Systems and Procedures
A Division of The Office of Budget and Finance
A Division of The Office of Budget and Finance
With the implementation of LionPATH, the processes for Bernreuter Loans Funds for Non-University Park Locations, Senior Loan and Grant-in-Aid, Emergency Loans to International Students, and International Medical Insurance Loan Fund were combined into a single short-term loan to student's process. This procedure details short-term student loan processing, loan repayment, loan collections, and writing off delinquent accounts.
With the implementation of this new process, International Medical Insurance Fund transactions are now considered a grant.
The Office of Student Aid is responsible for coordinating short-term loans funds to students. Students initiate a request for temporary funding until pending financial aid is received and disbursed into the Student Account. The student can initiate the request with the Office of Student Aid, or in the case of international students, with the Office of Global Programs. The office processing the short-term loan accesses the student's account and determines if the student qualifies for this assistance. Short-term loans are typically issued after the first day of the semester. The following process steps should occur:
Students Financial Services will retain the original signed copy. If the student signs at a campus, the campus will mail the original signed promissory note to Student Financial Services (address above) with a copy of the student's PSU ID card or other government issued photo ID. In order to expedite the disbursement of funds, the campus can email/fax the promissory note and copy of the PSU ID card or other government issued photo ID to Student Financial Services, followed by mailing the original signed promissory notes. Student Financial Services will post the loan as an advance charged to the Student Account using a Payment Plan (PPL).
Students should be advised of the importance of signing up for eRefund to avoid delays in receiving the short-term loan funds.
It is the responsibility of the student to repay all awarded loans. Full repayment of loans granted will be made according to University Policy in effect at the time the loan is granted.
Repayment of a short-term loan must occur on or before the due date, which is 60 days from the date of issuance. Late fees of 1.5% of the remaining balance shall be assessed and will be charged on short-term loans monthly following the due date. All loans are intended to be paid-in-full by the end of the semester the loan was received.
When financial aid funds are credited to the student account, the short-term loan charge in the PPL account will be repaid first (only behind a prior balance) and if the funds are sufficient to cover the outstanding balance, the balance is considered paid-in-full. The holds associated with the non-payment of the loan are then released (if applicable). The student's Promissory Note is marked/stamped "Paid" and the payment date indicated. The stamped "paid" Paper Promissory Note is then returned to the student via first-class mail.
Personal checks, certified checks, and/or money orders may also be accepted for loan repayment. Checks for loan repayment must be made payable to The Pennsylvania State University and mailed to the Office of the Bursar (103 Shields Building, University Park, PA 16802) or taken in person to the Bursar's Office (103 Shields Building, University Park, PA 16802). Payments may also be made at the Commonwealth Campuses. All checks must be restrictively endorsed in accordance with Policy FN01 Cash Revenues and deposited in accordance with Procedure FN2005 Processing Cash Revenues.
If the final payment is made with a personal check or money order, the holds associated with the non-payment of loan are released (if applicable). The student's Promissory Note is marked/stamped "Paid" and the payment date indicated. The stamped "Paid" paper promissory note is then returned to the student via first-class mail following 10 business days to allow the check to clear the bank. If a BRI hold is present (indicating a history of returned payments), a check will not be accepted.
See Procedure FN2002 Processing Returned Checks (formerly CR2002) if a personal check is returned for any reason.
If the payment is made with a certified check, no waiting period is required before marking the Promissory Note "Paid" and returning it to the student via first-class mail.
The student can repay their loan commitment online through the "Student Home Base" in LionPATH. The payment will be deducted from the student's bank account. No prenumbered receipt is issued for this payment. The holds associated with the non-payment of the loan are released (if applicable). The student's Promissory Note is then marked/stamped "Paid" and the payment date indicated. The stamped "paid" Paper Promissory Note is then returned to the student via first-class mail following 10 business days to allow the check to clear the bank. If a BRI hold is present (indicating a history of returned payments), an eCheck/ACH option will not be available.
If a student's short-term loan becomes one (1) day past due, a hold is placed on registrations and diploma in LionPATH by the Office of the Bursar. Future registrations and diploma(s) are "held" until the loan has been repaid.
