Chapter 1: The MPN & the Stafford/PLUS Loan Process
STUDENT APPLIES FOR AID & COMPLETES THE MPN .....................................................................................1 Required borrower information on MPN, Multi-year use of the MPN & when a new MPN is required PLUS MPN .....................................................................................................................................................................6 PLUS certification specifying amount to be borrowed, Adverse credit history & use of endorser SCHOOL CERTIFIES/ORIGINATES LOAN ...............................................................................................................7 Certifying eligibility, Submission of award & disbursement data (Direct Loans), Scheduling disbursements with an FFEL lender, Lender/guarantor approval (FFEL only), Review of the Stafford MPN process
NOTIFICATION OF DISBURSEMENT .................................................................................................................... 13 REQUIRED STUDENT/PARENT AUTHORIZATION ........................................................................................... 15 METHOD OF PAYMENT .......................................................................................................................................... 17 Credit to the student’s account, Direct disbursement to the student, Delivery of FSA funds must be cost-free CREDIT BALANCES .................................................................................................................................................. 19 Paying credit balances, Holding credit balances, Power of attorney in disbursing FWS and Perkins, Power of attorney for foreign study (Stafford/PLUS) CHECKING ELIGIBILITY AT THE TIME OF DISBURSEMENT ............................................................................ 21 TIMING OF DISBURSEMENTS ............................................................................................................................... 22 Basic rules for early & delayed disbursements, Number of Stafford/PLUS disbursements: standard terms and substantially equal non standard terms, Number of Stafford/PLUS disbursements: 1) credit hour programs without terms, 2) credit hour programs with non-standard terms that are not substantially equal in length, and 3) clock hour programs, Timing of Pell Grant disbursement within a payment period, Disbursing FSEOG & Perkins, Retroactive disbursements for completed periods DISBURSING FWS WAGES ..................................................................................................................................... 26 Holding FWS funds on behalf of the student, Garnishment of wages COMPLETION OF COURSEWORK REQUIREMENTS ........................................................................................ 27 Pell Grants; Stafford and PLUS loans in clock hour programs; Stafford and PLUS loans in credit hour programs without terms and credit hour programs with terms that are not substantially equal in length, Retaking hours and courses, Excused absences LATE DISBURSEMENTS ........................................................................................................................................... 29 PROMPT DISBURSEMENT RULES ........................................................................................................................ 33 Holding FFEL funds if student is temporarily ineligible, Holding Stafford loan funds for verification USING ELECTRONIC PROCESSES FOR AUTHORIZATIONS & NOTIFICATIONS ........................................ 34 The E-Sign Act Chapter 3: Requesting & Managing FSA Funds ....................... 35 DRAWING DOWN FSA FUNDS ............................................................................................................................. 35 The advance payment method, Just-in-Time payment method (also known as Pushed-Cash), Reimbursement & cash monitoring payment methods MAINTAINING & ACCOUNTING FOR FUNDS.................................................................................................... 39 Bank account notification requirements, Maintaining FSA funds in a separate or commingled account, When a school doesn’t maintain a separate federal bank account, Accounting and financial requirements, Timely return of funds when a school does not maintain a separate federal bank account, Interest-bearing or investment account, Perkins Loan funds EXCESS CASH ............................................................................................................................................................ 42 Allowable excess cash tolerances PROHIBITION ON ESCHEATING OF FSA FUNDS ............................................................................................. 43
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