Audit 327528

Finding 2024-001 Verification Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition/Context We reviewed the Seminary’s “Processes for Verifying Student’s Title IV Eligibility” policy. Our procedures revealed the following: (1) The processes document does not list a time frame. (2) The processes document does not list consequences for applicant's failure to provide requested documentation within a specified time period. (3) The processes document does not list how applicants may be notified regarding results of verification. (4) The processes document does not list how corrections occur should they be found, only that the Financial Aid Manager is responsible for accuracy. (5) The processes document does not address 668.16(g) in regards to fraud or other criminal misconduct. (6) The processes document lists a general ‘but not limited to” but not a full “clear” list. (7) The processes document does not list the timeframe/deadlines and or consequences by CTS only that ED might place a hold. (8) The processes document does not list that CTS can exercise authority under 479(a). Criteria Per the Title 34, Code of Federal Regulations (CFR), Part 668 Subpart E, when a student’s Free Application for Federal Student Aid (FAFSA) is selected for verification purposes by the Secretary of the U.S. Department of Education, the student’s institution must verify all of the applicable items. This verification process must follow the institution’s published processes for verifying students’ Title IV eligibility that satisfy the provisions of Title 34, CFR, Section 668.51 through 668.61. Cause The Seminary’s Verification policy does not include enough appropriate language to satisfy the requirements of compliance with Title 34, CFR, Section 668.53. Effect The Seminary’s students and staff may not be aware of the necessary steps and time frames to complete Verification requests in accordance with Department of Education requirements. Thus, students may face consequences towards their financial aid that otherwise could have been mitigated. Recommendation The Seminary should update their process document to ensure that it includes clear steps that meet the compliance requirements. Views of Responsible Officials The Seminary will ensure process document is updated to be in compliance with the requirements of with Title 34, CFR, Section 668.53. In addition, the Seminary will consider the implementation of further controls ensure processes are in compliance.

Finding 2024-002 Gramm-Leach-Bliley Act-Student Information Security Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition The Seminary’s information security program did not address the implementation of all minimum safeguards as required by the Gramm-Leach-Bliley Act. While the Seminary had designated a Qualified Individual to coordinate its information security program and had a written information security program in place, that program did not meet all criteria requirements for disposing of customer information securely. Criteria The Gramm-Leach-Bliley Act (GLBA) (Public Law 106-102) requires institutions to protect sensitive data. This includes information obtained through processes administering federal student financial assistance programs. Postsecondary educational institutions must protect student financial aid information, as stated in the institution’s Program Participation Agreement (PPA) and the GLBA. Institutions should take due care to information and data provided by the Department of Education or obtained through the processes of administering Title IV Federal student assistance programs (Dear Colleague Letter, July 1, 2016 (GEN-16-12). Title 16, Code of Federal Regulations (CFR), Section 314.4 requires institutions to develop, implement, and maintain an information security plan that includes the CFR’s stated minimum elements. The minimum requirements include: disposal of customer information securely. Cause The Seminary has been properly disposing of customer information securely and anticipating and evaluating changes to the information system or network but failed to state the timeline in its information security plan. Effect Not implementing all required safeguards in its information security program increases the Seminary’s risk of data breach or loss. Recommendation The Seminary should update and strengthen their Information Security Plan to adequately address the minimum safeguards. Views of Responsible Officials The Seminary will update its information security plan to include the timeline for disposing of customer information securely and anticipating and evaluating changes to the information security or network.

