Program-Review Tip: Document Reasons for Delays in Education-Loan Delivery

USA Funds^®’ policy-and-compliance experts encourage schools to document the reasons for any delays in delivery of education-loan proceeds to students.

Schools must deliver to students within three business days loan proceeds received from a lender via electronic-funds transfer or master check. They must deliver to students within 30 days loan proceeds received by paper check.

The school may delay delivery of loan proceeds for an additional 10 business days only if the school expects the student to complete the required number of clock or credit hours in a preceding payment period, or the school expects the student to meet all Federal Family Education Loan Program-eligibility requirements within the conditional period.

If delivery is delayed, USA Funds encourages the school to document the reasons for the delay, to provide during guarantor program reviews or other audits. Documentation may include materials such as the following:

• Notations in the borrower’s file or financial-aid history describing the circumstances that contributed to the delay.
• Copies of academic transcripts showing the number of clock or credit hours passed.
• National Student Loan Data System or other relevant system screen prints that reflect the student’s current eligibility status.

If the borrower fails to complete the required number of clock or credit hours, or otherwise fails to meet all FFELP-eligibility requirements within the 10-business-day time frame, the school must return the loan proceeds to the lender within the next 10 business days.

For more information contact USA Funds’ policy advisers.