Handbook of Business Procedures
2.2.7. LOAN FUNDS —32-ACCOUNTS
A loan fund is an account where the balance is used to make loans to students. Loan fund balances are reported in the University of Texas at Austin’s annual financial report. Some funds are restricted in the sense that only the income generated from the fund may be used for making loans; in this case, the principal is placed in an endowment fund. In cases where both principal and income are available, all funds are placed in the loan fund group.
Loan funds are used to account for resources that may be loaned to students. Some of the loans are short-term emergency loans of a limited amount with a short repayment time of one to three months. Other loans are long-term loans which may have repayment periods of up to 10 years (plus possible deferments). Most loan fund accounts are revolving loan funds. The principal will be returned to the individual loan fund account as it is repaid, along with interest on the loan and any other charges, such as late fees, to make the funds available for more loans.
Deductions from the loan funds are primarily in the form of loans to student borrowers, resulting in notes receivable for the amount of outstanding principal. Certain expenses related to the collection of the loans may be chargeable to the loan fund accounts. Uncollectible loans are charged back to the fund from which the loans were originally made and reduce the balance of that fund.
Funding for projects comes from various sources:
- Permanent University Fund (PUF) bond proceeds
- Available University Fund (AUF)
- Investment income
- Revenue Financing System (RFS) and Tuition Revenue Bond (TRB) proceeds
- Federal, state, and local grants
- Auxiliary balances
- Other (includes designated tuition, facilities and administrative recovery, other self-supporting designated balances, insurance claims, and land proceeds)
The major transfers in the loan funds are related to the funds from the Department of Education or Health and Human Services and the corresponding institutional matching fund transfers, which are mandatory. Occasionally transfers to and from other fund groups are allowed, based on the various fund restrictions.
- University purchasing procedures must be followed.
- Only collection costs, including litigation expenses, write-offs, and certain other expenditures are allowed.
- Perkins Federal Student Loan funds (formerly National Direct Student Loan) are governed by specific Department of Education guidelines and Federal Regulations.
- Nursing Faculty Loan Program loan funds are governed by specific Health and Human Services guidelines and Federal Regulations.
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