In an electronic announcement dated November 21, 2015, USDE provided specific information to assist your school with reconciling the William D. Ford Federal Direct Loan (Direct Loan) Program. The information provided below should be viewed by both the Financial Aid Office and Business Office. This announcement also contains a link to a Reconciliation Q & A. Please be sure to check it out at
Direct Loan Reconciliation Defined
Direct Loan Reconciliation is the process by which Direct Loan funds received and disbursed as recorded on the Department of Education’s (the Department’s) systems are reviewed and compared with a school’s internal records; AND
Discrepancies are identified and resolved
Reasons for remaining cash balances are documented
Direct Loan Reconciliation is a mandatory monthly process, as required under 34 CFR 685.300(b) (5). Your school should reconcile all cash (Drawdowns and Refunds of Cash) and disbursement records (Actual Disbursements and Adjustments) with information in the COD System on an ongoing basis.
There are two types of reconciliation, which can be performed separately or simultaneously during the month, including:
This is the process where the business and financial aid offices compare the monthly financial aid office roster of scheduled disbursements to a monthly business office cash detail report that reflects funds drawn down and funds disbursed for the month. If discrepancies are found, your school should document and resolve them in a timely manner.
The school compares its reconciled internal records to the Department’s records of funds received and returned, and loans originated and disbursed to students at the school. At a minimum, this reconciliation must be completed at least monthly to ensure that data is correct in all systems and that cash management and disbursement reporting timelines are being met. If you have completed your internal reconciliation first, your school will have fewer discrepancies to resolve when you perform this external reconciliation. The Department offers various tools to assist you with external reconciliation. For more information, see the attachment to this announcement.
Direct Loan schools must also complete a final reconciliation to a zero ($0) Ending Cash Balance at the end of their processing year. This should occur within a month or two of your final disbursements but no later than the Program Year Closeout deadline, which is the last processing day in July of the year following the end of the Award Year. Information regarding this final reconciliation and the Program Year Closeout Deadline is published on the Information for Financial Aid Professionals (IFAP) Web site through Electronic Announcements beginning in February prior to the deadline.
DJA not only reconciles Direct Loan accounts for our clients on a monthly basis, we also reconcile Pell each month to ensure they are balanced. The final reconciliation for both programs is done by our team as well. Although DJA reconciles the DL SAS reports and Pell Grant Year to Date reports to the institutions accounting records, institutions must do an internal reconciliation to these reports as well. Please reconcile that all disbursements have been credited to the student’s accounts and any credit balance was returned within the required 14 days.