This month’s winning question is from Ms. Sherry Tesler, Assistant Director of Financial Aid at SUNY Ulster:

What is the time frame to disburse student loan funds to a student after a school has received an individual loan check from the lender?

A school is required to deliver or return loan proceeds within specific time frames. These include the Initial Period, Conditional Period and Return Period.

In the case where proceeds are disbursed by individual check, the school must secure the necessary endorsements and deliver the funds within an initial thirty days after the school’s receipt of the check. Undelivered proceeds must be returned to the lender no later than ten business days from the end of the initial period.

If, however, the school is unable to deliver loan funds during the initial period due to the student’s failure to meet certain loan eligibility requirements, the school may delay delivery for a conditional period of ten business days from the end of the initial period if the school anticipates the student will meet all eligibility requirements within the conditional period. It is recommended that the school document the reason for holding loan proceeds during this conditional period.

If the school is unable to deliver loan funds within the initial or conditional period, it must return the loan proceeds to the lender no later than ten business days from the end of the conditional period. However, should the student become eligible during the return period, the school may deliver the proceeds rather than return them provided delivery is made before the last day of the return period.

The reference to "no later than ten business days" means the mailing of a check or the initiation of an electronic funds transfer by the school by the close of business day of the last day of the return period.


Questions regarding this guidance should be directed to the Office of Counsel and Regulatory Compliance at 518- 473-3986, toll-free at 1-866-431-HESC (1-866-431-4372); press 6, or askpolicy@hesc.org.