roster (ADR), which listed all of the anticipated disbursements that went into the calculation of the payment and the total listed on the roster equaled the payment transmitted to a school's bank account. Any money that wasn't disbursed to the students on the roster had to be returned to the Department of Education.
With the implementation of COD, several changes have been made. Payments for schools who don't initiate their own draws are now based on accepted and posted actual disbursement records plus or minus accepted and posted disbursement adjustments. Pushed cash schools will receive a Funded Disbursement List (FDL) with the accepted and posted actual disbursements as of the last processing cycle. COD will send a NET payment amount that will include any accepted actual disbursements, plus or minus any disbursement adjustments. As a result, in some cases, the amount listed on the report may be less than or greater than the amount actually received.
For example, a school sends in 15 disbursement records totaling $20,000 and two downward disbursement adjustments totaling $1,500. The FDL produced will show the 15 disbursements and the total of $20,000. However, the school will only receive 18,500 ($20,000 - $1,500.) We are working on an enhancement to the FDL that will show any netting adjustment that is made when COD calculates the payment amount that is sent to the school. Until the enhancement is complete, the total on the FDL may not match the payment received.
In most cases, schools will not return money when a disbursement is adjusted downward since the adjustment will be netted against disbursements as described above. The school must still report the downward adjustment to FSA but does not have to return the cash unless it will not be used to partially offset a subsequent push of cash (covering disbursements for any set of borrowers) within the timeframe allowed under the excess cash regulations. In other words, you should always report the adjustment, but you should keep the money to use for the next round of disbursements unless that will occur outside the cash management regulations (i.e., 3-10 days). If you do not expect to disburse the money to another student within these timeframes, it must be returned according to the established procedures and guidelines (see DLB 02-24).
Examples
Below are some more specific examples than the one stated above. While somewhat simplified, we hope these examples demonstrate how this will affect your business process. These examples assume that all other factors remain constant. Timing of record submission or refunded cash or rejected records, among other changes could impact the amount of money transmitted to a school's bank account.
Example #1
12/16/02 - School sends in the following:
| Actual Disbursement Records: | Person: | Net Amount: | Disbursement Date: |
| Disbursement # 1, Sequence # 1 | Jack | $600 | 12/20/02 |
Disbursement # 1, Sequence # 1 | Jill | $1,000 | 12/20/02 |
Disbursement # 1, Sequence # 1 | Huck | $500 | 12/20/02 |
Disbursement # 1, Sequence # 1 | Cindy | $1,500 | 12/20/02 |
| Total: | $3,600 |
The school will receive a Funded Disbursement Listing that includes each of the disbursements and money is transferred to the school's bank account that is equal to the amount on the listing.
Example #2
1/3/03 - School sends in the following:
Actual Disbursement Records: | Person: | Net Amount: | Disbursement Date: |
| Disbursement # 2, Sequence # 1 | Chuck | $500 | 1/9/03 |
| Disbursement # 2, Sequence # 1 | James | $1,000 | 1/9/03 |
| Disbursement # 2, Sequence # 1 | Sue | $1,500 | 1/9/03 |
| Disbursement # 2, Sequence # 1 | Mary | $1,500 | 1/9/03 |
| Sub-Total: | $4,500 | ||
|
| Jill | $500 - $1,000 = ($500)(Original amount = $1,000) | 12/20/02 |
| Disbursement #1, Sequence #2(Downward Adjustment) | Cindy | $1,200 - 1,500 = ($300)(Original amount = $1,500) | 12/20/02 |
| Sub-Total: | ($800) | ||
| Total: | $3,700 |
In this example, the FDL lists each of the new disbursements and total net disbursements of $4,500. However, only $3,700 ($4,500- 800 = $3,700) is transferred to the school's bank account and the $800 dollars received previously is used to fund the remaining portion of the disbursements on the FDL.
Example #3
1/5/03 - School sends in the following:
| Actual Disbursement Records: | Person: | Net Amount: | Disbursement Date: |
| Disbursement # 2, Sequence # 2(Downward Adjustment) | Sue | $0-$1,500 = (1,500)(Original amount = $1,500) | 1/9/03 |
| Total: | $(1,500) |
No Funded Disbursement Listing is sent to the school and no money is transmitted. The school will not be making additional disbursements until mid - February and therefore sends the $1,500 to the Department of Education.
Example #4
2/3/03 - School sends in the following:
| Actual Disbursement Records: | Person: | Net Amount: | Disbursement Date: |
| Disbursement # 3, Sequence # 1 | Chuck | $500 | 2/9/03 |
| Disbursement # 3, Sequence # 1 | James | $1,000 | 2/9/03 |
| Disbursement # 3, Sequence # 1 | Sue | $1,500 | 2/9/03 |
| Disbursement # 3, Sequence # 1 | Mary | $1,500 | 2/9/03 |
| Total: | $4,500 |
The school will receive a Funded Disbursement Listing that includes each of the disbursements and money is transferred to the school's bank account that is equal to the amount on the listing.
Note: In this example, if the school had reported the downward adjustment from Example 3 along with the February disbursements, they would have received $3,000 instead of the $4,500. If you inadvertently return money for a downward adjustment and the adjustment is netted against other disbursements (reducing the amount of money sent to your school), please contact customer service (see below) to request the money to be returned.
If you have any questions about this bulletin or the examples, please contact COD Schools Relations Center at 800/848-0978 or via email at CODsupport@afsa.com. Thanks you for your ongoing partnership in the Direct Loan Program.
Sincerely,
Jane Holman
Acting Director, Title IV Delivery
Schools Channel