Audit 389412

Finding 2025-001: Significant Deficiency - Title IV Credit Balances Federal Program: Student Financial Assistance Cluster Federal Agency: U.S. Department of Education Pass-Through Entity: Not Applicable Assistance Listing Number (ALN): 84.268 Federal Award Year: May 31, 2025 Criteria: Title IV regulations (34 CFR 668.164(h)(1) require that Title IV credit balances on student accounts be paid directly to the student as soon as possible but no later than 14 days after the credit balance occurred. A student or parent may authorize the Institution to hold the credit balance to be applied to specified other nontuition fees, room and board charges as noted in the regulations at (34 CFR 668.165(b)). Condition/Context: The credit balance generated in the accounts of 2 out of 25 students tested was not timely refunded to them based on the outlined criteria, leading to late refunds to those students (neither of which completed a voluntary hold authorization). The sample was not a statistically valid sample. Cause: The College's payment process cycle is not set up to process refunds as soon as possible, which caused delays in refunds being made to students. Effect: The College delayed issuing refunds to the affected students in a timely manner and could have had other unnecessary delays in paying Title IV funds to other students, resulting in a violation of the 14-day maximum policy Questioned Costs: Total questioned costs were $3,795 of Federal Direct Student Loan funds (ALN 84.268). Recommendation: The College should revise its procedures to ensure Title IV credit balances are paid timely or student/parent authorizations to hold funds are obtained. Management's Response: The College acknowledges the untimely disbursement of Title IV credit balance refunds. We concur that, for 2 of the 25 student accounts reviewed, Title IV credit balances were not refunded within the 14 day period required under 34 CFR 668.164(h)(1). We further acknowledge that no valid student or parent authorization to hold these credit balances was on file, and therefore the refunds should have been issued promptly. The College completed an internal review and determined that the delays resulted from the structure of the existing payment processing cycle. Although the College’s processes emphasize careful reconciliation and verification of student account activity, the timing of our refund cycle was not aligned with the regulatory requirement. To remediate this deficiency and ensure full compliance going forward, the College is revising its policy governing the drawdown and disbursement of federal funds to align the timing of Title IV activity with the academic add/drop period. This change will ensure greater predictability of credit balance creation and enhance monitoring capabilities. The College is committed to strengthening its internal controls to ensure sustained compliance with all Title IV cash management regulations.