USA Funds Advises Lenders of New Foreign-School Loan-Disbursement Procedure

New requirements published by the U.S. Department of Education in Dear Colleague Letter G-03-348 (L-03-242) require guarantors and lenders to implement new disbursement-approval procedures for students attending foreign schools. The letter outlines new requirements for students who request that their Stafford- or PLUS-loan disbursements be sent directly to them, rather than to the school. Because of these new requirements, USA Funds^® will perform the following actions prior to loan disbursement:

• Confirm that the foreign school is eligible to participate in the Federal Family Education Loan Program (FFELP).
• Confirm students' enrollment at the foreign institution.

Lenders or disbursing agents must obtain USA Funds' approval prior to sending disbursements directly to students attending foreign schools. To assist lenders and disbursing agents in complying with this requirement, USA Funds created an e-mail resource, foreignschools@usafunds.org, for use in notifying USA Funds of borrowers' requests and obtaining disbursement approval. Lenders and disbursing agents should send the following information to this e-mail address:

• The students' names.
• The last four digits of each student's Social Security number.
• The name of each foreign school.
• The eight-digit school code.
• The name of the school official who completed the school certification on the Master Promissory Note (MPN).

Upon receipt of the information, USA Funds' compliance department will research the request and respond with either an approval or denial. Lenders and disbursing agents may not disburse funds until receiving notification of USA Funds' approval via an e-mail message.

The new process is effective beginning Nov. 25, 2003.

G-03-348 requires the new process only when students request that their disbursements be sent directly to them. If no such request is on file, the lender and disbursing agent can release funds using their usual disbursement process.

Note that, unless prior arrangements have been made with USA Funds, lenders cannot use USA Funds' blanket-guarantee process for foreign-school students who have requested direct disbursement.

If you have questions about the new requirements, please contact USA Funds' policy department.