Audit 394478

Compliance Area Special Tests and Provisions – Direct Loan Requirements Criteria or Requirement Pursuant to 34 CFR § 685.304(a) and the Federal Student Aid Handbook, Volume 8 (Direct Loans), Chapter 2, a borrower receiving a Direct Subsidized or Direct Unsubsidized Loan must complete entrance counseling prior to the first disbursement of the loan unless the borrower has previously completed entrance counseling for a prior loan period at the University. Condition Found, Including Perspective During our testing of 40 Direct Loan recipients, we noted that for one student selected for testing, the University did not maintain documentation evidencing that entrance counseling was completed prior to the first Direct Loan disbursement. No evidence of completion was observed within the student information system or the student's electronic file prior to the disbursement date. Possible Asserted Cause and Effect Based on discussions with management, the University makes entrance counseling available to students through the U.S. Department of Education's online platform; however, procedures were not in place to verify and document completion prior to the first disbursement of Direct Loan funds. As a result, Direct Loan funds were disbursed without documented evidence that the borrower satisfied entrance counseling requirements as required by federal regulations. Questioned Costs None. Statistical Validity Our sample of 40 students was selected using a nonstatistical sampling method. Therefore, results of our testing cannot be projected to the entire population. Identification of Whether the Audit Finding is a Repeat of a Finding in the Immediate Prior Audit Finding 2025-001 is not a repeat of a finding from the immediate prior audit. Recommendation We recommend the University implement procedures to verify and document completion of entrance counseling prior to the first Direct Loan disbursement. Controls should ensure that documentation of completion is retained in the student file or that system controls prevent disbursement until entrance counseling requirements are satisfied.

Compliance Area Special Tests and Provisions – Title IV Credit Balance Refunds Criteria or Requirement Pursuant to 34 CFR § 668.164(h), a school must pay a Title IV credit balance directly to the student (or parent borrower, as applicable) as soon as possible, but no later than 14 calendar days after the credit balance occurs. A Title IV credit balance occurs when Title IV funds are credited to a student's account and exceed allowable institutional charges. Condition Found, Including Perspective During testing of 40 students receiving Title IV funds, we noted that for three students, Title IV funds were credited to the student accounts in the University's student billing system, resulting in a Title IV credit balance. Refunds were issued more than 14 calendar days after the credit balance was created. One of the three refunds tested was issued 54 days after the credit balance occurred. The remaining two refunds were also issued beyond the required 14-day timeframe. Possible Asserted Cause and Effect Based on discussions with management, the University calculated the 14-day period based on subsequent changes to loan amounts in COD and/or drawdown timing rather than from the date the Title IV credit balance was created on the student account ledger. As a result, refunds were not issued within the timeframe required by federal regulations. Failure to timely disburse Title IV credit balances may result in noncompliance with federal student financial assistance regulations and may impact students' timely access to funds. Questioned Costs None. Refunds were ultimately issued to students; however, they were not issued within the required 14- day timeframe. Statistical Validity Our sample of 40 students was selected using a nonstatistical sampling method. Therefore, results of our testing cannot be projected to the entire population. Identification of Whether the Audit Finding is a Repeat of a Finding in the Immediate Prior Audit Finding 2025-002 is not a repeat of a finding from the immediate prior audit. Recommendation We recommend that the University revise its procedures to ensure that the 14-day requirement for Title IV credit balance refunds is calculated from the date the credit balance is created on the student account ledger. Management should implement monitoring controls to track credit balances and ensure timely refunds in accordance with federal regulations.

Compliance Area Student Financial Assistance Cluster – Special Tests and Provisions – Return of Title IV Funds (R2T4) Criteria or Requirement In accordance with 34 CFR 668.22, institutions must accurately determine the percentage of the payment period completed using the correct payment period start and end dates to calculate earned and unearned Title IV assistance. If a student withdraws before completing 60% of the payment period, the institution must determine the amount of unearned Title IV funds and return those funds within 45 days of the date of determination. Condition Found, Including Perspective During testing of 10 students who withdrew during the year ended June 30, 2025, we recalculated the Return of Title IV Funds (R2T4) determinations. Differences were identified in three of the 10 selections tested. In two of the three instances, the institution used an incorrect Spring 2025 term end date in the Colleague system when calculating the percentage of the payment period completed. As a result, the students were calculated at or above the 60% completion threshold and determined to have earned 100% of their Title IV assistance, when recalculation using the official academic calendar dates indicated that a return of funds was required. One additional instance resulted in a de minimis difference. Possible Asserted Cause and Effect The term end date configured in the Colleague system did not align with the institution's official academic calendar, and procedures were not in place to verify that system-configured term dates agreed to the approved academic calendar prior to performing R2T4 calculations. As a result, R2T4 determinations were not calculated using the correct payment period dates, which resulted in failure to identify and return unearned Title IV funds in certain instances. If the issue is systemic, additional students who withdrew during the Spring 2025 term may have been similarly affected. Questioned Costs Questioned costs related to the two affected students totaled approximately $5,800, representing Title IV funds that should have been returned based on recalculation using the official term dates. Final questioned costs may change pending management's review of the full withdrawal population for the Spring 2025 term. Statistical Validity A nonstatistical sampling approach was used. Therefore, results cannot be projected to the population; however, the error rate identified indicates the potential for similar noncompliance within the population of students who withdrew during the Spring 2025 term. Identification of Whether the Audit Finding is a Repeat of a Finding in the Immediate Prior Audit Finding 2025-003 is not a repeat of a finding from the immediate prior audit. Recommendation We recommend the University reconcile system-configured term dates within Colleague to the officially approved academic calendar for all academic periods used for Title IV calculations. In addition, the University should perform a comprehensive review of students who withdrew during the Spring 2025 term to determine whether additional R2T4 recalculations and returns are required. Procedures should be implemented to periodically verify that system term dates align with official academic records prior to performing R2T4 calculations.