Audit 5437

2023-002 National Student Loan Data System (NSLDS) Enrollment Reporting Type of Finding – Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Direct Loans – CFDA 84.268 Criteria: 34 CFR 690.83(b)(2) and 34 CFR 685.309 provide regulations to institutions for the accurate and timely reporting of student enrollment information. Institutions must review, update, and verify student enrollment statuses, program information, and effective dates. The institution should have sufficient internal controls over program compliance to report information accurately and timely. Condition: Two students that withdrew from McPherson College were found to have status change effective dates reported to the NSLDS that were not compliant with enrollment reporting guidelines. Questioned Costs: None identified.Context: Out of a sample of 50 students with status changes, two students that withdrew were identified as having incorrect dates reported to the NSLDS. Effect: Dates reported to the Department of Education impact when students enter repayment on outstanding student loans. Incorrect dates reported to the Department of Education could cause a student to enter repayment at a time not in accordance with related regulations. Cause: The dates reported to the NSDLS included either the first or last day of fall or spring classes versus a withdraw date based on an interterm class. The internal controls over review of the effective dates reported to the NSLDS were not effective at preventing or detecting and correcting the reported effective dates. Identification as a Repeat Finding: This is a repeat finding of finding 2022-002 that was reported for the year ending June 30, 2022. Recommendation: We recommend the individual responsible for identifying effective status change dates for withdrawing students receive training on the requirements. We also recommend that the individual reviewing information reported to the NSLDS perform their review at a level of precision necessary to detect and correct dates reported inconsistent with related regulations. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations.

2023-003 Perkin’s Loan Recordkeeping and Record Retention Type of Finding – Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Perkins Loans – CFDA 84.038 Criteria: In accordance with 34 CFR 674.19.(e) - Institutions must retain original or true and exact copies of promissory and master promissory notes, repayment records, and cancellation and deferment requests for each Perkins loan made. Internal controls over compliance with direct and material compliance requirements should be sufficient to prevent or detect and correct noncompliance in a timely manner. Condition: Two students with a Perkin’s loan in repayment did not have the proper documentation retained in the students’ file in accordance with 34 CFR 674.19(e). Questioned Costs: None identified. Context: Out of a sample of 50 students selected for testing, 25 of the students were in repayment and 25 of the students had a loan that was paid, canceled or assigned within the previous three years. Two students of the 25 who had a loan that was paid, canceled or assigned were not compliant with the recordkeeping and record retention requirements. The population for loans in repayment includes 237 students. Effect: The College was not compliant with Federal requirements of the Student Financial Assistance Program. Cause: The loan file for one student could not be located and the promissory note for one student could not be located. While the College believes these files were misfiled, internal controls over filing and usage of loan files should be sufficient to track and ensure timely refiling after use. Identification as a Repeat Finding: This is a repeat finding of finding 2022-003 that was reported for the year ending June 30, 2022. Recommendation: We recommend the College review the filing processes for loan files to refine controls in place on filing and tracking of such files. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations. The College is reviewing the process and will refine the process as necessary.

2023-002 National Student Loan Data System (NSLDS) Enrollment Reporting Type of Finding – Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Direct Loans – CFDA 84.268 Criteria: 34 CFR 690.83(b)(2) and 34 CFR 685.309 provide regulations to institutions for the accurate and timely reporting of student enrollment information. Institutions must review, update, and verify student enrollment statuses, program information, and effective dates. The institution should have sufficient internal controls over program compliance to report information accurately and timely. Condition: Two students that withdrew from McPherson College were found to have status change effective dates reported to the NSLDS that were not compliant with enrollment reporting guidelines. Questioned Costs: None identified.Context: Out of a sample of 50 students with status changes, two students that withdrew were identified as having incorrect dates reported to the NSLDS. Effect: Dates reported to the Department of Education impact when students enter repayment on outstanding student loans. Incorrect dates reported to the Department of Education could cause a student to enter repayment at a time not in accordance with related regulations. Cause: The dates reported to the NSDLS included either the first or last day of fall or spring classes versus a withdraw date based on an interterm class. The internal controls over review of the effective dates reported to the NSLDS were not effective at preventing or detecting and correcting the reported effective dates. Identification as a Repeat Finding: This is a repeat finding of finding 2022-002 that was reported for the year ending June 30, 2022. Recommendation: We recommend the individual responsible for identifying effective status change dates for withdrawing students receive training on the requirements. We also recommend that the individual reviewing information reported to the NSLDS perform their review at a level of precision necessary to detect and correct dates reported inconsistent with related regulations. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations.

2023-003 Perkin’s Loan Recordkeeping and Record Retention Type of Finding – Significant Deficiency and Noncompliance Student Financial Assistance Cluster: Federal Perkins Loans – CFDA 84.038 Criteria: In accordance with 34 CFR 674.19.(e) - Institutions must retain original or true and exact copies of promissory and master promissory notes, repayment records, and cancellation and deferment requests for each Perkins loan made. Internal controls over compliance with direct and material compliance requirements should be sufficient to prevent or detect and correct noncompliance in a timely manner. Condition: Two students with a Perkin’s loan in repayment did not have the proper documentation retained in the students’ file in accordance with 34 CFR 674.19(e). Questioned Costs: None identified. Context: Out of a sample of 50 students selected for testing, 25 of the students were in repayment and 25 of the students had a loan that was paid, canceled or assigned within the previous three years. Two students of the 25 who had a loan that was paid, canceled or assigned were not compliant with the recordkeeping and record retention requirements. The population for loans in repayment includes 237 students. Effect: The College was not compliant with Federal requirements of the Student Financial Assistance Program. Cause: The loan file for one student could not be located and the promissory note for one student could not be located. While the College believes these files were misfiled, internal controls over filing and usage of loan files should be sufficient to track and ensure timely refiling after use. Identification as a Repeat Finding: This is a repeat finding of finding 2022-003 that was reported for the year ending June 30, 2022. Recommendation: We recommend the College review the filing processes for loan files to refine controls in place on filing and tracking of such files. Views of Responsible Officials: McPherson College agrees with the finding and the recommendations. The College is reviewing the process and will refine the process as necessary.