Department of Education Releases New Procedures for Post-120-Day Disbursements

The U.S. Department of Education recently revised its procedures for requesting permission to disburse loan funds after the 120-day late-disbursement period. The Department issued a Dear Colleague letter, GEN-05-07, which outlines the following new procedures:

• Requests must be sent to the Department's Common Origination and Disbursement School Relations Center .
• Include the date of the request, the school's Office of Postsecondary Education ID, the lender's name and, in the case of a PLUS loan, the parent-borrower's name and Social Security number.
• Only the school or the school's servicer are permitted to request a disbursement labeled by the Department as a “late late disbursement.”

The Department supplied a sample late-disbursement request with the letter. The sample provides a guide for schools that need to request permission to make disbursements beyond the 120-day late-disbursement period.

The basic policy elements governing late disbursements remain the same:

• Students generally lose eligibility for loan funds when they cease enrollment or drop to less-than-half-time attendance.
• In some cases, lenders are permitted to disburse, and schools are permitted to deliver, loan funds to students who have withdrawn or dropped to less than half-time attendance.
• Under normal circumstances, these funds must be delivered not more than 120 days after the student's last date of at least half-time attendance.
• In exceptional circumstances, and with the permission of the Department, the school may deliver loan funds more than 120 days after the date the student last attended at least half time.

If you have additional questions about loan policy governing late disbursement of Federal Family Education Loan Program funds, contact USA Funds^®' policy advisers.