THE CALIFORNIA STATE UNIVERSITY
OFFICE OF THE CHANCELLOR
400 Golden Shore Drive
Long Beach, California 90802-4275
(310) 951-4610

Code:  AD NOAT 95-03

Date: January 25, 1995

To:  Financial Managers
      Accounting Officers
      Budget Officers


From: George A. Pardon
       Accounting Director
       Business and Finance

Subject:  Installment Payment Plan Program
The Installment Payment Plan Program must reimburse the State of California
for the interest income lost to the State as a result of participants 
deferring payment for part of their registration fees.  This lost interest
is paid out of the Installment Payment Plan revenues generated by the
processing fees.  Section 89700.1(c) states that "the portion of the administrative
fee attributable to the reimbursement for loss of interest earnings shall be 
deposited in the General Fund."  The State Controller's Office has requested 
the interest be remitted to the State by remittance advice to account 161400, 
Miscellaneous Revenue.  Interest due the State must be remitted 45 days after 
the end of each semester or quarter.

At the end of the payment period for each semester or quarter, each campus 
must calculate the amount of lost interest for that semester.  The lost interest 
must be calculated by multiplying the total amount of the payment due (for 
only State University Fees or Non-resident Tuition) times the number of days 
for which that payment was deferred; i.e., from the first day of classes to the 
payment date.  The same is done for any payments thereafter.  The number of 
days deferred always includes the first day of classes but does not include the 
day of the payment.  The totals are then multiplied by the current Pooled 
Money Investment rate divided by 100, multiplied by the number of days 
deferred for each payment, and then divided by 360 (the standard year for the 
calculation of interest).

Interest will continue to be due until the deferment has been settled.  
Deferments can only be settled by payment of the deferment in full, 
disenrollment of the student before the end of semester, or payment of the 
deferment by the campus.  BA 93-13 states "interest will accumulate on the 
unpaid balance and is owed to the State.  There was a commitment by the 
CSU not to penalize the State by collecting fees in installments.  Therefore, 
the campus must reimburse the State at some point for the fees not collected."

If you have any questions, please contact Ron Ashcroft at (310) 951-4610.

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