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Quality Assurance Program

Direct Loans

This assessment provides you with an opportunity to review and evaluate your procedures regarding Federal Direct Loans.

 

Administration of the Direct Loan Program must also address Default Prevention and Cohort Default regulations. These areas are addressed in the Default Prevention & Management Assessment.

If you identify areas requiring corrective action, we recommend that you complete an Action Plan.

Activity Bar: 
Direct Loan Activity 1: Direct Loan Reconciliation (Program Year Closeout)
Direct Loan Activity 2: Direct Loan Quality Assurance
Direct Loan Activity 3: Direct Loan Origination
Direct Loan Activity 4: Direct Loan Fiscal Requirements

Additional Links: 
2016-2017 FSA Handbook, School Eligibility & Operations, Chapter 6; 2016-2017 FSA Handbook, Calculating Awards & Packaging, Chapter 5; 2016-2017 FSA Handbook, Processing Aid & Managing FSA Funds, Chapter 1; 2016-2017 FSA Handbook, Processing Aid & Managing FSA Funds, Chapter 6; Federal Direct Loan Website; Direct Loan Operational and Communications Guidance For Schools; 150% Direct Subsidized Loan Limit Information Page; Online Training Recording, Direct Loan Reconciliation – DCL ANN-12-07; 150% Direct Subsidized Loan Limit

Please note the regulatory citations are referenced in the first column of the assessment. To link to any of the regulatory references, click on the link in the regulatory link column and scroll down to the applicable section.

 

Federal Direct Loan Program

Regulatory Link(s)

Activity

Definitions 34 CFR 685.102

  • Direct Loan Monthly Reconciliation 34 CFR 685.102(b) (scroll down to School origination option 1 or option 2)

34 CFR 685.102

34 CFR 685.200

34 CFR 685.201

34 CFR 685.202

34 CFR 685.203

34 CFR 685.204

34 CFR 685.205

34 CFR 685.206

34 CFR 685.208

34 CFR 685.209

34 CFR 685.210

34 CFR 685.211

34 CFR 685.212

34 CFR 685.213

34 CFR 685.214

34 CFR 685.215

34 CFR 685.216

34 CFR 685.217

34 CFR 685.218

34 CFR 685.219

34 CFR 685.220

34 CFR 685.221

34 CFR 685.300

34 CFR 685.301

34 CFR 685.303

34 CFR 685.304

34 CFR 685.305

34 CFR 685.306

34 CFR 685.307

34 CFR 685.308

34 CFR 685.309

 

Direct Loan Activity 1: Direct Loan Reconciliation (Program Year Closeout)

Direct Loan Monthly Reconciliation Worksheet

Borrower Eligibility 34 CFR 685.200

  • Student Direct Subsidized or Direct Unsubsidized loan borrower requirements
  • Student PLUS borrower requirements (Graduate/Professional PLUS loan borrowers)
  • Parent PLUS loan borrower requirements
  • Defaulted FFEL Program and Direct Loan borrowers
  • Use of loan proceeds to replace expected family contribution
  • Limitations on eligibility for Direct Subsidized Loans and borrower responsibility for accruing interest for first-time borrowers on or after July 1, 2013

 

Obtaining a Loan 34 CFR 685.201

  • Application process for a Direct Subsidized Loan or a Direct Unsubsidized Loan
  • Application process for a Direct PLUS Loan
  • Application process for a Direct Consolidation Loan
 

Charges for which Direct Loan Program borrowers are responsible 34 CFR 685.202; DCL-GEN-14-10

 

Loan Limits 34 CFR 685.203

  • Direct Subsidized loan limits
  • Direct Unsubsidized loan limits DCL-GEN-08-08
  • Additional eligibility for Direct Unsubsidized loans
  • Federal Direct Stafford/Ford Loan Program and Federal Stafford Loan Program aggregate limits
  • Aggregate limits for unsubsidized loans
  • Direct PLUS Loans annual limit
  • Direct PLUS Loans aggregate limit
  • Loan limit period
  • Treatment of Direct Consolidation Loans and Federal Consolidation Loans
  • Maximum loan amounts

Annual and Aggregate Loan Limits

Deferment 34 CFR 685.204

Deferment options

Forbearance 34 CFR 685.205

Forbearance options

Borrower responsibilities and defenses 34 CFR 685.206

 

Repayment plans 34 CFR 685.208

Summary of Repayment Plans

Choice of repayment plan 34 CFR 685.210

  • Initial Selection of a repayment plan
  • Changing repayment plans

 

Miscellaneous repayment provisions 34 CFR 685.211

  • Payment application and prepayment
  • Repayment incentives
  • Refunds and returns of Title IV, HEA Program funds from schools
  • Default
  • Ineligible borrowers
  • Rehabilitation of defaulted loan

 

Discharge of a loan obligation 34 CFR 685.212

Summary of Loan Discharges

Consolidation 34 CFR 685.220

 

Agreements between an eligible school and the Secretary for participation in the Direct Loan Program 34 CFR 685.300

  • General requirements 34 CFR 685.300(a)
  • Program participation agreement 34 CFR 685.300(b)
    • Federal Direct Loan Quality Assurance system 34 CFR 685.300(b)(9)
  • Origination 34 CFR 685.300(c)

Direct Loan Activity 2: Direct Loan Quality Assurance Component

Origination of a loan 34 CFR 685.301

  • Determining eligibility and loan amount
  • Promissory note handling

Direct Loan Activity 3: Direct Loan Origination

Processing loan proceeds 34 CFR 685.303

  • General requirements
  • Processing of the proceeds of a Direct Loan
  • Determining disbursement dates and amounts
  • Annual loan limit progression based on completion of an academic    
  • year
  • Late Disbursement
  • Treatment of excess loan proceeds

 

Counseling Borrowers 34 CFR 685.304

A Guide To Creating A Policies & Procedures Manual, Section 8.2, Counseling Borrowers

Financial Awareness Counseling Website

Determining the date of a student's withdrawal 34 CFR 685.305

 

Payment of a refund or Return of Title IV, HEA program funds to the Secretary 34 CFR 685.306

 

Withdrawal procedure for schools participating in the Direct Loan Program 34 CFR 685.307

 

Remedial actions 34 CFR 685.308

 

Administrative and fiscal control and fund accounting requirements for schools participating in the Direct Loan Program 34 CFR 685.309

  • General (Administrative and fiscal procedures)
  • Enrollment reporting process
  • Record retention requirements
  • Accounting requirements
  • Direct Loan program bank account
  • Division of functions
  • Limit on use of funds

Direct Loan Activity 4: Direct Loan Fiscal Requirements

A Guide To Creating A Policies & Procedures Manual, Section 8.4, Administrative and Fiscal Control

Last Updated January 2017

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