Audit 346439

Assistance Listing Number, Federal Agency, and Program Name 84.268 U.S. Department of Education, Student Financial Assistance Program Federal Direct Student Loan Program Federal Award Identification Number and Year P268K241654, 2023 2024 Pass through Entity N/A Finding Type Significant deficiency Repeat Finding No Criteria For direct loan disbursement, the institution must provide timely notification to the student of (1) the date and amount of the disbursement; (2) the student/parent’s right to cancel; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel (34 CFR 668.165). Condition The College did not provide notifications to certain students related to Direct Loan disbursements. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Context 1 student receiving direct loans in a sample of 25 students for disbursements did not receive the notification. Cause and Effect A control was lacking to ensure the notifications were sent to all students receiving direct loans. Recommendation We recommend a control be implemented to ensure notifications are sent to all students receiving direct loans. Views of Responsible Officials and Corrective Action Plan The financial aid office has taken immediate action to ensure that students are sent the appropriate loan disbursement notifications and is planning a long­term automated solution. Southwestern Michigan College does not automatically package loans in a student's initial financial aid offer. This strategy was part of a default management plan developed in 2014. As a result, we manually process loan requests throughout the semester as students notify us that they wish to borrow and complete the entrance counseling and master promissory note requirements on studentaid.gov. We will now run the disbursement notification process each week throughout the entire semester to ensure timely notifications. We are also planning to implement a long term automated solution. This would be a process in our ERP system and will run automatically using our scheduler software. The process will send an email notification to students as new loans are processed. A record of this notification will be retained in our ERP system.

Assistance Listing Number, Federal Agency, and Program Name 84.268 U.S. Department of Education, Student Financial Assistance Program Federal Direct Student Loan Program Federal Award Identification Number and Year P268K241654, 2023 2024 Pass through Entity N/A Finding Type Significant deficiency Repeat Finding No Criteria For direct loan disbursement, the institution must provide timely notification to the student of (1) the date and amount of the disbursement; (2) the student/parent’s right to cancel; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel (34 CFR 668.165). Condition The College did not provide notifications to certain students related to Direct Loan disbursements. Questioned Costs None Identification of How Questioned Costs Were Computed N/A Context 1 student receiving direct loans in a sample of 25 students for disbursements did not receive the notification. Cause and Effect A control was lacking to ensure the notifications were sent to all students receiving direct loans. Recommendation We recommend a control be implemented to ensure notifications are sent to all students receiving direct loans. Views of Responsible Officials and Corrective Action Plan The financial aid office has taken immediate action to ensure that students are sent the appropriate loan disbursement notifications and is planning a long­term automated solution. Southwestern Michigan College does not automatically package loans in a student's initial financial aid offer. This strategy was part of a default management plan developed in 2014. As a result, we manually process loan requests throughout the semester as students notify us that they wish to borrow and complete the entrance counseling and master promissory note requirements on studentaid.gov. We will now run the disbursement notification process each week throughout the entire semester to ensure timely notifications. We are also planning to implement a long term automated solution. This would be a process in our ERP system and will run automatically using our scheduler software. The process will send an email notification to students as new loans are processed. A record of this notification will be retained in our ERP system.