Finding 2024-003 Return of Title IV Funds Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition We tested one (1) of one (1) (100%) student’s Title IV return calculation, our procedures revealed that the Seminary applied the incorrect completion percentage, as such the calculation was not performed accurately. Criteria Per Title 34, CFR, Section 668.22, during an institution’s payment period or period of enrollment where a student, who has begun attendance and has received Title IV funds, withdraws from the institution then the institution must calculate and determine the amount of Title IV funds the student has earned as of the student’s withdrawal date. If the total amount of Title IV grant or loan assistance earned by the student is less than the amount that was disbursed to the student or on the student’s behalf as of the date of the institution’s determination that the student withdrew, the difference must be returned to the Title IV programs, and no additional disbursements may be made to the student for the payment period or period of enrollment. The amount of earned Title IV grant or loan assistance is calculated by (1) determining the percentage of Title IV grant or loan assistance that the student has earned and (2) applying that percentage to the total amount of Title IV grant or loan assistance that was or could have been disbursed to the student or on the student’s behalf for the payment period or period of enrollment as of the student’s withdrawal date. Cause The Seminary utilizes a manual calculation Excel sheet for performing Title IV returns calculations. The incorrect completion rate was entered into the Excel sheet. Effect The Seminary returned a total of $26 associated with ALN 84.268, less Title IV funds than required for the student tested in the sample. Recommendation The Seminary should develop their return of Title IV funds calculator further to include more automated (formulas) to ensure that all students are having their return calculations performed using the same methodology as required. In addition, the Seminary’s Finance department should also review and approve any new implementations to the calculator to verify its effectiveness. Views of Responsible Officials The Seminary will use the Return to Title IV Worksheet found in the Federal Student Aid Handbook to ensure calculations are accurate.

Finding 2024-004 Disbursements To or On Behalf of Students Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition For thirteen (13) of thirteen (13) (100%) disbursements tested, the Seminary did not send an award or disbursement notification as required. Criteria Per Title 34, CFR, Section 668.165, before an institution disburses Title IV, Higher Education Act of 1965 (HEA) program funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each Title IV, HEA program, and how and when those funds will be disbursed. If those funds include Direct Loan program funds, the notice must indicate which funds are from subsidized loans, which are from unsubsidized loans, and which are from PLUS loans. If an institution credits a student’s ledger account with Federal Direct Student Loan (Direct Loan) funds or Teacher Education Assistance for College and Higher Education (TEACH) Grant funds, the institution must notify the student or parent of (1) the anticipated date and amount of the disbursement, (2) the student’s or parent’s right to cancel all or a portion of that loan or grant and have the loan or grant proceeds returned to the U.S. Department of Education, and (3) the procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the loan or grant, or loan or grant disbursement. The institution must provide the notice in writing no earlier than 30 days before, and no later than 30 days after, crediting the student’s ledger account at the institution. Cause The Seminary does not have a formalized process (automated or manual) to appropriately notify their students on their financial aid disbursements. Effect Not providing sufficient award and disbursement notifications impacts the students’ financial planning process by limiting the information available to them and their ability to exercise the option to cancel the loan. Recommendation The Seminary should develop and implement a formalized disbursement notification process that meets the compliance requirements. Views of Responsible Officials The Seminary will formalize the process of notifying students via email regarding their financial aid disbursements.

Finding 2024-005 Enrollment Reporting Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition For four (4) of ten (10) (40%) of students tested, the Chicago Theological Seminary did not accurately report student data to NSLDS. Incorrect data included enrollment effective dates and program enrollment status. Criteria Federal regulations and related guidance governing Title IV student aid programs require schools to report the enrollment of students who receive federal student aid (U.S. Department of Education, National Student Loan Data System (NSLDS) Enrollment Reporting Guide, November 2022, Chapter 2). Cause Updating NSLDS is a manual process for the Seminary that requires the input of the Registrar and Financial Aid Manager to complete. As these are manually processed, the deficiencies found are related to human error. Effect Not reporting student status changes accurately and in a timely manner could affect determinations that guarantors, lenders, and servicers of student loans make related to in-school status, deferments, grace periods, and repayment schedules. Recommendation The Seminary should strengthen review processes of any data in NSLDS. Rather than looking for changes occurring within student data from Campus Café, a review of the data that is already in NSLDS may help with identifying and correcting any human errors made within a timely manner. Views of Responsible Officials The Seminary will strengthen its review process of data in NSLDS to ensure enrollment effective dates and program enrollment information is accurate for each student.

