FAC Explorer

Audit 410031

FY End
2025-06-30
Total Expended
$82.83M
Findings
2
Programs
1
Organization: Oklahoma Student Loan Authority (OK)
Year: 2025 Accepted: 2026-08-28
Auditor: ARLEDGE & ASSOCIATES PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
1228334 2025-001 Material Weakness Yes N
1228335 2025-001 Material Weakness Yes N

Programs

ALN Program Spent Major Findings
84.032 FEDERAL FAMILY EDUCATION LOANS $143,699 Yes 1

Contacts

Name Title Type
H2PFCLEZS8E7 Debbie Robinson Auditee
4055569236 Kency Duarte Auditor
No contacts on file

Notes to SEFA

The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the Oklahoma Student Loan Authority (the Authority) under programs of the federal government for the year ended June 30, 2025. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Authority, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Authority.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
The purpose of the Authority is to provide loan funds to qualified persons at participating postsecondary educational institutions. The student loans held by the Authority under the Federal Higher Education Act of 1965, as amended, include Federal Stafford (Stafford) Loans, Unsubsidized Stafford Loans for Middle Income Borrowers (Unsubsidized Stafford), Federal Supplemental Loans for Students (SLS), Federal PLUS Loans for Parents (PLUS), Federal PLUS Loans for Graduate or Professional Students (GRAD), and Federal Consolidation Loans (Consolidation). The FFEL Program loans are guaranteed at 98% for loans first disbursed prior to July 1, 2006 and 97% for loans first disbursed on or after July 1, 2006 by the Oklahoma State Regents for Higher Education Guaranteed Student Loan Program (State Guarantee Agency), which is reinsured by the United States Department of Education (the USDE), or guaranteed by other guarantors approved by the USDE (Guarantee Agencies). As of June 30, 2025, approximately $82,622,000 of the Authority’s outstanding loans were guaranteed at 98% or 97% of the outstanding balance, as described above.
In accordance with Uniform Guidance Subpart E Section 200.414, recipients of federal awards are allowed a 10% de minimis administrative cost rate. For the year ended June 30, 2025, the FFEL Program did not provide for additional administrative costs. Therefore, the Authority did not elect to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
Amounts reported in the accompanying schedule may differ from amounts requested by the Authority for the FFEL Program due to the U.S. government agency’s discretionary authority to reduce interest subsidies, special allowance payments, or a combination of both by an amount equal to loan origination fees or lender’s fees. Additionally, the amount of special allowance payments is determined by a U.S. government agency using the information provided by the Authority; consequently, the amounts are not calculated by the Authority.
Due to the nature of the federal awards for the fiscal year ended June 30, 2025, no specific expenditures were made by the FFEL Program; receipts represent subsidies from a U.S. government agency. Such programs are described in the notes to the basic financial statements. The accompanying schedule of expenditures of federal awards includes the beginning balance of loans outstanding under the FFEL Program since the Authority has continuing compliance requirements with respect to those loans, and also presents the total interest subsidies received from the USDE during the year related to the FFEL Program and spent for debt service. All federal awards received directly from federal agencies are included on the schedule.
The Authority evaluated subsequent events through July 24, 2026, the date the Schedule of Expenditures of Federal Awards was available to be issued. On October 28, 2025, the Authority’s Board of Trustees approved the sale of the Authority’s Federal Family Education Loan Program portfolio to Kentucky Higher Education Student Loan Corporation. The sale closed on November 6, 2025. Following the sale, the Authority no longer serviced loans under the Federal Family Education Loan Program and its related federal compliance reporting obligations ended. This subsequent event did not affect the federal awards expended reported on the Schedule for the year ended June 30, 2025.

