From: by way of Lynn Davis
Date: Wed Oct 03 2001 - 16:11:35 EDT
-----Original Message-----
From: Wayne Mahoney [mailto:wmahoney@swlaw.edu]
Sent: Wednesday, October 03, 2001 12:50 PM
To: Susan Burns
Subject: Re: Title IV credit balance refunds
Hi Susan
Please see my answers below. This info is contained in what are called the
Cash Management regs. I have attached a copy of the Financial Aid Handbook
Cash Mgmt Chapter. It's a pdf document.
Hope this helps.
wayne
sburns@smcvt.edu wrote:
>Hello:
>
>I was forwarded your names from the financial aid office at St. Michael's
>College. I am the Bursar here at St. Michael's and am new to the world of
>higher education.
>
>I'm trying to interpret the 14-day refund rule. I'm hoping you can share
>your interpretation with me.
>
>How are people applying the 14-day refund of credit balances?
>
>* Is it strictly when Title IV alone exceeds total allowable charges,
>then a refund must be sent within 14 days of the funds being applied to the
>student account
That's sort of the way we do it. However, say for example, on the same day
you applied Title IV funds (and it isn't enough to create a refund) and a
credit from an outside source (and it does create a refund). Even though
the Title IV funds alone did not cause the refund by itself, the Department
would invoke the 14 day rule because they tend to lean toward the
student. They would say you should assume the outside credit hit first so
the Title IV funds create the refund.
SFA CREDIT BALANCES
Whenever a school credits SFA program funds to a students
account, and those funds exceed the students allowable charges, an
SFA credit balance occurs. A school must pay the excess SFA program
funds (the credit balance) directly to the student as soon as possible,
but no later than 14 days after the later of:
the date the balance occurred on the students account, if the
balance occurred after the first day of class of a payment period
or
the first day of classes of the payment period if the credit
balance occurred on or before the first day of class of that
payment period
Credit Balances Cite
34 CFR 668.164(e)
Here's what they say about non SFA refunds. Don't worry about the stuff
after the 1st sentence unless they've left school.
The Department does not address the treatment of credit balances
that are created by non-SFA program funds. Previously, under the SFA
refund requirements, when a student withdrew, all credit balances had
to be eliminated before a refund calculation was performed. For
information on the treatment of a credit balances under the new
return to Title IV funds requirement when a student withdraws, see
chapter 6.
>* If an account has a combination of Title IV funds and tuition
>payments from the family & there is a credit balance do you have to send a
>refund even if it may create a balance due the following semester
We don't hold credit balances, especially for the next term. Mainly
because of the rules. However, if a student wants to leave the money on
account, we have them endorse the refund check back to us so that we can
show we gave them the money. This way we are not 'holding' excess
funds. Here's the rule:
Holding credit balances
A school is permitted to hold excess funds (credit balances) if it
obtains a voluntary authorization from the student or parent. If a
school receives authorization to hold excess funds, the school must
identify the student or parent and the amount of funds the school
holds for the student or parent in a subsidiary ledger account
designated for that purpose. The school also must maintain, at all
times, cash in its bank account at least equal to the amount the school
holds for students. Because SFA program funds are awarded to
students to pay current year charges, notwithstanding any
authorization obtained by a school from a student or parent, the
school must pay
any remaining balance on loan funds by the end of the loan
period, and
any other remaining SFA program funds by the end of the last
payment period in the award year for which they were awarded.
If a school cannot locate a student to whom an SFA credit balance
must be paid (i.e., the school has exhausted all possible avenues to
find the student), the school must return the credit balance to the
Department. In this case, a school will have to determine which SFA
program funds created a credit balance before it can return funds to
the SFA programs. As mentioned previously, the Department does not
specify how a school must determine which SFA funds create a credit
balance. However, when possible, the Department encourages schools
to return SFA program funds to loan programs first to reduce the
likelihood of default.
The school is permitted to retain any interest earned on the
students credit balance funds. The Department may prohibit a school
that has been placed on reimbursement from holding excess funds. If
the Department determines that the school has failed to meet the
financial responsibility standards, a limitation may be placed on the
school preventing it from holding excess funds for any student.
>* Are the 14 days business days or calendar days
Calendar.
>
>
>Susan
>
>Susan Burns, Bursar
>Saint Michael's College
>SMC Box 2 - One Winooski Park
>Colchester, VT 05439
>(802) 654-2335
>sburns@smcvt.edu
-- Wayne Mahoney Director of Financial Aid Southwestern University School of Law 675 S. Westmoreland Avenue Room 102 Los Angeles, CA 90005wmahoney@swlaw.edu www.swlaw.edu
213-738-6719 213-383-1688 (fax 24/7)
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