Finding 2024-001 Verification Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition/Context We reviewed the Seminary’s “Processes for Verifying Student’s Title IV Eligibility” policy. Our procedures revealed the following: (1) The processes document does not list a time frame. (2) The processes document does not list consequences for applicant's failure to provide requested documentation within a specified time period. (3) The processes document does not list how applicants may be notified regarding results of verification. (4) The processes document does not list how corrections occur should they be found, only that the Financial Aid Manager is responsible for accuracy. (5) The processes document does not address 668.16(g) in regards to fraud or other criminal misconduct. (6) The processes document lists a general ‘but not limited to” but not a full “clear” list. (7) The processes document does not list the timeframe/deadlines and or consequences by CTS only that ED might place a hold. (8) The processes document does not list that CTS can exercise authority under 479(a). Criteria Per the Title 34, Code of Federal Regulations (CFR), Part 668 Subpart E, when a student’s Free Application for Federal Student Aid (FAFSA) is selected for verification purposes by the Secretary of the U.S. Department of Education, the student’s institution must verify all of the applicable items. This verification process must follow the institution’s published processes for verifying students’ Title IV eligibility that satisfy the provisions of Title 34, CFR, Section 668.51 through 668.61. Cause The Seminary’s Verification policy does not include enough appropriate language to satisfy the requirements of compliance with Title 34, CFR, Section 668.53. Effect The Seminary’s students and staff may not be aware of the necessary steps and time frames to complete Verification requests in accordance with Department of Education requirements. Thus, students may face consequences towards their financial aid that otherwise could have been mitigated. Recommendation The Seminary should update their process document to ensure that it includes clear steps that meet the compliance requirements. Views of Responsible Officials The Seminary will ensure process document is updated to be in compliance with the requirements of with Title 34, CFR, Section 668.53. In addition, the Seminary will consider the implementation of further controls ensure processes are in compliance.

Finding 2024-002 Gramm-Leach-Bliley Act-Student Information Security Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition The Seminary’s information security program did not address the implementation of all minimum safeguards as required by the Gramm-Leach-Bliley Act. While the Seminary had designated a Qualified Individual to coordinate its information security program and had a written information security program in place, that program did not meet all criteria requirements for disposing of customer information securely. Criteria The Gramm-Leach-Bliley Act (GLBA) (Public Law 106-102) requires institutions to protect sensitive data. This includes information obtained through processes administering federal student financial assistance programs. Postsecondary educational institutions must protect student financial aid information, as stated in the institution’s Program Participation Agreement (PPA) and the GLBA. Institutions should take due care to information and data provided by the Department of Education or obtained through the processes of administering Title IV Federal student assistance programs (Dear Colleague Letter, July 1, 2016 (GEN-16-12). Title 16, Code of Federal Regulations (CFR), Section 314.4 requires institutions to develop, implement, and maintain an information security plan that includes the CFR’s stated minimum elements. The minimum requirements include: disposal of customer information securely. Cause The Seminary has been properly disposing of customer information securely and anticipating and evaluating changes to the information system or network but failed to state the timeline in its information security plan. Effect Not implementing all required safeguards in its information security program increases the Seminary’s risk of data breach or loss. Recommendation The Seminary should update and strengthen their Information Security Plan to adequately address the minimum safeguards. Views of Responsible Officials The Seminary will update its information security plan to include the timeline for disposing of customer information securely and anticipating and evaluating changes to the information security or network.

