Finding 2025-003: Inaccurate Cost of Attendance, Need Analysis, Pell Awarding, and Overall Award Determination – Significant Deficiency Federal Program: Federal Direct Student Loans [84.268], Federal Pell Grant Program [84.063], and Federal Work-Study Program [84.033] Criteria: Under 34 CFR §668.16 and program-specific regulations within the Student Financial Assistance Cluster, institutions must: Accurately determine each student’s COA in accordance with federal definitions. Calculate each student’s financial need using correct COA, EFC, and other aid. Ensure that Title IV aid does not exceed COA or financial need, as applicable. Award Pell Grants based on the student’s actual enrollment status for each payment period, in accordance with 34 CFR §690.63. Maintain documentation supporting all adjustments to COA, need, or awards. Condition: During testing of Student Financial Assistance (SFA) eligibility and awarding, the Institution did not consistently apply federal requirements related to Cost of Attendance (COA), financial need determination, and award packaging. Specifically: One student was awarded aid in excess of the federally allowable COA. One student’s COA was overstated, which resulted in the student being potentially overawarded. Six student’s were awarded the incorrect COA based on the grade level reported on the Institutional Student Information Record (ISIR). However, there is no code for year 4 on the ISIR, which resulted in the students receiving year 3 COA. Two students received aid in excess of their calculated financial need, and the Institution did not maintain documentation supporting the adjustments or exceptions. One student was enrolled at three-quarter time during the fall semester and full-time during the spring semester; however, the student received three-quarter-time Pell Grant disbursements for both semesters, resulting in an underpayment for the spring term and inaccurate Pell reporting. These errors demonstrate inconsistent application of federal awarding rules and insufficient review of eligibility and enrollment status changes. Cause: Internal controls over COA determination, need analysis, Pell awarding, and award packaging were not operating effectively. Review procedures did not detect errors in COA inputs, enrollment status updates, need calculations, or Pell disbursement amounts. Documentation requirements were not consistently followed. Effect: Students received award amounts that were not compliant with federal requirements. Errors resulted in both overawards and underawards, inaccurate Pell reporting, and increased risk of improper payments. Questioned Costs: $13,205 Context: Errors occurred across multiple students and multiple components of the awarding process, indicating a systemic weakness in the Institution’s controls over eligibility, enrollment status monitoring, and award determination. Repeat Finding: This is not repeat finding. Recommendation: The Institution should strengthen internal controls over COA determination, need analysis, Pell awarding, and award packaging. Improvements should include: Implementing a secondary review of COA inputs, need calculations, and Pell enrollment status determinations. Ensuring timely updates to enrollment status and corresponding Pell recalculations. Maintaining documentation supporting all award adjustments. Providing refresher training to financial aid staff on federal awarding requirements. Management Response: To strengthen internal controls, the Academy will implement enhanced review procedures for financial aid packaging, Cost of Attendance determinations, financial need calculations, enrollment status changes, and Pell Grant disbursements prior to disbursement. In addition, financial aid personnel will receive refresher training on federal awarding requirements, documentation standards, and exception processing. Management believes these corrective actions will improve compliance with federal regulations and reduce the likelihood of similar errors in future award years.
Finding 2025-004: Incorrect Loan Type Awarded Under the Direct Loan Program – Significant Deficiency Federal Program: Federal Direct Student Loans [84.268] Criteria: Per the 2024-2025 Federal Student Aid Handbook, chapter 3 Packaging Aid, an institution must determine an undergraduate student’s maximum Direct Subsidized Loan eligibility before originating a Direct Unsubsidized Loan for the student. Condition: During testing of eligibility, 1 out of 40 students were not awarded their maximum subsidized loan amounts they should have been awarded. Cause: The Institution’s loan packaging controls did not detect that the student had remaining subsidized eligibility. The review process for loan type selection was insufficient. Effect: The student received a less favorable loan type, resulting in noncompliance with Direct Loan Program requirements. Questioned Costs: No questioned costs. Context: This is a systemic problem. Repeat Finding: This is a repeat finding. Recommendation: The Institution should enhance its loan packaging controls to ensure subsidized eligibility is fully evaluated and documented before awarding unsubsidized loans. Staff should receive training on Direct Loan awarding requirements. Management Response: To prevent similar occurrences, the Academy will implement an additional supervisory review of loan awards before disbursement, utilize system-generated eligibility reports to verify that students are awarded the maximum subsidized loan amount for which they qualify, and provide refresher training to financial aid staff on federal Direct Loan awarding requirements. Management believes these enhancements will improve the accuracy of loan packaging and reduce the likelihood of similar errors in future award years.
Finding 2025-005: Missing Documentation of Required Title IV Disbursement Notifications – Significant Deficiency Federal Program: Federal Direct Student Loans [84.268] Criteria: The Federal Student Aid Handbook requires institutions to notify students of the amount and type of Title IV funds they are expected to receive, as well as how and when those funds will be disbursed. Under 34 CFR §668.165(a), institutions must provide this notification before disbursing Title IV funds and must maintain documentation supporting compliance with this requirement. Condition: During testing of Student Financial Assistance (SFA) disbursements, the Institution did not maintain documentation demonstrating that required Title IV disbursement notifications were provided to students. For the students selected for testing, the Institution could not provide evidence that students were notified of the amount and type of Title IV funds they were scheduled to receive, nor the timing and method of the disbursements, as required by federal regulations and the Federal Student Aid (FSA) Handbook. As a result, we were unable to verify that the required notifications were issued. Cause: The Institution’s internal controls over Title IV disbursement notifications were not operating effectively. The Institution did not retain evidence of notifications sent to students, and there is no formal process to ensure that required notifications are consistently documented and archived. Effect: Without documentation of required notifications, the Institution cannot demonstrate compliance with federal disbursement requirements. Students may not have been properly informed of their Title IV awards or disbursement schedules, increasing the risk of misunderstandings, disputes, or improper disbursements. The absence of documentation also limits the Institution’s ability to demonstrate compliance during audits or federal program reviews. Questioned Costs: None. This finding relates to documentation and compliance with notification requirements; no monetary impact was identified. Context: This is a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: The Institution should strengthen its internal controls over Title IV disbursement notifications by: Implementing a standardized process to generate and retain required notifications. Ensuring notifications include all required elements (amount, type, method, and timing of disbursements). Maintaining documentation in a centralized location accessible for audit and program review. Providing training to financial aid staff on federal notification requirements. Management Response: The Academy has reviewed its Title IV disbursement notification process and is implementing procedures to ensure that all required notifications are generated, issued to students prior to disbursement, and retained in accordance with federal regulations and institutional record retention requirements. The Academy will also establish a standardized process for documenting the date, method, and content of each notification. Additionally, financial aid staff will receive refresher training on Title IV disbursement notification requirements, and supervisory reviews will be incorporated into the disbursement process to verify that required notifications have been issued and properly documented before funds are disbursed. Management believes these enhanced controls will strengthen compliance with federal requirements and ensure adequate documentation is maintained for future audits