I. Background
Federally funded loan programs are handled in a different manner than other federally funded sponsored agreements. Research Accounting Services (RAS) became responsible for drawing the federal loan funds since these program draws utilize the same federal websites used for drawing other federal awards. (See Appendix A – for list of websites used for this process). RAS has always been involved in the process for Department of Health and Human Services (DHHS) professional loans, but only became involved in the process for the Department of Education (ED) loans in 2010. This change for ED stemmed from mandated changes in the administration of student loans commonly referred to as the direct lending laws. With the direct lending programs, the federal government decided to eliminate financial institutions from the student loan process and award the loan directly to the institution where the student is enrolled.
II. Procedures
A. Department of Education
When financial aid is awarded in the form of a direct federal loan, Student Financial Services (SFS) applies these funds to the individual student’s account. The loan is charged to one of the four federal loan funds based on the student’s funding. The funds are then drawn down by RAS based on charges to the various loan funds. RAS has worked with SFS to establish grant and fund numbers for each federal loan program in the same way as other federal externally funded sponsored agreements. A fund has been establish for each loan for every year the direct lending program has been functioning. ED considers all four of the funds as one
Number: RASAR 01.02 Issuing Department:
Research Accounting Services
Title: Federal Loan Fund Processes
Submitted By:
Jeanette Pastelak, Director Patricia J. Russo, CPA, MBA, Associate Controller
Supersedes No: GRPR02.33
Approved By: Frank Annunziato AVP and Controller Effective Date: January 1, 2014 Last Reviewed: February 3, 2014 Next Review: January 2016
a) Establish Grant number and Fund number at the beginning of each fiscal year. Funds for the federal student loan programs are
established as 30XXXX grants and funds and utilize the “ED” PMS code. All of the loan fund grants/funds are assigned to the Director of RAS as the Analyst and Business Manager and the Principal Investigator is the Director of SFS.
b) Run the ED FRRBILL Process (See RASAR 01.01 Federal Letter of Credit Electronic Cash Draw for procedures). This is typically run once per week.
c) Loan funds on the FRRBILL are separated from the grants and recorded in a separate worksheet in the Excel “Draw
Documentation” file.
d) A second Excel file titled “Loan Analysis” is populated with the expenditures of each of the four loan funds. The current balance of funds available through the Department of Education G5 website is also entered on the file. The Director of RAS confers with the Associate Director of SFS to verify the amount of loans disbursed through the ED Common Origination and Disbursement (COD) web site. The amount of loans disbursed through COD is compared to what has been billed and the difference is then drawn on the G5 website. There is often a lag between the timing of expenses posted to general ledger versus approval through COD, therefore the
verification is completed prior to the draw. Funds drawn before approval of the loans need to be returned via the G5 website. e) Funds drawn are posted in accordance with the procedures outlined
in RASAR01.01 Federal Letter of Credit Electronic Cash Draw.
B. Department of Health and Human Services
Unlike typical grant awards, expenditures in the DHHS federal loan programs are not charged directly to the loan fund’s specific FOAPAL string. The federal loans have matching requirements, which must be met to be eligible for
funding. Therefore, these funds only pay for a percentage of the total loans issued, which represents the federal contribution. Each loan fund has a
corresponding fund number (See Appendix B) in which all entries for the loan programs are recorded. . These loans program include DHHS Health
Professional Loans for nursing, dental, pharmacy, podiatry and medicine which have a current required match of 10%.
a) Establish Grant number and Fund number at the beginning of each fiscal year. Funds for the DHHS federal student loan programs are established as 36XXXX grants and funds and utilize the 8888G PMS code. All of the loan fund grants/funds are assigned to the Director of RAS as the Analyst and Business Manager and the Principal
Investigator is the Director of SFS.
b) Run monthly query of companion loan center to determine amount of loans issued to students. Run the query beginning in August of each fiscal year and continue each month until all federal funds have been drawn down.
c) Review query and determine amount of federal funds to be drawn. Calculate by multiplying total amount of loans issued by percentage of federal funds. (example: For DHHS, a $100 loan would result in $90 to be drawn from U.S. Department of Health and Human Services , and $10 recorded as university match).
d) Draw funds from the DHHS Payment Management Website (see RASAR 01.01 - Federal Letter of Credit Electronic Cash Draws). The draw for the loan funds should be made separately from other DHHS grant draws.
e) When funds are received from DHHS, transfer funds from RAS clearing fund to the appropriate loan fund:
DR 900000 99000 2186 06 $xxx.xx CR 62xxxx xxxxx 5101 12 $xxx.xx Prepare journal entry to book match:
DR 65xxxx xxxx 7920 12 $xxx.xx CR 62xxxx xxxxx 7920 12 $xxx.xx
f) When all funds have been drawn, update FRAGRNT main tab with the total amount drawn in the “Maximum Amount” field.
g) The grant and fund can then be terminated.
APPENDIX A Federal Websites
1. Department of Health and Human Services Payment Management System (SMARTLINK)
http://www.dpm.psc.gov/
2. Department of Education G5
APPENDIX B
Federal Loan Fund Numbers
620000 Health Professional Loan – Podiatry 620001 Health Professional Loan – Medicine 620002 Health Professional Loan – Dentistry 620003 Health Professional Loan – Pharmacy 620004 Health Professional Loan – Nursing 620005 Primary Care Loan - Medicine
620006 Loans to Disadvantaged Students - Medicine 620007 Loans to Disadvantaged Students - Dentistry 620008 Loans to Disadvantaged Students - Pharmacy 300xxx Direct Subsidized Loan
300xxx Direct Unsubsidized Loan 300xxx Direct PLUS Loan
