Finding 1062599 (2023-001)

-
Requirement
N
Questioned Costs
$1
Year
2023
Accepted
2024-09-09
Audit: 318809
Organization: California College of the Arts (CA)

AI Summary

  • Core Issue: The College over-awarded Direct Loans to a student who was only enrolled for one semester instead of a full academic year.
  • Impacted Requirements: Loans must align with the student's enrollment period, as per the Department of Education guidelines.
  • Recommended Follow-Up: Implement a review process for manually processed financial aid to prevent future over-awards.

Finding Text

Findings for the year ended June 30, 2023 2023-001 FEDERAL DIRECT STUDENT LOANS Federal Assistance Listing Number: Various; Student Financial Aid Cluster, Department of Education Criteria According to the Department of Education 2022-2023 Federal Student Aid Handbook Volume 3 Chapter 5, “Direct Loan Periods and Amounts,” the minimum period for which a school may originate a Direct Loan varies depending on the school’s academic calendar: For credit-hour programs with standard terms (semesters, quarters, or trimesters), or with nonstandard terms, the minimum loan period is a single academic term. For example, if a student will be enrolled in the fall semester only and will skip the spring semester, you may originate a loan with a loan period that covers only the fall term. The loan amount must be based on the reduced costs and EFC for that term, rather than for the full academic year. Observation/Condition/Context The College over-awarded and over-disbursed Direct Subsidized and Direct Unsubsidized Loans to one student out of forty tested. The College originated and disbursed Direct Subsidized and Direct Unsubsidized Loans for a full academic year when the student only enrolled in one semester. Questioned Cost The College awarded $2,250 more in Direct Subsidized and $4,000 more in Direct Unsubsidized than was required. Cause/Effect A manual adjustment to the student’s financial aid packaging was required. Due to the manual processing, a flag on the student’s account did not appear when the student was over-awarded, and the College did not have a process in place to catch the error outside of the system flag, which resulted in the College over-awarding the student Direct Subsidized and Direct Unsubsidized Loans. Recommendation We recommend that the College implement a procedure to review manually processed financial aid packaging.

Categories

Questioned Costs Student Financial Aid Matching / Level of Effort / Earmarking

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $1.95M
84.063 Federal Pell Grant Program $1.45M
84.038 Federal Perkins Loan Program - Outstanding $335,346
84.033 Federal Work-Study Program $225,604
84.007 Federal Supplemental Educational Opportunity Grants $153,141
47.041 Nsf- Engineering $7,622
84.038 Federal Perkins Loan Program - Issued Loans $0
84.038 Federal Perkins Loan Program Admin Cost Allowance $0