Direct Loan Reconciliation

Richard Brown

Summer 2010 the federal government changed the rules on Stafford and Plus loans.  Instead of subsidizing private lenders with federal funds, the government took out the middleman (private lenders) and lends the money directly to students for subsidized Stafford, unsubsidized Stafford, and Plus loans.  This change increased the workload of schools everywhere.  Under the private loans with government subsidies scenario the private lenders were responsible for reconciling the funds with the government.  Under the Direct Loan program the schools are responsible for reconciling.

Financial aid, student billing, and finance departments always needed to reconcile and ensure each department was in synch with funds prior to the change.  The difference is now the Financial Aid department has the added burden of squaring funds with the feds.  In a simplistic view, the school requests a sum of money for loans and disburses those funds to students based on need and other factors...sounds simple enough.  The Financial Aid staff request funds via the Common Origination and Disbursement (COD) website.  Once approved, a file is sent to the business office and the aid is applied to each student’s statement for each disbursement for each loan.  Once the money is disbursed, a file is created for Financial Aid documenting the amount the business office actually disbursed to each student for each loan payment.  There may be multiple disbursements for each type of loan.  The data tracked is the loan type, sequence number, student ID, disbursement date, gross amount, fee amount, rebate amount and actual net amount.  At the end of each month a School Account Statement (SAS) is downloaded with an accounting of what monies were used from our federal account and for which student and type of loan.

With the help of some programming from Information Technology Services, Financial Aid reconciles the above mentioned items to ensure all dollar amounts match and dates are within accepted limits.  So the gross, fee, rebate, and net from COD need to match what is on SAS, which needs to match the file sent "To The Business Office" (2BO), which needs to match the information in the file "From the Business Office" (FBO).  Think of this as balancing 4 different checkbooks then making sure each of the 4 different checkbooks match each other.  After the different programs finish munching the data it ends up in a spreadsheet with thousands of rows and over 50 columns.  The non-matching data is separated from the matching data and checked in each system as to why there is a discrepancy and fixed.  An intense amount of work goes into making sure all of the data is accurate in PowerCampus, PowerFaids, and COD.  In the end, this makes the final reconciliation process somewhat painless since there are very few discrepancies to research.

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