VOLUME 4

Processing Aid & Managing FSA Funds
Chapter 1: The MPN & the Stafford/PLUS Loan Process
STUDENT APPLIES FOR AID & COMPLETES THE MPN .....................................................................................1
Required borrower information on MPN, Multi-year use of the MPN & when a new MPN is required
PLUS MPN .....................................................................................................................................................................6
PLUS certification specifying amount to be borrowed, Adverse credit history & use of endorser
SCHOOL CERTIFIES/ORIGINATES LOAN ...............................................................................................................7
Certifying eligibility, Submission of award & disbursement data (Direct Loans),
Scheduling disbursements with an FFEL lender, Lender/guarantor approval (FFEL only), Review of
the Stafford MPN process

Chapter 2: Disbursing FSA Funds .............................................. 13
NOTIFICATION OF DISBURSEMENT .................................................................................................................... 13
REQUIRED STUDENT/PARENT AUTHORIZATION ........................................................................................... 15
METHOD OF PAYMENT .......................................................................................................................................... 17
Credit to the student’s account, Direct disbursement to the student,
Delivery of FSA funds must be cost-free
CREDIT BALANCES .................................................................................................................................................. 19

Paying credit balances, Holding credit balances,
Power of attorney in disbursing FWS and Perkins,
Power of attorney for foreign study (Stafford/PLUS)
CHECKING ELIGIBILITY AT THE TIME OF DISBURSEMENT ............................................................................ 21
TIMING OF DISBURSEMENTS ............................................................................................................................... 22

Basic rules for early & delayed disbursements,
Number of Stafford/PLUS disbursements: standard terms and substantially equal non
standard terms, Number of Stafford/PLUS disbursements: 1) credit hour programs without
terms, 2) credit hour programs with non-standard terms that are not substantially equal in
length, and 3) clock hour programs, Timing of Pell Grant disbursement within a payment
period, Disbursing FSEOG & Perkins, Retroactive disbursements for completed periods
DISBURSING FWS WAGES ..................................................................................................................................... 26

Holding FWS funds on behalf of the student, Garnishment of wages
COMPLETION OF COURSEWORK REQUIREMENTS ........................................................................................ 27
Pell Grants; Stafford and PLUS loans in clock hour programs;
Stafford and PLUS loans in credit hour programs without terms
and credit hour programs with terms that are not substantially equal in length,
Retaking hours and courses, Excused absences
LATE DISBURSEMENTS ........................................................................................................................................... 29
PROMPT DISBURSEMENT RULES ........................................................................................................................ 33

Holding FFEL funds if student is temporarily ineligible,
Holding Stafford loan funds for verification
USING ELECTRONIC PROCESSES FOR AUTHORIZATIONS & NOTIFICATIONS ........................................ 34

The E-Sign Act

Chapter 3: Requesting & Managing FSA Funds ....................... 35
DRAWING DOWN FSA FUNDS ............................................................................................................................. 35

The advance payment method, Just-in-Time payment method
(also known as Pushed-Cash), Reimbursement & cash monitoring
payment methods
MAINTAINING & ACCOUNTING FOR FUNDS.................................................................................................... 39

Bank account notification requirements, Maintaining FSA funds in a separate
or commingled account, When a school doesn’t maintain a separate federal bank account,
Accounting and financial requirements, Timely return of funds when a school
does not maintain a separate federal bank account, Interest-bearing or investment account,
Perkins Loan funds
EXCESS CASH ............................................................................................................................................................ 42
Allowable excess cash tolerances
PROHIBITION ON ESCHEATING OF FSA FUNDS ............................................................................................. 43