Monthly statements/notices will be sent by the Office of the Bursar through LionPATH until the short-term loan is paid in full. If the short-term loan remains on the Student Account for at least twelve (12) months, the account will be transferred from LionPATH to a third-party system (Heartland ECSI/SAL). At this time, the Student Account (GL Account 12510100) will be credited for the outstanding short-term loan (PPL) balance and the Consolidated Short-Term Loan fund (GL Account 14001010, Fund 1797000141) will be debited (creating a receivable). The receivable will then be advanced as a "Consolidated Short-Term Loan" for further collection efforts by Student Financial Services (Loan Servicing and Collections).
Once the Consolidated Short-Term Loan is in the ECSI/SAL system, the student is sent monthly billing statements. If the loan remains unpaid and is past due, a one-time mandatory phones call is made by Student Financial Services (Loan Servicing and Collections team). If the loan remains unpaid, a final notice is sent to the student and if no response, the loan is automatically placed with a licensed collection agency at 90 days past due. Credit bureau reporting begins after six (6) months past due in SAL/ECSI. Loans with no activity at a collection agency for one (1) year are placed with second collection agency. If no payments are received for one (1) year at the second collection agency, the loan is placed with a third collection agency.
If these notices are undeliverable to the student for any reason, they are sent to Student Financial Services (Loan Servicing and Collections team). If the loan was to an international student, The Directorate of International Student Advising will assist in locating the student to collect the outstanding loan.
Payments made to the collection agency include the agency's fee . The entire payment, including agency fee, is forwarded to Student Financial Services and are posted to the student's loan account. The agency is then reimbursed for their collection fee. The student's account reflects the collection agency's fee paid by the student in addition to the loan payment. If Directorate of International Student Advising decides not to have the account placed with a collection agency, no further collection activity will occur, and the remaining balance is charged to the awarding department's budget/fund. Since holds will remain on the former student's registration, they may eventually repay the loan if university services are needed.
Only after the third collection agency determines an account to be uncollectible and notifies Student Financial Services (Loan Servicing and Collections) to this effect, may the account be written off against the Student Aid Reserve Account. Delinquent accounts under $25.00 are not turned over to a collection agency and are written off directly to the Student Aid Reserve Account.
All write-offs must be recommended by the Collection Officer and approved by the Director Student Financial Services. The entry for writing off delinquent or uncollectible accounts is:
Registration and Diploma "holds" remain on the student records until the delinquent loan is paid in full . If payments are received at any time after the accounts have been written-off, the entry described above is reversed. If paid-in-full, any existing holds are also released.
The purpose of writing-off uncollectible accounts is to replenish the loan fund (from the Student Aid Reserve Account), thus making the funds available to currently enrolled students.
See Procedure FN2002 Processing Returned Checks (formerly CR2002).
Violations of a financial policy and/or procedure should be reported to your supervisor, unit manager, Human Resources representative, and/or office responsible for the policy and/or procedure. Where those resources are inadequate, you may choose to make an anonymous report through the Penn State University hotline by calling 1-800-560-1637.
The Business Area Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Business Area Financial Officer is responsible for working with Internal Auditing when audits are being performed in the administrative area. Audits pertaining to sponsored activities or other audits performed by external auditors may also be performed. The Business Area Financial Officer is also be responsible for working with the external auditor and/or a central University office related to these procedures.
University Records retention must be managed in accordance with Policy AD35 University Archives and Records Management, and retention schedules approved by the Records Management Advisory Committee, the Office of General Counsel, and Senior Vice President and Chief of Staff. These records retention schedules are derived from - or based upon - federal, state, and local statutes or regulations, University Policy, industry standards, and business needs. All University Records must be maintained in such a manner to provide ease of access, establish a suitable audit trail for all transactions, and to be reviewed prior to disposition.
Upon completion of the retention period, University Records must be disposed of via secure destruction or transfer to University Archives, unless an exception to the disposition process set forth below applies. If the disposition method for University Records states "Review by Archives" on the records retention schedule, the employees responsible for those records should consult the University Archivist for a final determination of disposition. For University Records that must be securely destroyed, units may arrange for shredding services by either contacting the Blue/White Shredding Program or the Inactive Records Center (IRC).
Exceptions to the disposition process are as follows:
To safeguard the privacy of individuals, records that contain Personally Identifiable Information (PII), as defined in University Policy AD53 Privacy Policy, or student records, as defined in University Policy AD11 Confidentiality of Student Records, must be destroyed beyond recovery. For additional information regarding privacy and the protection of an individual's personal information, see Policy AD53 Privacy Policy.
Additional questions may be directed to the Records Management Program.
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For questions, additional detail, or to request changes to this procedure, please contact the Office of Student Financial Services.