Audit 296208

Finding 2023-001 Exit Counseling Federal Department: U.S. Department of Education Assistance Listing Numbers: 84.268 Cluster Name: Student Financial Assistance Cluster Programs: Federal Direct Student Loans Award Numbers: P268K221372, P268K231372 Questioned Cost: None Program Expenditures: $18,949,992 Olivet Nazarene University (University) did not timely notify students of the need to complete Direct Loan exit counseling. During our testing of 55 students who received loans during the year, it was noted that 19 students required Direct Loan exit counseling. For four students (21%) who ceased to be enrolled at least half-time at the University, exit counseling notifications were provided to the students at 161 days (131 days late) and at 181 days (151 days late). The sample was not intended to be, and was not, a statistically valid sample. The Code of Federal Regulations (34 CFR 685.304(b)(3)) states if a student borrower withdraws from school without the school's prior knowledge or fails to complete the exit counseling as required, exit counseling must, within 30 days after the University learns that the student borrower has withdrawn from school or failed to complete the exit counseling as required, be provided either through interactive electronic means, by mailing written counseling materials to the student borrower at the student borrower's last known address, or by sending written counseling materials to an email address provided by the student borrower that is not an email address associated with the University sending the counseling materials. The Uniform Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Effective internal controls should include procedures to ensure that exit counseling is performed in a timely manner for all borrowers ceasing half-time attendance at the University. University officials stated that the late exit counseling resulted from a processing error which occurred in January 2023. This error caused several student names to be omitted from the inquiry detailing students not returning for the Spring 2023 term. The missing names were discovered by the University in late June 2023, at which point exit counseling notifications were processed. By failing to ensure exit counseling is timely completed, students are not informed of their rights and responsibilities under the loan agreement. (Finding Code No. 2023-001) Recommendation We recommend the University timely provide exit counseling notifications to all students who cease to be enrolled at least half-time. University Response The University agrees with the finding and has improved the VEERA reporting structure to accurately determine students who register for a term and then cancel their registration after the term has started. These reports should avoid a recurrence of the issue.

Finding 2023-002 Untimely Return of Title IV Funds Federal Department: U.S. Department of Education Assistance Listing Numbers: 84.268 Cluster Name: Student Financial Assistance Cluster Programs: Federal Direct Student Loans Award Numbers: P268K221372, P268K231372 Questioned Cost: None Program Expenditures: $18,949,992 Olivet Nazarene University (University) did not return title IV funds to the Department of Education (Department) within 45 days after the date of the University’s determination that a student withdrew. During our testing of 25 students who withdrew from the University during the year, it was noted that one student’s (4%) Direct Unsubsidized Loan funds were not timely returned to the Department. The University’s date of determination that the student withdrew was December 4, 2022; however, the University did not return the student’s unearned Direct Unsubsidized loan funds to the Department until January 20, 2023 (2 days late). The sample was not intended to be, and was not, a statistically valid sample. The Code of Federal Regulations (34 CFR 668.22(j)(1)) states an institution must return the amount of title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution’s determination that the student withdrew. The Uniform Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Effective internal controls should include procedures to ensure that unearned title IV funds are returned to the Department in a timely manner. University officials stated the timing of the withdrawal occurred as the campus was closing for two weeks for the Christmas and New Year’s holidays. The report for the student who stopped attending without notifying the office was activated upon returning in January, and by the time it was completed, the funds were returned two days late. The University believes this was an isolated incident and the staff have been instructed to complete all withdrawals before the campus closes in December. Failure to timely return unearned title IV funds to the Department may jeopardize future Federal funding. (Finding Code No. 2023-002) Recommendation We recommend the University timely return to the Department the amount of title IV funds for which it is responsible after the University has determined a student has withdrawn. University Response The University agrees with the finding and believes the training of staff should eliminate the chance of it occurring in the future.

Finding 2023-001 Exit Counseling Federal Department: U.S. Department of Education Assistance Listing Numbers: 84.268 Cluster Name: Student Financial Assistance Cluster Programs: Federal Direct Student Loans Award Numbers: P268K221372, P268K231372 Questioned Cost: None Program Expenditures: $18,949,992 Olivet Nazarene University (University) did not timely notify students of the need to complete Direct Loan exit counseling. During our testing of 55 students who received loans during the year, it was noted that 19 students required Direct Loan exit counseling. For four students (21%) who ceased to be enrolled at least half-time at the University, exit counseling notifications were provided to the students at 161 days (131 days late) and at 181 days (151 days late). The sample was not intended to be, and was not, a statistically valid sample. The Code of Federal Regulations (34 CFR 685.304(b)(3)) states if a student borrower withdraws from school without the school's prior knowledge or fails to complete the exit counseling as required, exit counseling must, within 30 days after the University learns that the student borrower has withdrawn from school or failed to complete the exit counseling as required, be provided either through interactive electronic means, by mailing written counseling materials to the student borrower at the student borrower's last known address, or by sending written counseling materials to an email address provided by the student borrower that is not an email address associated with the University sending the counseling materials. The Uniform Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Effective internal controls should include procedures to ensure that exit counseling is performed in a timely manner for all borrowers ceasing half-time attendance at the University. University officials stated that the late exit counseling resulted from a processing error which occurred in January 2023. This error caused several student names to be omitted from the inquiry detailing students not returning for the Spring 2023 term. The missing names were discovered by the University in late June 2023, at which point exit counseling notifications were processed. By failing to ensure exit counseling is timely completed, students are not informed of their rights and responsibilities under the loan agreement. (Finding Code No. 2023-001) Recommendation We recommend the University timely provide exit counseling notifications to all students who cease to be enrolled at least half-time. University Response The University agrees with the finding and has improved the VEERA reporting structure to accurately determine students who register for a term and then cancel their registration after the term has started. These reports should avoid a recurrence of the issue.

Finding 2023-002 Untimely Return of Title IV Funds Federal Department: U.S. Department of Education Assistance Listing Numbers: 84.268 Cluster Name: Student Financial Assistance Cluster Programs: Federal Direct Student Loans Award Numbers: P268K221372, P268K231372 Questioned Cost: None Program Expenditures: $18,949,992 Olivet Nazarene University (University) did not return title IV funds to the Department of Education (Department) within 45 days after the date of the University’s determination that a student withdrew. During our testing of 25 students who withdrew from the University during the year, it was noted that one student’s (4%) Direct Unsubsidized Loan funds were not timely returned to the Department. The University’s date of determination that the student withdrew was December 4, 2022; however, the University did not return the student’s unearned Direct Unsubsidized loan funds to the Department until January 20, 2023 (2 days late). The sample was not intended to be, and was not, a statistically valid sample. The Code of Federal Regulations (34 CFR 668.22(j)(1)) states an institution must return the amount of title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution’s determination that the student withdrew. The Uniform Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Effective internal controls should include procedures to ensure that unearned title IV funds are returned to the Department in a timely manner. University officials stated the timing of the withdrawal occurred as the campus was closing for two weeks for the Christmas and New Year’s holidays. The report for the student who stopped attending without notifying the office was activated upon returning in January, and by the time it was completed, the funds were returned two days late. The University believes this was an isolated incident and the staff have been instructed to complete all withdrawals before the campus closes in December. Failure to timely return unearned title IV funds to the Department may jeopardize future Federal funding. (Finding Code No. 2023-002) Recommendation We recommend the University timely return to the Department the amount of title IV funds for which it is responsible after the University has determined a student has withdrawn. University Response The University agrees with the finding and believes the training of staff should eliminate the chance of it occurring in the future.