/Institutions/United-States-University/json/2023-2024/Policy-and-Procedure-Manual-local.json

/Institutions/United-States-University/json/2023-2024/Policy-and-Procedure-Manual.json

502-2-1-Disbursement

Title:	Disbursing Federal Financial Aid
Owner:	Office of Financial Aid
Last Updated/Revised:	05/01/2024

Policy: USU will adhere to all U.S. Department of Education regulations for disbursing Federal Student Aid (FSA), including the provision set forth for timing of disbursements, notification of disbursements, and late disbursements. These regulations apply to the following programs: Pell Grants and Direct Loans.

Definitions:

• Academic Year – a period of time in which a typical full-time student is expected to advance one grade level. For undergraduates, the law requires certain minimums. An academic year must contain a minimum of 30 weeks for a credit hour program and at least 24 semester-credit hours. The academic year definition for USU is 32 weeks and 24 semester credits.
• First-Year/First-Time Direct Loan Student Borrower – a first-year student who has not borrowed a Federal Stafford loan at any prior school or institution.
• Institutional Student Information Record (ISIR) – an electronic output document sent directly to the school from the Central Processing System (CPS) that summarizes information submitted on a student’s FAFSA. It also provides the result of the EFC calculations, results of eligibility matches with certain databases, reject reasons, comments, and data assumptions.
• Late Disbursement – a disbursement made under specific circumstances to an otherwise eligible student after the date the student became ineligible.
• Loan Period – a period of enrollment for which a Direct Stafford or Direct PLUS loan is made, which must coincide with one or more bona fide academic terms established by the school for which institutional charges are generally assessed (e.g.: semester, quarter, an academic year, or the length of the student’s program in weeks of instructional time).
• Payment Period – a school-defined length of time for which financial aid funds are paid to a student. For programs using academic terms, a payment period is equal to a term.
• Period of Enrollment – the period for which a Direct Stafford or PLUS loan is intended. The period of enrollment must coincide with one or more bona fide academic terms established by the school for which institutional charges are generally assessed (e.g.: semester, quarter, length of the student’s program or academic year). Also referred to as the loan period.
• Student Aid Report (SAR) – a federal output document sent directly to a student from CPS that summarizes information submitted on the FAFSA. It provides the student’s expected family contribution (EFC), comments to the student as well as information for the financial aid administrator; and reports the student’s NSLDS financial aid history.
• Disbursement Approval Criteria (DAC) – a function in the student information system that reviews a series of validation points to determine a student’s eligibility for payment of Title IV funds.

Purpose: The purpose of this policy is to explain the disbursement of federal student aid.

Procedure:

General Requirements

1. Title IV disbursements must be credited to a student’s account by payment period
   1. Title IV funds must be disbursed once, each payment period.
   2. Once the school has determined a student’s award eligibility and provided the student with an estimated award letter, the Office of Financial Aid (OFA) will schedule all Title IV awards in the student information system.
      1. The FA representative will schedule the loan period to coincide with the academic year.
      2. The anticipated disbursement dates must be scheduled to coincide with the payment periods in the academic year.
   3. The OFA will schedule the Title IV disbursements to credit a student’s account each payment period.
2. Checking Eligibility at the Time of Disbursement
   1. Once Title IV funding goes through the disbursement approval criteria, the disbursements will be automatically batched for payment.
   2. For disbursements that are unable to be batched, the OFA must evaluate the student’s eligibility.

Notifications

1. General Notification
   1. The school must provide students with an award letter to inform each student of the amount of funds the student and his or her parent can expect to receive from each Title IV program. The award letter must also specify how and when those funds will be disbursed.
   2. The award letter must be provided to the student before a disbursement is made.
2. Notification of Title IV Loan Disbursements Credits to a Student’s Account
   1. When loan funds are credited to a student’s account, the school must provide a notification to the student or parent borrower. The notification must be sent no later than 7 days after the school credits the student’s account with loan funds.
      1. Notification can be accomplished either via email or U.S. postal mail.
      2. The student or parent must subsequently inform the school if he or she wishes to cancel all or a portion of a loan within 30 calendar days from receipt of the disbursement notice. If a loan cancellation request is received, the school must:
         1. Return the loan proceeds, cancel the loan, or do both, in accordance with applicable program regulations and
         2. Inform the student or parent in writing regarding the outcome of the cancellation request. Electronic means may be used.
      3. If a school receives a borrower’s request for cancellation outside of the 30-day period, the school must inform the student or parent of the outcome of their request.

Title IV Credit Balances

1. A Title IV credit balance occurs whenever the University credits federal student aid funding to a student’s account and those funds exceed the student’s allowable charges. The University pays by check or direct deposit (EFT) the excess Title IV program funds (the credit balance), directly to the student as soon as possible, but no later than 14 days after:
   1. The date the balance occurred on the student’s account, if the balance occurred after the first day of class of the payment period; or
   2. The first day of classes of the payment period if the credit balance occurred on or before the first day of class of that payment period.

First Year, First time Borrowers

1. The Office of Financial Aid will schedule first year, first-time borrower loan disbursements no sooner than 30 days after the first day of the student’s program of study. However, if the institution has a low cohort default rate, i.e. below 15% for the three most recent fiscal years, the institution is exempt from this restriction (34 CFR 685.303(b)(5)(i)(A)).
2. See above for disbursement eligibility requirements.

Late Disbursements

1. In order for a student to be considered for a late disbursement, the Office of Financial Aid must ensure that the following conditions are met:
   1. CPS has processed a SAR or ISIR with an official EFC; and
   2. For Direct Loans, the loan is originated prior to the date the student became ineligible;
2. Late disbursements for students that withdraw from the school during a payment period/period of enrollment, are also subject to post-withdrawal disbursement rules. See R2T4 policy and procedure for more information.
3. Limitations on Making a Late Disbursement
   1. A school is prohibited from making: (1) a late second or subsequent disbursement of Direct Loan funds unless the student has successfully completed the loan period; and (2) a late disbursement of Direct Loan funds to a first-year, first-time borrower who withdraws before the 30th day of the student’s program of study, unless the school meets the requirements for a waiver based on low default rates.
   2. A school may not make a late disbursement later than 180 days after the date the student becomes ineligible.

Timing of Disbursements

1. Initial disbursements are scheduled a week after the first day of the payment period except for the initial disbursements of Direct Loans to First-Year, First-Time borrowers (unless waived due to low default rates).
2. Second Disbursement
   1. The Office of Financial Aid will schedule a second or subsequent disbursement the week after the start of the term for all Title IV programs.
      1. All Title IV awards are divided into equal disbursements, one in each term of the period of enrollment. An uneven split of disbursements is completed only upon request from the student, in which two different loan periods will be originated.

Scope: This policy applies to all students who receive federal student funding.

Documents and Forms: None