Processing Direct Loan Adjustments

Award and disbursement details from the Packaging process are used in Loan Origination records to support COD processing of Direct Loans. COD can accept and process up to 20 disbursements for each award with the disbursement number indicated in the COD Disbursement Number field. Therefore, you can allocate up to 20 potential disbursements when setting up any of the Direct Loan Financial Aid Item Types: Stafford (subsidized and unsubsidized) and PLUS (parent and graduate student PLUS). The Loan Origination process updates loan origination information based on award adjustments in the context of an award’s Disbursement IDs as created under the rules set by its Financial Aid Item Type and Disbursement Plan/Split Code Formula.

WARNING:

For Direct Loans, it is strongly recommended that you set up Direct Loan Financial Aid Item Types using a Disbursement Split Formula that has an Even Split Option value of Even among first disb by Term. Doing this ensures that the Origination records automatically inherit disbursement protection and award adjustment attributes necessary for proper COD reporting.

If Direct Loan originations are created from disbursements where the Even Split Code option is not Even among first disb for Term, the Packaging process ignores any disbursements already made and repackages the student without regard to disbursement activity.

When a Direct Loan is awarded using the setup recommended above, the Packaging process splits the loan evenly among the first Disbursement ID of a term when the award is initially offered. Then, when award adjustments are made, the Packaging process updates the award disbursement details based on the assumption that the Even among first disb by Term option is used, whether the award has been disbursed, and what Disbursement IDs remain within each term.

If the Direct Loan has been awarded and originated, but not yet been disbursed, an increase to the award reallocates the new award amount using the existing disbursement plan split code. In this case, further loan processing recognizes the award adjustment as an origination award change to the existing scheduled disbursements.

Here is an example of how award increases can affect the distribution of awards and disbursements using the recommended setup and an initial award of 3,000.00 USD:

3,000.00 USD (original award, no funds disbursed)
	Fall	Winter	Spring
Scheduled Amount (Disbursement ID)	1,000.00 USD D 01	0.00 USD D 02	1,000.00 USD D 03	0.00 USD D 04	1,000.00 USD D 05	0.00 USD D 06
Disbursed Amount	0.00 USD	0.00 USD	0.00 USD	0.00 USD	0.00 USD	0.00 USD

Prior to disbursing any funds, the award is increased to 4,500.00 USD:

4,500.00 USD (increased from original award of 3,000.00 USD, no funds disbursed)
	Fall	Winter	Spring
Scheduled Amount (Disbursement ID)	1,500.00 USD D 01	0.00 USD D 02	1,500.00 USD D 03	0.00 USD D 04	1,500.00 USD D 05	0.00 USD D 06
Disbursed Amount	0.00 USD	0.00 USD	0.00 USD	0.00 USD	0.00 USD	0.00 USD

The Fall award of 1,500.00 USD is disbursed, and afterwards, the award is increased to 6,000.00 USD. The 500.00 USD increase has not yet been disbursed:

6,000.00 USD (increased from 4,500.00 USD after the Fall portion of 1,500.00 USD is disbursed)
	Fall	Winter	Spring
Scheduled Amount (Disbursement ID)	1,500.00 USD D 01	500.00 USD D 02	2,000.00 USD D 03	0.00 USD D 04	2,000.00 USD D 05	0.00 USD D 06
Disbursed Amount	1,500.00 USD	0.00 USD	0.00 USD	0.00 USD	0.00 USD	0.00 USD

The additional 500.00 USD for Fall is now disbursed, and, afterwards, the award is increased to 7,500.00 USD. Since there are no remaining Disbursement ID's for Fall, the increase is distributed over the Winter and Spring terms.

7,500.00 USD (increased from 6,000.00 USD, no remaining Fall Disbursement ID's to use)
	Fall	Winter	Spring
Scheduled Amount (Disbursement ID)	1,500.00 USD D 01	500.00 USD D 02	2,750.00 USD D 03	0.00 USD D 04	2,750.00 USD D 05	0.00 USD D 06
Disbursed Amount	1,500.00 USD	500.00 USD	0.00 USD	0.00 USD	0.00 USD	0.00 USD

Processing Direct Loan PLUS Adjustments

When determining how to adjust a Direct Loan PLUS award, there are circumstances that may require a separate or new loan application to be created for COD processing.

For example, COD requires a new MPN to be processed if the borrower has already been established and processed a DL PLUS based on an Endorser. In this example, COD internally tags the loan application as a Single-Loan MPN. Once a Single-Loan MPN has been established, no other awards can be linked to that MPN. If the borrower requests a subsequent PLUS loan, a new MPN must be generated and signed. To do this, the borrower must be awarded a new and distinct Direct Loan Financial Aid Item Type. Each distinct Direct Loan Financial Aid Item Type results in the Loan Origination process creating a separate and distinct loan application. Here is a specific example: a student is awarded a Direct PLUS of 1,000.00USD. The Direct PLUS is established and processed with an approved Endorser. The borrower is eligible and requests an additional 900.00USD of Direct PLUS loan. You must add the increase in award using a separate and distinct Direct Loan Financial Aid Item Type. Loan Processing then creates a new loan record, supporting the requirement for a new MPN and credit check.

Handling Error Messages in Direct Loan Adjustments and Packaging

Five error messages explain errors encountered during the Direct Loan adjustment Packaging process. The following table provides the message number, message text, and an explanation of the circumstances:

Message Number	Message Text	Explanation of Circumstances
9191	Disbursed amounts > awarded amounts; original award not changed.	The most common circumstances for this error are when you enter a manual award that has a value of less than the total award amount.
9192	Disb. amount < awarded disb. amt., but no disb. entry available for change.	This error message appears when the total disbursed to the student is less than the award amount but no disbursement IDs are available for further disbursements.
9193	At least 1 DL split award value is 0.00; Net split award amount is positive.	This error message appears when you use a custom split to redistribute the award, and then increase the award and revert to the original split code. This causes the gross split award entries to zero out. Then during validation, the gross split award amounts appear as zeros, while the net split amounts and disbursements appear as positive amounts. Because the gross split detail is missing, the Packaging process cannot logically evaluate the award. The Packaging process, therefore, rejects the award altogether and returns a zero value for the overall award amount.
9493	Award cannot be adjusted, because at least 1 set of term disbs. are fully used.	This error message appears when you attempt to repackage an award that has already used all the available disbursement IDs for one or more terms. The award amount does not change.
9494	Award disbursements cannot be evenly reduced; even division not possible.	As a first priority, Packaging attempts to spread a net decrease evenly across all terms. Whenever possible, the award amount is divided equally among all terms. However, this is not possible when a disbursement for an amount larger than the award amount divided by the number of terms has already been made in one term. In this case, the residual amount—award amount minus the amount already disbursed in the previously-mentioned term—is divided equally among the remaining terms.