ACTIVE CONFIRMATION OF LOAN AWARDS NOW REQUIRED ANNUALLY
Beginning with the 2020-2021 award year, federal student loan borrowers will have to complete an extra step before their loans disbursements will be released by the Common Origination and Disbursement System. The “Informed Borrower Confirmation” requires borrowers to review and acknowledge their loan indebtedness each year before the school can disburse and draw down those funds.
The changes will take effect in the COD system and are expected to be operational by April 2020. FSA is instructing schools to modify their student and parent facing 2020-2021 award year websites and materials to ensure students are aware of the new requirement. Institutions should also plan to modify their internal document tracking, disbursement approval procedures and system software to account for the changes. Although schools will be able to send origination and disbursement records to COD before a borrower has confirmed their loan indebtedness, COD will not allow the loan to disburse if the confirmation process hasn’t been completed. Once the Informed Borrower Confirmation goes live, schools will receive a new COD Reject Edit 225 on submitted Direct Loan disbursements if the Informed Borrowing Confirmation process has not yet completed by the borrower.