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Activity 2: Direct Loan Quality Assurance Component

A Direct Loan school is required to implement a quality assurance system within their financial aid office operations 34 CFR 685.300(b)(9). While neither the regulations nor FSA require that a yearly report be filed with the Department of Education, a clearly documented quality assurance system must be in place at your school. Additionally, you must review this system on a regular basis.

It is important to identify appropriate staff members within the financial aid office and other campus offices that will initiate and maintain the quality assurance system. Emphasis should be placed on communication and teamwork.

Review and record what office is responsible for reviewing and updating the process to ensure your school complies with the Direct Loan quality assurance component. Also indicate where this information is located and when it was last reviewed and updated.

Resource Link:

Direct Loan Tools; 150% Direct Subsidized Loan Limit Information Page; November 13 2013 Electronic Announcement Direct Loan Quality Assurance Requirement Overview

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Topic – Direct Loan quality assurance component 34 CFR 685.300(b)(9)

To help your school satisfy the Direct Loan Quality Assurance requirement, use the information below to assess your operations:

The Direct Loan Program regulations at 34 CFR 685.300(b)(9) require schools to implement and document a quality assurance process to ensure that they are complying with program requirements and meeting program objectives.

A school should have a quality assurance process in place that documents that the school is:

• Reporting loan records, disbursements, and adjustments to disbursements correctly to the Common Origination and Disbursement (COD) System

• Disbursing and returning loan funds in accordance with regulatory requirements

• Disbursing the correct loan amount to the correct student

• Completing monthly reconciliation and Program Year Closeout

STEP ONE: REVIEW OPTIONS AND DEVELOP A PLAN TO ENHANCE YOUR DIRECT LOAN OPERATIONS

Choose an option below to ensure your school meets the quality assurance requirement in the Direct Loan Program:

❑ Use Direct Loan reports

There are several reports available via the COD System that can assist your school with evaluating the effectiveness of your school’s Direct Loan processes and procedures. Some reports can also assist your school with the reconciliation process to ensure that the monthly and year end process for reconciling is done efficiently. Information about the various reports can be found in the 2020-2021 COD Technical Reference. Some of the key reports include:

• COD School Monitoring Report (produced by the COD System)

• Direct Loan Booking Warning Report (produced by the COD System)

• Counseling Report (produced by the COD System)

• Actual Disbursement List (produced by the COD System)

• Pending disbursement listing (produced by the COD System)School Account Statement (SAS) (produced by the COD System)

• SAS on demand (produced by COD System)

• EDExpress List Reports (produced within EDExpress software) or Direct Loan processing reports and queries

(produced from your software system)

o For schools using their own software system, software-specific or school-created Direct Loan processing reports and queries can be used to monitor Direct Loan processing for efficiency, timely and accurate reporting, resolving rejected records and reconciling.

• Direct Loan Tools (DL Tools)

o Disbursement Measurement Tool Report (For EDExpress schools only)

o Direct Loan SAS Comparison Reports

• COD website (particularly the school summary financial information, funding information, cash activity, refunds of cash, and action queue screens)

Also, don’t forget to reach out to your COD customer service representative/reconciliation specialist with any questions regarding your COD data or assistance with navigating the system.

❑ Use FSA Assessments

Direct Loan Activity 1: Direct Loan Reconciliation (Program Year Closeout) - Your school is required to reconcile the funds that it has received from the G5 system to pay its students with the actual disbursement records that is has forwarded to the Common Origination and Disbursement (COD) system. Reconciliation must be completed on a monthly basis. Use the checklists to assist with both the monthly reconciliation and Program Year Closeout processes.

Direct Loan Monthly Reconciliation Worksheet - Complete the Direct Loan Monthly Reconciliation to ensure all federal accounts have been reconciled. If your school has been reconciling monthly, the year-end process should be easier.

A Guide to Creating a Policies & Procedures Manual, Section 8– This section specifically addresses the importance of developing policies & procedures related to packaging Federal Direct Loan, PLUS, counseling borrowers, payment of a refund or Return of Title IV and administrative and fiscal Control.

STEP TWO: DOCUMENT THE RESULTS OF YOUR ASSESSMENT

Regardless of the method or tools you choose, it is important to have a clearly documented quality assurance system and information to document that the system is being used. To help with documentation and making improvements to your processes, it is recommended that your school uses an Action Plan. Schools are encouraged to keep copies of any completed Action Plans as part of the documentation of the quality assurance requirement.

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