A late disbursement is a disbursement made by a lender or delivered by a college after the end of the loan period or the date on which the student ceased to be enrolled on at least a half-time basis. The Common Manual and the Volume 4,
Chapter 2 – FSA Handbook: Processing Aid and Managing Federal Student Aid Funds provides detailed information concerning late disbursements.
Conditions for making a late FFELP (Stafford and/or PLUS) disbursement:
- A student must be considered for a late disbursement as long as the U.S. Department of Education (ED) has processed an Institutional Student Information Record (ISIR)/Student Aid Report (SAR) with an official Expected Family Contribution (EFC); and
- A college must certify an application for the loan prior to the date the student became ineligible.
Making a Late Disbursement
If a student has completed the payment period or period of enrollment, a college must make or offer to make the late disbursement to the student or parent.
A college may choose to make a late disbursement to a student who did not withdraw or complete the period of enrollment but ceases to be enrolled at least half time.
After the college determines the amount of the late disbursement, the following steps are required:
- Contact the borrower prior to making any late disbursements of Title IV loan funds and confirm that loan funds are still needed and that the student wants a late disbursement;
- Explain the obligation to repay the loan funds.
- Document the contact and the final determination of the late disbursement.
The college is permitted to credit the student’s account to pay for current and allowable charges in accordance with the current cash management regulations. If the student due a late disbursement has a credit balance comprised of FSA loan funds, the college must offer the funds in writing to the student and may not disburse the funds directly to the student without first obtaining the student’s authorization.
Late Disbursement Regulation Changes Effective July 1, 2008
Per guidance posted to IFAP through an e-Announcement dated May 20, 2008, new regulations issued on November 1, 2007, which become effective on July 1, 2008, modify the late disbursement provisions in 34 CFR 668.164 (g).
- The period for making a late disbursement is increased from 120 days to 180 days.
A college now has 180 days in which to make a late disbursement after the date a student ceases to be enrolled at least half time for a loan period. It is not necessary for a college to obtain prior approval from ED to make a late disbursement. The current requirements included in Volume 4, Chapter 2 of the SFA Handbook continue to apply.
- The provision that allows a college to request approval to make a “late” late disbursement beyond the late disbursement period is eliminated.
Approval to make a late disbursement after the 180-day late disbursement period will not be granted regardless of the reason.
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