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Getting Started—
Schools New to Direct Loans

Direct Loan Participation

If a non-Direct Loan school is currently eligible and certified for other Federal Student Aid (FSA) programs and has the Direct Loan Program listed as an approved program on its Eligibility and Certification Approval Report (ECAR), we will complete some basic setup actions that are necessary for the school to process Direct Loans via the Common Origination and Disbursement (COD) System.

Note: If a non-Direct Loan school is currently eligible and certified for other FSA programs, but it does not have the Direct Loan Program listed as an approved program on its ECAR, the school must first submit a revised E-App.

If a school has never participated in any of the FSA programs, it must first submit an application through the Electronic Application for Program Participation (E-App). Please refer to the schools new to FSA programs.

Federal Student Aid-Initiated Setup Actions

The following actions will be completed for all non-Direct Loan schools that are currently eligible and certified for other FSA programs, with the Direct Loan Program listed as an approved program on its ECAR. The setup actions listed below apply to a school's main campus only.

A school will—

  • Be assigned a Direct Loan school code (a six-digit code beginning with G).*
  • Have its Disbursements Funded Without Accepted Pnote flag set to “N” (meaning a Master Promissory Note (MPN) must be on file with the Department of Education before actual disbursements can be accepted).*
  • Have its Eligibility for Single Disbursement flag set to “Y”, if eligible.*
  • Have its Student Aid Internet Gateway (SAIG) mailbox profile updated to include Direct Loan Services and Direct Loan Delinquency Reporting Services. We will e-mail the school’s primary Destination Point Administrator regarding the SAIG mailbox update.
    • We will include these services under the same SAIG mailbox used for Grants Services.
    • If not participating in Grants Services, we will include these services under the same SAIG mailbox used for ISIR Services.
    • If a school uses a third party servicer, we will NOT update the SAIG mailbox services. In this case, a school will need to update its SAIG mailbox services through the SAIG Enrollment Web site. A school can do this when it is ready to do so.
    • If a school wishes to change its SAIG mailbox setup, it can do so through the SAIG Enrollment Web site.
    • For questions about SAIG or for assistance with the enrollment process, contact CPS/SAIG Technical Support at (800) 330-5947. A school may also e-mail CPSSAIG@vangent.com.

    *A school cannot change this setup action.

School-Initiated Setup Actions

When a school is ready to actively participate in the Direct Loan Program, it will need to complete several actions to ensure all connections are in place to receive Direct Loan funds and to electronically transmit and receive Direct Loan data.

Request for Participation

Send an e-mail request to the COD School Relations Center at CODSupport@acs-inc.com. The subject line of the e-mail should be "Request to Participate in the Direct Loan Program." In addition, the following information should be provided in the body of the e-mail:

  • Name of your school
  • Address including city, state, and zip code
  • Person requesting participation (Financial Aid Director or an official listed on the E-App is preferred)
  • E-mail and phone number of the official
  • OPE ID
  • DUNS Number (if known)
  • Award Year in which processing will begin

When your school sends its request to COD System to complete your FSA Direct Loan setup, a member of the FSA OnBoarding Team will be assigned as your point of contact. The point of contact will send a participation acknowledgement e-mail which will include your school's Direct Loan code. Your Point of Contact will explain how the Direct Loan Program works and help you set up your user account and options in FSA systems (and the G5 payment system, if your school has not previously received funds from ED).

At the point you begin to successfully process Direct Loan data for your borrowers and disburse Direct Loan funds, the Point of Contact will make sure you are contacted by the person who has been assigned to be your school's primary Direct Loan contact at the COD School Relations Center.

COD Web Site Access

To view or process Direct Loan data on the COD Web site, a school must have an authorized COD user ID and password. If a school user already has a valid COD user ID and password, it does NOT need to request a separate one for Direct Loans. To obtain access to the COD Web site, a school must designate a School Security Administrator who is responsible for establishing other users and associated procedures.

School Security Administrators should refer to the procedures given in COD Website Access for Schools. Third-party servicers should refer to COD Website Access for Third Party Servicers.

Master Promissory Note settings

Your school should review the default settings for the Master Promissory Note, as listed on the COD Web site for your school (see the screens for School Options), and revise them if necessary.

Counseling reports

A school must ensure that Direct Loan borrowers receive adequate counseling on the responsibility to repay a loan, the consequences of default, and repayment options.