Finding 2024-003 Return of Title IV Funds Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition We tested one (1) of one (1) (100%) student’s Title IV return calculation, our procedures revealed that the Seminary applied the incorrect completion percentage, as such the calculation was not performed accurately. Criteria Per Title 34, CFR, Section 668.22, during an institution’s payment period or period of enrollment where a student, who has begun attendance and has received Title IV funds, withdraws from the institution then the institution must calculate and determine the amount of Title IV funds the student has earned as of the student’s withdrawal date. If the total amount of Title IV grant or loan assistance earned by the student is less than the amount that was disbursed to the student or on the student’s behalf as of the date of the institution’s determination that the student withdrew, the difference must be returned to the Title IV programs, and no additional disbursements may be made to the student for the payment period or period of enrollment. The amount of earned Title IV grant or loan assistance is calculated by (1) determining the percentage of Title IV grant or loan assistance that the student has earned and (2) applying that percentage to the total amount of Title IV grant or loan assistance that was or could have been disbursed to the student or on the student’s behalf for the payment period or period of enrollment as of the student’s withdrawal date. Cause The Seminary utilizes a manual calculation Excel sheet for performing Title IV returns calculations. The incorrect completion rate was entered into the Excel sheet. Effect The Seminary returned a total of $26 associated with ALN 84.268, less Title IV funds than required for the student tested in the sample. Recommendation The Seminary should develop their return of Title IV funds calculator further to include more automated (formulas) to ensure that all students are having their return calculations performed using the same methodology as required. In addition, the Seminary’s Finance department should also review and approve any new implementations to the calculator to verify its effectiveness. Views of Responsible Officials The Seminary will use the Return to Title IV Worksheet found in the Federal Student Aid Handbook to ensure calculations are accurate.

Finding 2024-004 Disbursements To or On Behalf of Students Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition For thirteen (13) of thirteen (13) (100%) disbursements tested, the Seminary did not send an award or disbursement notification as required. Criteria Per Title 34, CFR, Section 668.165, before an institution disburses Title IV, Higher Education Act of 1965 (HEA) program funds for any award year, the institution must notify a student of the amount of funds that the student or his or her parent can expect to receive under each Title IV, HEA program, and how and when those funds will be disbursed. If those funds include Direct Loan program funds, the notice must indicate which funds are from subsidized loans, which are from unsubsidized loans, and which are from PLUS loans. If an institution credits a student’s ledger account with Federal Direct Student Loan (Direct Loan) funds or Teacher Education Assistance for College and Higher Education (TEACH) Grant funds, the institution must notify the student or parent of (1) the anticipated date and amount of the disbursement, (2) the student’s or parent’s right to cancel all or a portion of that loan or grant and have the loan or grant proceeds returned to the U.S. Department of Education, and (3) the procedures and time by which the student or parent must notify the institution that he or she wishes to cancel the loan or grant, or loan or grant disbursement. The institution must provide the notice in writing no earlier than 30 days before, and no later than 30 days after, crediting the student’s ledger account at the institution. Cause The Seminary does not have a formalized process (automated or manual) to appropriately notify their students on their financial aid disbursements. Effect Not providing sufficient award and disbursement notifications impacts the students’ financial planning process by limiting the information available to them and their ability to exercise the option to cancel the loan. Recommendation The Seminary should develop and implement a formalized disbursement notification process that meets the compliance requirements. Views of Responsible Officials The Seminary will formalize the process of notifying students via email regarding their financial aid disbursements.

Finding 2024-005 Enrollment Reporting Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster Federal Direct Student Loans Assistance Listing #: 84.268 Questioned Costs: None Condition For four (4) of ten (10) (40%) of students tested, the Chicago Theological Seminary did not accurately report student data to NSLDS. Incorrect data included enrollment effective dates and program enrollment status. Criteria Federal regulations and related guidance governing Title IV student aid programs require schools to report the enrollment of students who receive federal student aid (U.S. Department of Education, National Student Loan Data System (NSLDS) Enrollment Reporting Guide, November 2022, Chapter 2). Cause Updating NSLDS is a manual process for the Seminary that requires the input of the Registrar and Financial Aid Manager to complete. As these are manually processed, the deficiencies found are related to human error. Effect Not reporting student status changes accurately and in a timely manner could affect determinations that guarantors, lenders, and servicers of student loans make related to in-school status, deferments, grace periods, and repayment schedules. Recommendation The Seminary should strengthen review processes of any data in NSLDS. Rather than looking for changes occurring within student data from Campus Café, a review of the data that is already in NSLDS may help with identifying and correcting any human errors made within a timely manner. Views of Responsible Officials The Seminary will strengthen its review process of data in NSLDS to ensure enrollment effective dates and program enrollment information is accurate for each student.