Finding 2023-001: Special Tests and Provisions: Disbursements
Federal Agency: U.S.Department of Education
Program: Student Financial Aid
CFDA#: Various
Award Number(s): Various
Award Year(s): July 1, 2022– June 30, 2023
Criteria:
34 CFR Section 668.165(a)(1):
(a) Notices:
2) Except in the case of a post-withdrawal disbursement made in accordance with §
668.22(a)(5), if an institution credits a student ledger account with Direct Loan, Federal
Perkins Loan, or TEACH Grant program funds, the institution must notify the student or
parent of –
i. The anticipated date and amount of the disbursement
ii. The student's or parent's right to cancel all or a portion of that loan, loan
disbursement, TEACH Grant, or TEACH Grant disbursement and have the loan
proceeds or TEACH Grant proceeds returned to the Secretary; and
iii. The procedures and time by which the student or parent must notify the institution
that he or she wishes to cancel the loan, loan disbursement, TEACH Grant, or
TEACH Grant Disbursement.
3) The institution must provide the notice described in paragraph (a)(2) of this section in
writing –
i. No earlier than 30 days before, and no later than 30 days after, crediting the
student’s ledger account at the institution, if the institution obtains affirmative
confirmation from the student under paragraph (a)(6)(i) of this section; or (ii) No
earlier than 30 days before, and no later than 30 days after, crediting the student’s
ledger account at the institution, if the institution does not obtain affirmative
confirmation from the student under paragraph (a)(6) of this section.
Condition
We selected a sample of 25 students who were disbursed student financial assistance to validate that the
College was compliant with the U.S. Department of Education disbursement requirements for the Federal
Direct Loan. As part of our testing, we validated that the student and/or parent received the notification of
the borrower's right to cancel all or a part of the loan disbursement(s) within thirty days of crediting the
student’s ledger account. However, in reviewing the notifications sent, it was identified that for 18 students
the College did not timely communicate the amounts of the loan disbursement(s) or the student’s or parent’s
right to cancel all or a portion of the loan, loan disbursement, disbursement and have the proceeds returned
to the Department of Education.
Cause
For each of the 18 Federal Direct Loan recipients selected, notifications were not timely provided due to a
configuration issue affecting the College’s student information system. This issue was determined to have
impacted 974 students that were Federal Direct Loan recipients for which aid was disbursed between August
30, 2022 and February 16, 2023.
Effect
Accurate and timely communication of loan disbursement information helps students determine whether or
not they want to accept or cancel the loan. Furthermore, this information is reviewed by the student to
understand their responsibility to repay their loan and how much they will owe.
Questioned Costs
None, as loan disbursements were made to eligible students.
Recommendation
We recommend that the College enhance its existing control processes by performing validation checks to
ensure that loan disbursement notifications are complete, accurate and timely communicated to students in a
timely manner. We also recommend that the College enhance its change management protocols executed to
make upgrades to the student information system.
Management’s Views and Corrective Action Plan
Management’s response is reported in management’s views and corrective action plan included at the end
of this report.
Finding 2023-001: Special Tests and Provisions: Disbursements
Federal Agency: U.S.Department of Education
Program: Student Financial Aid
CFDA#: Various
Award Number(s): Various
Award Year(s): July 1, 2022– June 30, 2023
Criteria:
34 CFR Section 668.165(a)(1):
(a) Notices:
2) Except in the case of a post-withdrawal disbursement made in accordance with §
668.22(a)(5), if an institution credits a student ledger account with Direct Loan, Federal
Perkins Loan, or TEACH Grant program funds, the institution must notify the student or
parent of –
i. The anticipated date and amount of the disbursement
ii. The student's or parent's right to cancel all or a portion of that loan, loan
disbursement, TEACH Grant, or TEACH Grant disbursement and have the loan
proceeds or TEACH Grant proceeds returned to the Secretary; and
iii. The procedures and time by which the student or parent must notify the institution
that he or she wishes to cancel the loan, loan disbursement, TEACH Grant, or
TEACH Grant Disbursement.
3) The institution must provide the notice described in paragraph (a)(2) of this section in
writing –
i. No earlier than 30 days before, and no later than 30 days after, crediting the
student’s ledger account at the institution, if the institution obtains affirmative
confirmation from the student under paragraph (a)(6)(i) of this section; or (ii) No
earlier than 30 days before, and no later than 30 days after, crediting the student’s
ledger account at the institution, if the institution does not obtain affirmative
confirmation from the student under paragraph (a)(6) of this section.
Condition
We selected a sample of 25 students who were disbursed student financial assistance to validate that the
College was compliant with the U.S. Department of Education disbursement requirements for the Federal
Direct Loan. As part of our testing, we validated that the student and/or parent received the notification of
the borrower's right to cancel all or a part of the loan disbursement(s) within thirty days of crediting the
student’s ledger account. However, in reviewing the notifications sent, it was identified that for 18 students
the College did not timely communicate the amounts of the loan disbursement(s) or the student’s or parent’s
right to cancel all or a portion of the loan, loan disbursement, disbursement and have the proceeds returned
to the Department of Education.
Cause
For each of the 18 Federal Direct Loan recipients selected, notifications were not timely provided due to a
configuration issue affecting the College’s student information system. This issue was determined to have
impacted 974 students that were Federal Direct Loan recipients for which aid was disbursed between August
30, 2022 and February 16, 2023.
Effect
Accurate and timely communication of loan disbursement information helps students determine whether or
not they want to accept or cancel the loan. Furthermore, this information is reviewed by the student to
understand their responsibility to repay their loan and how much they will owe.
Questioned Costs
None, as loan disbursements were made to eligible students.
Recommendation
We recommend that the College enhance its existing control processes by performing validation checks to
ensure that loan disbursement notifications are complete, accurate and timely communicated to students in a
timely manner. We also recommend that the College enhance its change management protocols executed to
make upgrades to the student information system.
Management’s Views and Corrective Action Plan
Management’s response is reported in management’s views and corrective action plan included at the end
of this report.