FSA has issued an important reminder to institutions regarding federal requirements for reconciling the Direct Loan, Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant programs. The electronic announcement below outlines updated procedures, deadlines, and essential steps for completing both external as well as internal reconciliations for the 2024-25 academic year.
Posted Date: December 17, 2024
Author: Federal Student Aid
Electronic Announcement ID: GENERAL-24-146
Subject: Reconciliation Information for the Direct Loan, Federal Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant Programs
In a Nov. 18, 2024 Electronic Announcement we published general information regarding Title IV aid disbursement reporting, excess cash, and reconciliation requirements. In addition, updated disbursement reporting and data submission timelines for all programs were published in a recent Federal Register Notice (Federal Register / Vol. 89, No. 181 (Wednesday, September 18, 2024) for the 2024–2025 deadlines). Note: A temporary extension of the deadline for reporting disbursement records to the COD System was published in a July 30, 2024 Electronic Announcement (GENERAL-24-94).
In this announcement, we provide specific information to assist schools with reconciling the William D. Ford Federal Direct Loan (Direct Loan) Program, Federal Pell Grant (Pell Grant), Iraq and Afghanistan Service Grant, and Teacher Education Assistance for College and Higher Education Grants (TEACH Grant) Program. The information provided below is for both the financial aid office and business office.
Reconciliation Defined
Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant Reconciliation is the process by which a school reviews and compares grant data recorded on the U.S. Department of Education’s (the Department’s) systems with the information in the school’s internal records; AND
Direct Loan Reconciliation is the process by which Direct Loan funds received and disbursed as recorded on the Department’s systems are reviewed and compared with a school’s internal records; AND
For all programs listed above:
- Discrepancies are identified and resolved
- Reasons for remaining cash balances are documented
For Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant, it is recommended that schools reconcile at least monthly or as frequently as necessary to identify issues and maintain compliance with the cash management and disbursement reporting requirements. For Direct Loans, it is a mandatory monthly process, as required under 34 CFR 685.300(b)(5). A school should reconcile all cash (drawdowns and refunds of cash) and disbursement records (actual disbursements and adjustments) with information in the Common Origination and Disbursement (COD) System on an ongoing basis.
There are two types of reconciliation, which can be performed separately or simultaneously during the month, including:
- Internal Reconciliation
This is the process where the business and financial aid offices compare the monthly financial aid office roster of scheduled and actual disbursements and compare the disbursement transactions (actual disbursements and adjustments) and related cash transactions (Drawdowns, Drawdown Adjustments, Refunds of Cash, and Returns) in each office’s system to a monthly business office cash detail report that reflects funds drawn down and funds disbursed for the month. If discrepancies are found, the school must document and resolve them in a timely manner.
- External Reconciliation
The school compares its reconciled internal records to the Department’s records of funds received and returned, and to loans originated and disbursed to students for Direct Loans, to student disbursements and adjustments, and to cash balances recorded in the Common Origination and Disbursement (COD) System for Pell Grants. At a minimum, this reconciliation must be completed at least monthly to ensure that data is correct in all systems and that cash management and disbursement reporting timelines are being met. If you have completed the internal reconciliation first, there will be fewer discrepancies to resolve when you perform this external reconciliation. The Department offers various tools to assist you with external reconciliation. For more information, see the questions and answers below.
It is very important for schools to maintain good communication between the Business Office and the Financial Aid Office to successfully reconcile both internally and externally. Reconciliation is a shared responsibility. It requires joint action by the Financial Aid and Business Office to identify discrepancies and any missing data, and to correct these in a timely manner.
Schools should document their reconciliation process and the resolution of any identified discrepancies.
Final Reconciliation of a Direct Loan Award Year
Direct Loan schools must also complete a final reconciliation to a zero ($0) Ending Cash Balance at the end of their processing year. This should occur within a month or two of the school’s final disbursements but no later than the data submission (closeout) deadline, which is the last processing day in July of the year following the end of the award year. Information regarding this final reconciliation and the Program Year Closeout deadline is published in three (3) Electronic Announcements posted to the FSA Partner Connect – Knowledge Center, in February, May, and July prior to the deadline.
Final Reconciliation of a Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant Award Year
In addition to regular monthly reconciliation of Pell Grant, Iraq and Afghanistan Service Grant, and TEACH Grant data, a final reconciliation should be performed as soon as possible after final scheduled disbursements have been made for the award year. This final reconciliation should ensure that all data is correct, and the Total Net Drawdowns equals the Net Accepted and Posted Disbursements (NAPD) in the COD System (Cash >NAPD balance should equal $0.00). This process must be performed within the applicable data submission (closeout) deadline (defined below), as well as immediately following processing of any additional data by the school (for example, eligible late disbursements or disbursement adjustments made within regulatory timeframes, but which occur after the data submission deadline). There are two deadlines which impact this process:
- Data Submission (Closeout) Deadline – The data submission (closeout) deadline is published annually in a Federal Register Notice. It is generally the end of September following the teachend of the award year. For example, the Pell Grant and TEACH Grant 2024–25 award year will close on Sept. 30, 2025, and Direct Loan 2023–24 award year will close July 31, 2025. After this date, the COD System will not accept new or increased awards, or new or increased disbursement amounts without prior approval for an extension to the established data submission (closeout) deadline. Downward adjustments will continue to be accepted without an extension. If your school needs to request an extension to the data submission deadline, this request must be submitted via the COD website at https://cod.ed.gov. For more information on Extended Processing, see question #10 in the questions and answers below.
- Funding Cancellation Deadline – Pell Grant funding availability is canceled five years after the data submission (closeout) deadline for the award year. For example, for the 2019–20 Federal Pell Grant award year (July 1, 2019 – June 30, 2020), the funding cancellation date is Sept. 30, 2025 [2020 + 5 = 2025]. After the funding cancellation deadline, schools will be unable to report any further award or disbursement changes to the COD System for that award year. In addition, schools will be unable to draw down or adjust funds via the G5 website, and any refunds of cash must be made to the Pell miscellaneous account (contact the G5 help desk for instructions). As such, schools must complete all final reconciliation activities well before this final deadline and in accordance with disbursement reporting timelines and the data submission (closeout) deadline defined above.
Note: Schools should confirm closeout via the School Balance Confirmation page on the COD website once your school has completed its final reconciliation and reached a $0.00 Cash>NAPD for Pell Grant and $0.00 Ending Cash Balance for Direct Loan and TEACH Grant.
Contact Information
For additional information on reconciliation, refer to the Questions and Answers below. If you have questions about this announcement, contact the FSA Partner and School Relations Center at 1-800-848-0978. You may also email CODSupport@ed.gov.