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Professionals U.S. Department of Education

Citations: (R)685.309 AsOfDate: 12/31/95

Administrative and fiscal control and fund accounting requirements for schools participating in the Direct Loan Program. (a) General. A participating school shall-(1) Establish and maintain proper administrative and fiscal procedures and all necessary records as set forth in this part and in 34 CFR part 668 in order to-(i) Protect the rights of student and parent borrowers; (ii) Protect the United States from unreasonable risk of loss; and (iii) Comply with specific requirements in those regulations; and (2) Submit all reports required by this part and 34 CFR part 668 to the Secretary. (b) Student status confirmation reports. A school shall-(1) Upon receipt of a student status confirmation report from the Secretary, complete and return that report to the Secretary within 30 days of receipt; and (2) Unless it expects to submit its next student status confirmation report to the Secretary within the next 60 days, notify the Secretary within 30 days if it discovers that a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan has been made to or on behalf of a student who-(i) Enrolled at that school but has ceased to be enrolled on at least a half-time basis; (ii) Has been accepted for enrollment at that school but failed to enroll on at least a half-time basis for the period for which the loan was intended; or (iii) Has changed his or her permanent address. (3) The Secretary provides student status confirmation reports to a school at least semi-annually. (4) The Secretary may provide the student status confirmation report in either paper or electronic format. (c) Record retention requirements. Unless otherwise directed by the Secretary, the school or its successors-(1) Shall keep all records required under this part relating to a student's eligibility and participation in the Direct Loan Program for five years following the student's last day of attendance at the school; (2) Shall keep copies of any other reports and forms used by the school for all other records relating to a school's participation in the Federal Direct Stafford, Federal Direct Unsubsidized Stafford, or Federal Direct PLUS Loan Programs

for five years after completion; (3) Shall keep all records involved in any loan, claim, or expenditure questioned by a Federal audit until resolution of any audit questions. (4) In the event of the school's closure, termination, suspension, or change in ownership resulting in a change of control as described in 34 CFR part 600, shall provide for the retention of the records and reports required by this part and for access by the Secretary or the Secretary's authorized representatives to those records and reports for inspection and copying; and (5) May keep files, records, and copies of reports in microform or other media formats. (d) Loan record requirements. In addition to the records required by 34 CFR part 668, for each Direct Subsidized, Direct Unsubsidized, and Direct PLUS Loan received under this part by or on behalf of its students, a school shall maintain a copy of any application data submitted to the Secretary and shall, upon request, produce a record of-(1) The amount of the loan and the loan period; (2) The data in an individual student budget or the school's itemized standard budget that were used in calculating the student's estimated cost of attendance; (3) The sources and amounts of financial assistance available to the student that the school used in determining the student's estimated financial assistance for the loan period in accordance with Sec. 685.102; (4) The amount of the student's tuition and fees paid for the loan period and the date the student paid the tuition and fees; (5) The amount and basis of its calculation of any refund paid to or on behalf of a student; (6) In the case of a Direct Subsidized Loan under Sec. 685.200, the data used to determine the student's expected family contribution; (7) In the case of a Direct Subsidized, Direct Unsubsidized, or Direct PLUS Loan, the date of each disbursement of the loan. (8) The information collected at the exit interview; and (9) Any other matter for which a record would be required for the school to be able to document its compliance with applicable requirements with respect to the loan. (e) Inspection requirements. Schools shall follow the inspection requirements in 34 CFR 668.23(b). (f) Information sharing. Upon request by the Secretary, a school promptly shall provide the Secretary with any information the school has regarding the last known address, surname, employer, and employer address of a borrower who attends or has attended the school. (g) Accounting requirements. (1) A school shall establish and maintain on a current basis financial records that reflect all transactions for the bank account as required by paragraph (h) of this section. (2) The school shall account for receiving and expending Direct Loan Program funds in accordance with generally-accepted accounting principles. (h) Direct Loan Program bank account. Schools shall

follow the procedures for maintaining funds established in 34 CFR 668.164. (i) Division of functions. Schools shall follow the procedures for division of functions in 34 CFR 668.16(c). (j) Limit on use of funds. Except for funds paid to a school under section 452(b)(1) of the Act, funds received by a school under this part may be used only to make Direct Loans to eligible borrowers and may not be used or hypothecated for any other purpose. (Authority: 20 U.S.C. 1087a et seq.) (Approved by the Office of Management and Budget under control number 1840-0672) Note: OMB control number added June 28, 1995, effective July 1, 1995.