A student who is a first-time Direct Loan borrower must complete Direct Loan Entrance Counseling prior to receiving the first disbursement of a Direct Loan. However, a student who is receiving his or her first Direct Loan is not required to complete entrance counseling if he or she has previously received the same type of loan through the Federal Family Education Loan (FFEL) Program.

Students can fulfill the entrance counseling requirements by completing an online session at StudentLoans.gov. (Note that a school may choose to have its borrowers complete Direct Loan Entrance Counseling by other means, such as in-person sessions, audio-visual presentations, or other online counseling products—the school is responsible for ensuring that the counseling meets the requirements described in Volume 2, Chapter 6 of the FSA Handbook.)

Once a borrower completes the online counseling session at StudentLoans.gov, the COD System will send a Direct Loan Entrance Counseling Acknowledgement to the Student Aid Internet Gateway (SAIG) mailbox for all schools selected during the counseling session. A borrower may select up to three schools. (Note that the Direct Loan Servicing System will continue to produce and send the current counseling reports listing only borrowers who use the Direct Loan Servicing Online Web site to complete entrance counseling.)

A student who is ceasing enrollment (whether graduating, withdrawing, or dropping to less than half time) can fulfill the exit counseling requirement by completing an online session on the NSLDS Web site.

To get reports listing students who have completed on-line exit counseling, select the REPORT tab on the NSLDS Web site for professionals. You can also upload lists of your students who have been counseled by going to the ENROLL tab on this site.

Direct Loan Servicing Report Setup

A school can have several reports generated by the Direct Loan Servicing System sent directly to its SAIG mailbox. To do so, a school can set up its report options through the Direct Loan Servicing Online School Site.

G5 Payment System

G5 is the Department of Education’s payment system, and all schools receive FSA funding through G5. To receive Direct Loan funds, a school must review its bank account information in G5 or provide new bank account information to G5.

  • If a school has a single bank account for its FSA funds and the school plans to use this same account, no further action is necessary.
  • If a school has more than one bank account for its FSA funds, the school must contact G5 to designate the specific account that will be used for Direct Loan funds.
  • If a school will use a new bank account for its Direct Loan funds, it must submit a new direct deposit form, Form SF1199A, to G5 at the address below:

    U.S. Department of Education
    Financial Management Operations
    400 Maryland Avenue, SW, RM. 4W116
    Washington, DC 20202

Additional information about establishing banking information can be found under the Banking section of the Frequently Asked Questions on the G5 Web site. To access G5, users must have an authorized G5 user ID and password.

  • If a school already has a valid G5 user ID and password, it does NOT need to request a separate one for Direct Loans.
  • If a school needs a G5 user ID and password, it must submit a completed G5 Users Authorization Form (the form and instructions are available on the G5 Web site).

For further information about G5, visit the G5 Web site or call the G5 Hotline at (888) 336-8930.

Other Helpful Actions

Familiarize yourself with our information for Aid Professionals, which includes:

  • A description of the training that is available to Direct Loan schools
  • The Direct Loan School Guide (under “Publications”), which describes how a school sets up administrative and systems procedures to award and disburse Direct Loans.
  • Samples of the Master Promissory Notes, loan disclosures, and communications that the Direct Loan Program sends to borrowers.

Complete the COD computer-based training (CBT). Check out the CBT and learn how to use the COD Web site.

Review the school’s settings on the "Subscription Options" page on the IFAP Web site in order to receive notification of all Direct Loan-related guidance and communications.

  • By selecting "Weekly Email Summary," the school will receive a notice about all FSA guidance and communications that are published each week, including Direct Loans.
  • By selecting "Content Specific Email," the school will have the option of selecting which publications it receives notice about. At a minimum, we encourage you to select the boxes for Dear Colleague Letters, Electronic Announcements, Direct Loan Consolidation, and Direct Loan Servicing.

Special case: Schools with additional locations

If a school has additional locations, each location will need to be set up before processing can begin for that location. In addition, if a school plans to have any of its additional locations originate Direct Loans separately from the main campus, each location will need to have its own OPE ID and unique DUNS Number.

Direct Loan school contacts

Sometimes talking to a school that participates in the Direct Loan Program can be helpful in addressing questions and concerns. The National Direct Student Loan Coalition maintains a list of school staff with experience in the Direct Loan Program who have volunteered to share their expertise. List disclaimer. The list gives phone numbers and email addresses for the mentors as well as their type of school (e.g., public or private), type of system (e.g., Banner, Datatel, homegrown), and number of students. We encourage you to contact these mentors to learn about the Direct Loan Program from a school's perspective.

 

Last updated October 22, 2012

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