Finding Details

Finding 2025-001
A. Internal Control Findings Finding 2025-001: Material Weakness in Internal Control Over Compliance and Scope Limitation Over Special Tests and Provisions (Special Tests and Provisions) Criteria The Uniform Guidance requires the auditor to obtain sufficient appropriate audit evidence to support an opinion on whether the auditee complied with the types of compliance requirements that could have a direct and material effect on each major federal program. For the Federal Family Education Loans (Lenders) Program, ALN 84.032L, the direct and material compliance requirements identified for audit were Reporting and Special Tests and Provisions. The Special Tests and Provisions requirements applicable to the FFEL Program require the auditee to maintain sufficient borrower-level, loan-level, and system-generated documentation to demonstrate compliance with applicable program requirements and to support audit procedures. Condition The Authority was unable to provide sufficient documentation and system data necessary for us to perform required audit procedures over certain Special Tests and Provisions applicable to the Federal Family Education Loans (Lenders) Program, ALN 84.032L. Specifically, support was not available for seven of the ten Special Tests and Provisions selected or required for testing. Because the required documentation and system data were not available, we were unable to obtain sufficient appropriate audit evidence to determine whether the Authority complied with the Special Tests and Provisions compliance requirement for the FFEL Program for the year ended June 30, 2025. The Reporting compliance requirement was tested without exception. A. Internal Control Findings (Cont’d) Cause During the year, the Authority transitioned loan servicing to a third-party servicer, Higher Education Servicing Corporation (HESC). For loans issued and processed prior to the transition, servicing activity was processed under the legacy servicing system. Following the transition, the Authority no longer had access to the legacy system that maintained the portfolio documentation and related loan/system data needed to support audit procedures. Subsequently, the Authority sold or transferred its related loan portfolio. As a result of the servicing transition, loss of access to the legacy system, and sale or transfer of the related loan portfolio, certain supporting documentation and system data previously maintained for the FFEL Program were no longer available. Effect or Potential Effect Because the required servicing system data and borrower-level records were unavailable, we were unable to obtain sufficient appropriate audit evidence over Special Tests and Provisions. Accordingly, our report on compliance includes a disclaimer of opinion on the Authority’s compliance with the Special Tests and Provisions compliance requirement for the Federal Family Education Loans (Lenders) Program, ALN 84.032L. The inability to test Special Tests and Provisions also creates the potential that noncompliance with federal statutes, regulations, and the terms and conditions of the federal award could have occurred and not been detected. The Authority’s failure to retain, or otherwise maintain access to, the borrower-level and systemgenerated records necessary to support compliance with Special Tests and Provisions after the servicing transition, system decommissioning, and portfolio transfer represents a material weakness in internal control over compliance for the FFEL Program. Questioned Costs $0 identified. No questioned costs were identified from the procedures performed. However, because sufficient supporting documentation and system data were unavailable, additional questioned costs, if any, could not be determined. A. Internal Control Findings (Cont’d) Context The Federal Family Education Loans (Lenders) Program, ALN 84.032L, was identified as a major program for the year ended June 30, 2025. The direct and material compliance requirements subject to audit were Reporting and Special Tests and Provisions. Reporting was tested without exception. For Special Tests and Provisions, support was unavailable for seven of the ten requirements, resulting in a scope limitation over that compliance requirement. Recommendation We recommend that the Authority establish and maintain procedures to ensure that records supporting compliance with federal program requirements are retained and accessible for the period required by applicable federal statutes, regulations, award terms, and audit requirements. Such procedures should address system decommissioning, portfolio transfers, vendor transitions, and data retention requirements before access to legacy systems is terminated. Views of Responsible Officials Management acknowledges that sufficient documentation was not available to support all audit requirements and agrees with the recommendation. The circumstances described in this finding resulted from the transition of FFEL Program loan servicing to Higher Education Servicing Corporation (HESC) and the subsequent sale of the FFEL loan portfolio to Kentucky Higher Education Student Loan Corporation (KHESLC). Although OSLA transferred borrower-level history and transaction data to the new servicing system, access to the legacy system was discontinued, eliminating access to certain detailed records needed to support portions of the compliance testing. Because the Authority no longer owns or services the FFEL portfolio, the specific circumstances that led to this finding are not expected to recur. Nonetheless, management has implemented enhanced records management controls to help ensure the retention and accessibility of supporting documentation and to mitigate similar risks in the future.