Audit 371792

Finding 2025-001 Federal program: Student Financial Assistance Cluster ALN# 84.007 Federal Supplemental Education Opportunity Grant Award Year: 2024/2025; ANL# 84.033 Federal Work-Study Program Award Year: 2024/2025; ALN# 84.038 Federal Perkins Loan Program Federal Capital Contributions; ALN# 84.063 Federal Pell Grant Program Award Year: 2024/2025; ALN# 84.268 Federal Direct Student Loans Award Year: 2024/2025 Type of finding: Significant Deficiency and Noncompliance Compliance requirement: Special Tests - Disbursements to and on Behalf of Students Criteria: Under the Code of Federal Regulations (CFR), specifically 34 CFR 668.164, a school must pay a student a Title IV credit balance no later than 14 days after the balance occurred. A credit balance is the remaining amount of federal financial aid after a student's tuition, fees, and other authorized charges have been paid. Per the 2024 Compliance Supplement, when Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed by the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. An institution is permitted to hold credit balances if it obtains a voluntary authorization from the student. Regardless of any authorization obtained by the institution, the institution must pay any remaining loan balance by the end of the loan period and any other remaining Title IV funds by the end of the last payment period in the award year for which the funds were awarded. Condition: An error was identified for nineteen out of the forty judgmentally selected students for credit balance testing. For these students (per review of the Student’s account summary), we noted the date the student received their financial aid refund was outside of the 14 days after the first day of class/day in which a credit balance was reflected in the student’s accounts. Questioned costs: None Context: The student’s financial aid refund was not received within 14 days of the first day of class or the day in which a credit balance was triggered. Cause: The process begins with the Financial Aid office disbursing funds prior to the start of classes. Once school starts, the University standard operating procedure is to issue refunds after the add/drop period. While this timeline complies with the allowable window, the high volume of refunds combined with the manual review process resulted in several instances of refunds being made after the required 14 days. Effect: For some students, the financial aid refund was not processed timely. Repeat finding: No Recommendations: We recommend that the University revise existing controls, or add new controls, to ensure refunds are made timely. View of responsible officials: Management acknowledges the audit finding related to the timing of the Title IV credit balance refunds during FY25. Beginning in FY26, the University has transitioned to a new student information system, Workday, which significantly enhances our ability to manage financial aid disbursements and credit balance refunds in compliance with federal regulations. In the new system, financial aid disbursements will occur after the add/drop period, which better aligns with federal compliance timelines. Workday also provides automated reporting capabilities that allow the Student Financial Services office to easily identify students who have received Title IV funds, enabling staff to prioritize those accounts and ensure refunds are issued within the required timeframe. The system automates many manual processes, which increases efficiency and reduces the likelihood of delays. In addition, staff have received training on the new system and procedures, and an internal monitoring process is now in place to ensure continued compliance with refund requirements.