can i off write by tricky


									               Write-Off Helpful Hints
 HHS, DSA, OCBP                             Write-Off Submissions                     August 21, 2000

                               Sticking Points in the Process
              Starting the Process                       submitted within 30 days after uncollectibility
            ou have decided to clear out those           has been determined. Additionally, for cases

    Y       delinquent case files and know that the
            Division of Student Assistance (DSA),
            Office for Campus Based Programs
                                                         discharged in bankruptcy proceedings, the case
                                                         is deemed uncollectible the day the school
                                                         receives the discharge notice and must be
(OCBP) is the key to the write-off process. But          submitted within 30 days of that date.
how to get started? What does the process                    Is the case submitted by a servicer or the
require? So many questions you say? How does             school? A school is in the best position to make
a person get help? The purpose of this                   the decision as to the uncollectibility of a loan
information sheet is to answer some of those             and ultimately decide to submit it for write-off
questions.                                               review. However, if the case is submitted by a
    Go to the Source: The                                servicer, documentation of the School’s
answers to these and most                                determination of uncollectibility should be
questions can be found in the                            included with the submission.
updated Student Financial Aid                                Ensure that copies of signed and dated
Guidelines (SFAG). The                                   Promissory Notes are included. Schools are
SFAG including exhibits can                              responsible to keep and safeguard the originals
be found on its own website at Finding the information   as a permanent part of the borrowers record.                                Does Entry/Exit documentation exist in
sfag. We invite schools to visit the site.               the file? To meet this requirement, a school
    Check out the exhibits: They contain such            should conduct and document an entrance
things as a Due Diligence Checklist which                interview for each academic year during which
provides guidance on the types of documentation          the student receives loan funds and prior to funds
required to evidence due-diligence compliance.           being disbursed to the student. Likewise, a
    After reading the referenced material,               school must conduct and document an exit
completing your research, and collecting your            interview upon a borrowers exit from the
documentation, you are almost ready for                  program for which the funds were loaned. A
submission. But wait, let’s just double check            school should make every effort to establish
what we’ve got. Here are a few last minute items         electronic or paper records of individual or group
to review which often become the sticking points         sessions or procedures to support compliance.
in write-off submissions.                                     Are the required grace period contacts
    Is the total amount of all the borrower’s            included/supported? The regulations require a
loans (principal, interest, & penalty charges)           school to contact borrowers in writing twice
less than $3,000? If so, the schools have the            during the grace period at intervals determined
authority to write-off the balance of the loan           by the school. Mailed exit interview information
provided all due diligence steps have been               may not take the place of one of the two grace
completed, and documented (subject to audit).            period contacts.
     Is the write-off review submission request                Deferments are available for periods of
within the 30 day time-frame of the date the             time in which a borrower is engaged in an
loan(s) were determined to be uncollectible or           approved activity. Regulations require the
when the repayment period expired? Cases                 borrower to request a deferment citing an
over $3,000 requesting review need to be                 eligible activity for the time frame in which it is
Page 2 Helpful Hints

to be in effect. Ensuring that the borrower              collection agency must be made available to the
signed the request and the appropriate school            Department.
official has approved the request will meet the               Has the account been Litigated?
basic requirements for this one.                         Regulations require a school to litigate the
     Does regular billing exist and is supported         account after all other collection efforts have
by documentation? The regulations require a              failed unless the school can show that litigation
school to perform and document regular billing.          would not be cost-effective. This is subject to
To comply with this requirement, a school must           the Secretary’s approval. A package that
either send a statement prior to the due date of         contains documentation to that effect will
each payment or use a coupon payment system              greatly enhance its chances for success.
which provides coupons to                                     It all makes sense: By taking a few extra
borrowers no less often than                             moments to look over your due diligence
biennially. Past Due notices                             documentation on each borrower that a school
should not be mistaken for                               contemplates submitting, a school can better
the required billings.                                   avoid the pitfalls and problems associated with
    Reporting delinquent                                 denials. It’s that last look-see and a spare
accounts to Credit                 Communicate with      moment of double-checking that usually catches
Bureau(s) when the account Borrowers                     those “sticking points”.
first becomes over 120 days                              Check to see if the
delinquent. An integral part of the review               package you prepare for
process is to scan the case history for an               submission contains,
annotation of credit bureau reporting anytime the        supports, and evidences
account exceeds the 120 day delinquency date.            the items referenced
     Has the account been referred to a                  above. Then, any need for
Collection Agent? Regulations require a school           additional information will
to use a Collection Agency. However, a school            be greatly reduced while
can use an in-house or a commercial agent. For           enhancing the potential for
each collection agent to which an account is             approval. Time and effort
referred, the school must document the date of           spent in preparing the
                                                                                             It all adds up
referral, the results of the collection agent's          package and its subsequent
efforts, and the date the account was returned to        submission will be greatly reduced. Now, you
or recalled by the school. In addition, a copy of        have the latest helpful inform ation available, are
the procedures followed by the in-house                  equipped and encouraged to giv e the write-off
collection agent, or a copy of the contract (i.e,        process a try.
service agreement) with the commercial

  Quick References - Student Financial Aid Guidelines: Fiscal Management-Part II-Collections

  Due Diligence Summary                  Chapter 1
  Due Diligence Process                  Chapter 2
  Bankruptcy                             Effective 10/7/98 major revisions (PL 105-244)
  Write-off Process (documentation)
  Flowchart                              Exhibit A
  Checklist                              Exhibit C

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